Renewable Energy Certificate

Central Electricity Regulatory Commission (CERC) has notified Regulation on Renewable Energy Certificate (REC) on 14th Jan-2010 in fulfilment of its mandate to promote renewable sources of energy and development of market in electricity. REC mechanism is aimed at addressing the mismatch between availability of RE resources in state and the requirement of the obligated entities to meet the Renewable Purchase Obligation (RPO). This mechanism shall minimize the dependency of RE generators on Government in the form of tax incentives, subsidies, etc. and make them self sustaining to compete in the open market.

The Process of getting the RECs issued and sold involves the following steps:

Accreditation (Through State Nodal Agency)
Registration (Through Central Agency NLDC)
Issuance (Through Central Agency NLDC)
Trading and Redemption (Through Power Exchange)



RE GENERATORs: Wind, Solar, Small Hydro, Bio-mass, Bio-fuel, Co-generation, Municipal Waste, Any GENERATOR approved by MNRE
REC denomination: 1 MWh
Categories: Solar & Non-solar
Validity: 365 days after issuance
Trading platform: Power Exchanges only
Trading Calendar: Last Wednesday of the month
Non-solar REC Floor price (2011-12): Rs.1500/- & Forbearance Price: Rs.3900/- per REC
Solar REC Floor price (2011-12): Rs.12000/- & Forbearance Price: Rs.17000/- per REC


Eligibility Criteria

RE GENERATOR not having any PPA at preferential tariff.
RE GENERATOR selling electricity to local distribution licensee at a price not exceeding the pooled cost of power purchase of such distribution licensee.
RE GENERATOR selling electricity to any other licensee or to an open access consumer at mutually agreed price or through power exchange at market determined price.
RE Captive power producer is eligible for the entire energy generated from such plant including self consumption subject to condition that CPP has not availed any benefit in

    the form of concessional / promotional transmission or wheeling charges, banking facility benefit or waiver of electricity duty etc.


Renewable Purchase Obligation (RPO)

According to the Indian Electricity Act 2003, the State Electricity Regulatory Commission (SERC)s set targets for utility companies to purchase some percentage of their total power from renewable energy sources. These targets, called Renewable Purchase Obligations (RPOs), vary from state to state due to the potential of renewable energy. If the utility company is unable to buy its share of renewable energy, it can compensate that by buying the Renewable Energy Certificates (RECs) from the market to make up for the shortfall.


Obligated Entities
As per this regulation, obligated entities are
2.Captive Power Plants and
3.Open Access Consumers

The above mentioned entities will have to replace approximately 5% of their total quantity of power consumed with power generated from renewable energy, or buy it on paper. 1 REC is equal to 1 MWHr and would cost Rs.1500/- to Rs.3900 per REC.



If the obligated entity fails to fulfil their Renewable Purchase Obligation (RPO), then it will be penalized by the State Nodal Agency and will have to purchase the certificates at the Forbearance Price, i.e. Rs.3900/-.