REC is a market-based instrument that is equivalent to 1 megawatt-hour (MWh) of electricity generated from a renewable source.
The centre has clarified that 12 per cent GST (goods and services tax) is applicable on renewable energy certificates (RECs). Consequently, this will make renewable power more expensive.
“It is hereby clarified that Renewable Energy Certificates (RECs) and Priority Sector Lending Certificates (PSLCs) and other similar documents are classifiable under heading 4907 and attract 12 per cent GST,” stated a finance ministry notification Wednesday. This notification was issued as there was no clarity on the applicable GST on various scrips/certificates like RECs, PSLCs, etc.
REC is a market-based instrument that is equivalent to 1 megawatt-hour (MWh) of electricity generated from a renewable source. Most of the renewable energy is sold via power purchase agreements (PPAs) signed between renewable energy firms and state power discoms.
However, the remaining amount of renewable energy is largely sold through RECs. RECs are put up for sale at an energy exchange by the generation company. Discoms generally purchase RECs to fulfill their renewable power obligations, which is mandated under national tariff policy. Some private firms — which have made assurances that they will buy a specific amount of green energy annually — also use RECs to fulfill their assurances.
Source: indianexpress
