Economy

Power Ministry proposes REC market reform

Our Bureau | | Updated on: Jun 07, 2021

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Renewable Energy Certificates may become valid for perpetuity

The Ministry of Power on Monday circulated a discussion paper on redesigning the Renewable Energy Certificate (REC) mechanism for comments of stakeholders in the power sector.

“The discussion paper on the requirement of redesigning the REC mechanism has been prepared in order to align it with the emerging changes in power scenario and to promote new renewable technology,” the Ministry said in a statement.

The paper proposes making RECs valid in perpetuity instead of having a validity period. As RECs are perpetually valid then the floor and forbearance prices are not required to be specified as RECs holders would have the complete freedom to decide the timings to sell, the statement said.

The Central Electricity Regulatory Commission will be required to have monitoring and the surveillance mechanism to ensure that there is no hoarding of the RECs and creation of artificial price rise in the market.

The renewable energy generators are also proposed to be eligible for issuance of RECs over a reduced 15 years from the date of commissioning of the project. The existing renewable projects that are eligible for REC would continue to get RECs for 25 years.

Long-term visibility

“The role of trader can be enhanced in the REC trading which will bring in two key advantages. It will give long-term visibility to the buyers of the REC and they can easily fulfil the Renewable Purchase Obligations,” the Ministry said.

Further, the small buyers can bank on the traders for buying REC as an ease of purchase. This will ensure even the small buyers who find difficulty in trading in the REC market will be able to fulfil their RPOs, it added.

Published on June 07, 2021
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