Frequently Asked Questions- Renewable Energy Certificate (REC)
 

Q 1. What is the objective of Renewable Energy Certificate (REC) mechanism?

Renewable Energy Certificate (REC) mechanism is a market based instrument to promote renewable energy and facilitate compliance of renewable purchase obligations (RPO). It 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).

Q 2. What is the denomination of each REC issued?

One Renewable Energy Certificate (REC) is treated as equivalent to 1 MWh.

Q 3. How many types of RECs are there?

There are two categories of RECs, viz., solar RECs and non-solar RECs.
Solar RECs are issued to eligible entities for generation of electricity based on solar as renewable energy source, and non-solar RECs are issued to eligible entities for generation of electricity based on renewable energy sources other than solar.

Q 4. What would be the sources of revenue under REC mechanism?

Revenue for a RE generator under REC scheme includes revenue from the sale of electricity component of RE generation and the revenue from the sale of environmental attributes in the form of RECs.

Q 5. Who is eligible for REC?

A generating company engaged in generation of electricity from renewable energy sources shall be eligible for participation under REC scheme if it fulfils the following conditions:

  • it does not have any power purchase agreement to sell electricity at a preferential tariff determined by the Appropriate Commission; and
  • it sells the electricity generated either
    • to the distribution licensee of the area in which the eligible entity is located, at a price not exceeding the pooled cost of power purchase of such distribution licensee, or
    • to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at market determined price.

Q 6. Whether Captive Power Plants(CPPs) would be eligible for REC?

A Captive Power Producer (CPP) based on renewable energy sources shall be eligible for the entire energy generated from such plant including self consumption for participating in the REC scheme subject to the condition that such CPP has not availed or does not propose to avail any benefit in the form of concessional/promotional transmission or wheeling charges, banking facility benefit and waiver of electricity duty.

Provided also that if such a CPP forgoes the benefits of concessional transmission or wheeling charges, banking facility benefit and waiver of electricity duty, it shall become eligible for participating in the REC scheme only after a period of three years has elapsed from the date of forgoing such benefits.

Provided also that, the abovementioned condition for CPPs for participating in the REC scheme shall not apply if the benefits given to such CPPs in the form of concessional transmission or wheeling charges, banking facility benefit and waiver of electricity duty are withdrawn by the State Electricity Regulatory Commission and/or the State Government.

The expression 'banking facility benefit' means only such banking facility whereby the CPP gets the benefit of utilizing the banked energy at any time (including peak hours) even when it has injected into grid during off-peak hours.

Q 7. Does early termination of PPA by an RE generator make it eligible for REC?

A generating company having entered into a power purchase agreement for sale of electricity at a preferential tariff shall not, in case of premature termination of the agreement, be eligible for participating in the REC scheme for a period of three years from the date of termination of such agreement or till the scheduled date of expiry of power purchase agreement whichever is earlier ,if any order or ruling is found to have been passed by an Appropriate Commission or a competent court against the generating company for material breach of the terms and conditions of the said power purchase agreement.

Q 8. To whom REC would be issued? Whether Distribution licensee, Open Access consumer, Conventional captive power consumer are eligible for issuance of REC?

REC would be issued to RE generators only.

Q 9. How long one REC would be valid?

The REC once issued shall remain valid for three hundred and sixty five days from the date of issuance of such Certificate.

Q 10. Which RE technologies are eligible for REC?

Grid connected RE Technologies approved by MNRE would be eligible under this scheme.

Q 11. What are the options available for RE generators to sell renewable energy generated?

RE generators will have two options i) either to sell the renewable energy at preferential tariff or ii) to sell electricity generation and environmental attributes associated with RE generations separately.

Q 12. What is the procedure for getting REC?

The RE generators who fulfil the eligibility criteria can apply for the accreditation to concerned State Agency. After successful accreditation the eligible entity (RE generator) may apply for registration to the Central Agency. After successful registration the eligible entity may obtain REC through the 'process of issuance of REC' by Central Agency. The detailed procedures for Accreditation, Registration, Issuance and Redemption of REC can be downloaded from CERC/NLDC (POSOCO) websites: www.cercind.gov.in, www.nldc.in, www.recregistryindia.in

Q 13. Who could buy REC? Can REC be used to fulfil Renewable Purchase Obligation?

REC could be purchased by the obligated entities. REC could also be purchased by entities other than obligated entities on voluntary basis

Q 14. Where would RECs be traded?

REC would be exchanged only in the CERC approved power exchanges.

Q 15. What would be the price of one REC?

The price of REC would be determined in power exchange. REC would be traded in power exchange within the forbearance price and floor price determined by CERC from time to time. The floor and forbearance price as determined by the Commission vide Order dated 1.6.2010 (Petition No. 99/2010 - Suo-Motu) are as under:

Non solar REC ( / MWh) Solar REC ( / MWh)
Forbearance Price 3,900 17,000
Floor Price 1,500 12,000

CERC has determined floor price and forbearance price on 23rd Aug, 2011 applicable from, 2012 valid till FY 2016-17.

Non solar REC ( / MWh) Solar REC ( / MWh)
Forbearance Price 3,300 13,400
Floor Price 1,500 9,300

Q 16. What are the Fees and Charges for Accreditation, Registration, Issuance and Redemption?

The details of fees and charges for different procedures of REC are as under:

Fee and Charges towards Accreditation Amount in
Processing Fees (One Time) 5,000
Accreditation Charges (One Time) 30,000
Annual Charges 10,000
Revalidation Charge at the end of five (5) years 15,000
Fee and Charges towards Registration Amount in
Processing Fees (One Time) 1,000
Registration Charges (One Time) 5,000
Annual Charges 1,000
Revalidation Charge at the end of five (5) years 5,000
Fee and Charges towards Issuance of REC Amount in
Fees per Certificate 10

Q 17. What happens if Renewable Purchase Obligation is not met by the Obligated Entities?

