Renewable Energy Certificates

What is Renewable Energy Certificate?

Renewable Energy Certificates (REC) are generation based certificates awarded to those who generate electricity from Renewable Energy (RE) sources such as Solar, Wind, Biomass etc., if they opt not to sell the electricity at a preferentially higher tariff. REC is a kind of market mechanism to promote RE and facilitate compliance of Renewable Purchase Obligation (RPO). It also helps to reduce the mismatch between availability of RE sources in RE rich states and the requirement of the obligated entities to meet the RPO. 

There are two categories of RECs i.e.

i)          Solar REC, and

ii)         Non-solar REC.

Solar RECs are issued to eligible entities for generation of electricity from Solar based Power Plants.   

Procedure for obtaining Renewable Energy Certificate?

REC is issued to RE generators and to the eligible Distribution Licensees. Only Grid connected RE technologies approved by Ministry of New and Renewable Energy (MNRE) would be eligible for REC.

The RE generators who fulfil the eligibility criteria can apply for the accreditation to concerned state agency. After successful accreditation the eligible RE generator may apply to the Central Agency for registration. Once the registration is done, the eligible entity may obtain REC by the Central Agency.

How the Renewable Energy Certificates are beneficial?

One REC is treated as equivalent to 1 MWh or 1000 kWh. These certificates are tradable on the Energy Exchanges and are brought by specified consumers or Distribution Companies; known as obligated entities. These obligated entities may either have to purchase a certain quantum of electricity from RE generators or RECs.

Price of RECs:

The price of REC is determined in power exchange. REC is traded in power exchange within the forbearance price and the floor price determined by Central Electricity Regulatory Commission (CERC) from time to time.

	Non-solar REC	Solar REC	Non-solar REC	Solar REC
	Price during Apr 12 to Mar 17		W.e.f Apr 2017
Forbearance price	INR 3,300/REC	INR 5,800/REC	INR 3,000/REC	INR 2,400/REC
Floor Price	INR 1,500/REC	INR 3,500/REC	INR 1,000/REC	INR 1,000/REC

Earlier the floor and forbearance prices were 9,300 and 13,400 INR respectively for Solar REC.

As per the REC data at Indian Energy Exchange (IEX), a total of 417 participants participated for solar REC in July 2018 whereas 396 participants participated for Non-solar REC for the same month. The cleared volume of REC was 808,324.  

Non-solar RECs prices continued to rise due to robust demand and limited availability. In July 2018, the RECs were traded at a price of INR 1050 at Power Exchange India Ltd. (PXIL) (5% above floor price) and INR 1200 at (20% above floor price) IEX .