SC rejects GEA appeal on REC price revision by CERC

New Delhi: The Supreme Court has refused to entertain Green Energy Association (GEA) appeal on stopping Renewable Energy Certificates (REC) price revision by Central Electricity Regulatory Commission (CERC).

The apex court took cognizance of a matter seeking stay on REC price revision by CERC on June 16.

The high prices of RECs had been causing an additional burden to the tune of 654 crore annually (based on FY19-20 figures from Power Exchange) on the consumers in power tariffs.

Experts in the industry say that the impact would be much higher in coming years when compliance levels are expected to rise.

The Supreme Court summarily dismissed any prayers of stay on CERC order realizing the impact that the delay in regulations may be causing.

Under the Renewable Purchase obligation,  obligators (like DISCOMs, Captive Power Plants-CPPs and other consumers) have to either buy electricity generated by specified ‘green’ sources, or buy, in lieu of that, ‘renewable energy certificates (RECs)’ from the market.

The Govt introduced the RECs as a market-based instrument to promote and incentivize renewable energy and facilitate compliance of RPO by obligator (CPPs, Discoms)/conventional power generators, which do not have solar RE generating resources like land, roof or 270 days sunshine or located in a coastal areas facing frequent cloudy weather.

However, there is an acute shortage of Renewable Energy Certificates in the market which has prompted the market to be a sellers’ one. REC prices have spiked up in past 12 months to as high as Rs. 2.25 Rs/kwh for Solar RECs while it is a known fact that Solar power itself has been getting auctioned at average rate of Rs. 2.50 /kwh since FY17-18.

Prices of Solar RECs in the last one year have shot up by more than 125% (from Rs 1000 / MWhr to Rs 2250/MWhr) putting an additional burden of Rs. 1.25 / kwh of RE energy compliance for all consumers; DISCOMs  as well as Industry.

This huge burden on the consumers is due to the non-revision of REC prices since 2017 by the regulator, despite steep fall in RE generation costs.