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CERC Makes Drastic Changes in the REC Mechanism

In a recent notification, CERC (Central Electricity Regulatory Commission) published new REC regulations. 

These regulations differ in many significant ways from the existing REC regulations. A brief summary is provided below:

It is important to note that these regulations, though final, are not yet operational – they will come into force from date as notified by the Commission in the Official Gazette.

Key Changes in the REC Mechanism 2022, are as follows:

  • Eligibility for RECs:
    • Significantly expanded list of eligible projects
    • RE projects, Captive projects, Discoms and open access consumers are eligible for RECs, subject to minimal conditions (should not have availed concessions on transmission or wheeling charges) 
    • “banking of energy” related provisions have been done away with (ie, even if banking or “preferential banking” is availed, it does not disqualify a project
    • Large Hydro projects are also likely to be eligible for RECs (till now, only small hydro projects were eligible)
  • REC multiplier for different technologies: 
    • The REC Multiplier concept is introduced where some technologies like Biomass will get >2 RECs for every MWH of power generated. (see detailed table below)
  • REC pricing:
    • Floor and forbearance prices have been done away with
    • The Price of REC Certificate will be as discovered in the Power Exchange(s) or as mutually agreed between eligible entities and the electricity traders.
  • Trading of RECs:
    • Direct trading of RECs to be possible. REC Certificates can be exchanged through power exchanges or through electricity traders.
  • The Certificates issued shall remain valid until they are redeemed

Details of Certain Features of the new REC regulation

  1. Eligibility for REC

2. CERC has  introduced Multiplier, as below, which will be effective from the date of notification of the regulation for a period of 3 years and will  be reviewed from time to time.

The multiplier once assigned will be valid for a period of 15 years.

It is important to note that the certificate multipliers will only be provided to projects  commissioned after the date of effect of these regulations