As per the Model Regulation evolved by FOR, in case of default the concerned SERC may direct obligated entity to deposit into a separate fund to purchase the shortfall of REC at forbearance price. However, in case of genuine difficulty in complying with the renewable purchase obligation because of non-availability of certificates, the obligated entity can approach the Commission for carry forward of compliance requirement to the next year.

Q 18. Whether a RE CPP is eligible under REC frame work if the self (captive) consumption from such RE CPP is exempted from the levy of Electricity Duty by the State Government and not availing the benefits of concessional transmission or wheeling charges and banking facility benefit?

Since such RE CPP is availing the benefit of waiver of electricity duty, it will not be eligible under REC frame work. If such a CPP forgoes on its own, the benefit of waiver of electricity duty, it shall become eligible for participating in the REC scheme only after a period of three years has elapsed from the date of forgoing such benefits. Provided that the abovementioned condition for CPPs for participating in the REC scheme will not be applicable if the benefits given to such CPPs in the form of concessional transmission or wheeling charges, banking facility benefit and waiver of electricity duty are withdrawn by the State Electricity Regulatory Commission and/or the State Government.

Q 19. Whether an RE generator eligible under REC Mechanism, if it terminates its PPA (which is at preferential tariff) with obligated entities at mutual consent?

Yes, such RE projects are eligible under REC Mechanism. In such cases the bar, under the proviso added at the end of the Sub?clause (c) of Clause (1) of Regulation 5, for participating in the Renewable Energy Certificate (REC) scheme for a period of three years from the date of termination of such agreement or till the scheduled date of expiry of power purchase agreement whichever is earlier, would not be applicable as the termination would be with mutual consent.

Q 20. Whether Auxiliary consumption of the any RE generator (including RE CPP or Bagasse based cogeneration power plants) is entitled for issuance of REC?

No, only net generation of any RE generation project will be entitled for the issuance of REC.

Q 21. Whether a captive RE generator which banks electricity generated during any period of time and utilizes such banked energy at peak hours would be eligible under the REC mechanism?

When a captive RE generator banks electricity generated during any period of time and utilizes such banked energy at peak hours would not be eligible under the REC mechanism. The banking facility wherein the CPP is entitled to draw power from the utility based on and corresponding to the time period (peak or off?peak period) of injection of power by such CPP will not be considered as concessional / promotional benefit.

Q 22. Whether self (captive) consumption of any Bagasse based co-generation projects or any other renewable energy based Captive Power project is qualified for REC if they are not meeting criteria for qualifying as captive Power Plant as specified in the Electricity Rules, 2005?

In case a Captive Power Plant based on renewable energy sources (including the non-fossil fuel based co-generation) does not meet the criteria for qualifying as Captive Power Plant as specified in the Electricity Rules, 2005, such a CPP/co-generation plant would be treated as any other generator and would be eligible for the entire energy generated from such plant including self consumption for participating in the REC scheme subject to the condition that such a generator meets the REC eligibility requirements applicable for a generating company.

Q 23. If a plant is connected to grid as consumer (it is drawing power from the grid) and it has a RE Generating facility within its premises which is not connected to the grid. Whether this generating facility is eligible under REC Mechanism?

As per CERC REC Regulations, only grid connected RE Technologies are eligible under REC Mechanism. Since, the RE Generating unit for which REC benefits are sought is not connected to the grid, it is not eligible to participate under REC Mechanism.

Q 24. What is the date from which an RE Generator becomes eligible for issuance of RECs?

The energy injection for issuance of REC by Registered RE Generator shall be applicable from the next day of registration to last day of the same month for the first month. However for the subsequent months, period of energy injection shall be from the first day of the month to last day of the same month.

For different billing cycles of RE Generators, the format of Energy Injection Report submitted by SLDC to Central Agency shall be for the complete calendar month in accordance with approved REC procedures. In order to do accounting for the calendar month, SLDCs may calculate on pro-rata basis or any other method deemed suitable by the SLDC.

Q 25. Can a RE Generator apply for Accreditation and Registration under REC Mechanism prior to Commissioning ?

Eligible RE Generating Projects can apply for Accreditation under REC Mechanism six months prior to proposed date of Commissioning.Eligible RE Generating Projects can apply for Registration under REC Mechanism three months prior to proposed date of Commissioning.

Q 26. What may be the probable cases of DEFAULT which may lead to REVOCATION of Registration?

If the Central Agency, after making an enquiry or based on the report of the Compliance Auditors, is satisfied that public interests so require, it may revoke registration of the eligible entity in any of the following cases, namely :-

(a) where the eligible entity, in the opinion of the Central Agency, makes willful and prolonged default in doing anything required of him by or under these regulations;

(b) where the eligible entity breaks any of the terms and conditions of its accreditation or registration, the breach of which is expressly declared by such accreditation or registration to render it liable to revocation;

(c) where the eligible entity fails within the period required in this behalf by the Central Agency - (i) to show, to the satisfaction of the Central Agency, that it is in a position fully and efficiently to discharge the duties and obligations imposed on it by its accreditation or registration; or (ii) to make the deposit or furnish the security, or pay the fees or other charges required by its accreditation or registration.

Q 27. Within how many days of generation, an eligible entity may apply for issuance of RECs?

The eligible entities shall apply to the Central Agency for Certificates within three months after corresponding generation from eligible renewable energy projects provided that the application for issuance of certificates may be made on fortnightly basis, that is, on the first day of the month or on the fifteenth day of the month.