Power minister R.K. Singh approves amendments in REC mechanism

As part of the push to revamp the tradable renewable energy certificate (RECs) mechanism to boost India’s green economy, Union power and new and renewable energy minister Raj Kumar Singh has approved measures such as making such RECs perpetual.

“Union minister of power and new and renewable energy, Shri R.K. Singh has given his assent to amendments in the existing renewable energy certificate (REC) mechanism. The intent behind this decision is to align the ‘mechanism’ with the emerging changes in the power scenario and also to promote new renewable technologies,” power ministry said in a statement.

As part of the plan, the Union power ministry had circulated a discussion paper for redesigning the REC mechanism, that calls for renewable purchase obligations, or RPOs, to provide incentives to green energy sources.

“The proposed changes will provide some flexibility to the players, additional avenues, rationalization and also addressing the RECs validity period uncertainty issues,” the statement said and added, “Validity of REC would be perpetual i.e., till it is sold.”

Such a mechanism provides a safety net for renewable power developers by guaranteeing the purchase of electricity—making these projects much more bankable.

“Floor and forbearance prices are not required to be specified,” the statement said and added, “CERC to have monitoring and the surveillance mechanism to ensure that there is no hoarding of RECs.”

The Central Electricity Regulatory Commission, India’s apex power sector regulator, operationalized the RPO mechanism with the move being supplemented by tradable RECs. In the event of a state being unable to match its RPOs, it buys RECs from a power exchange.

“The RE generator who are eligible for REC, will be eligible for issuance of RECs for the period of PPA as per the prevailing guidelines. The existing RE projects that are eligible for REC would continue to get RECs for 25 years,” the statement said and added, “A technology multiplier can be introduced for promotion of new and high priced RE technologies, which can be allocated in various baskets specific to technologies depending on maturity.”

India is running the world’s largest clean energy programme to achieve 175 GW of renewable capacity, including 100GW of solar power and 60 GW of wind power by 2022. India has set a target of 450GW renewable energy capacity by 2030. A lot is riding on these projects to help India meet its climate change commitments.

“The changes proposed in revamped REC mechanism will be implemented by CERC through regulatory process,” the statement said.