The Supreme Court has stayed trading in Renewable Energy Certificates (RECs), whose prices have been reduced by the Central Electricity Regulatory Commission (CERC). REC-generating companies had filed the petition in the court against the CERC action. The court on Monday also stayed the new price regime introduced by the CERC, said sources privy to the hearing. The petitioners had submitted the unsold stocks of close to 10 million RECs, which enable trading in renewable energy, would not be cleared at the low prices. There are around 1,200 projects in the REC mechanism with a capacity of 5,383 Mw. The CERC in its order in March had computed the floor price of a solar REC at Rs 1 a unit and forbearance price at Rs 2.5 a unit. It was earlier Rs 3.5 a unit and Rs 5.8 a unit, respectively. For non-solar (wind and others), the floor price has been reduced to Rs 1 a unit and forbearance price at Rs 2.9 a unit. It was earlier in range of Rs 1.5-3.5 a unit.Forbearance price is the highest difference between the CERC tariff and the average power purchase cost of states.
The move, the CERC stated, was a result of falling tariffs in competitive bidding for solar energy and reducing costs for both solar and wind energy. Solar power prices fell to Rs 3.15 a unit in a recent project tender in Rajasthan. At the same time, wind power also witnessed its price spiralling down to Rs 3.46 per unit in the first ever auction of projects last week.EC generators moved the Appellate Tribunal of Electricity (APTEL), asking it to suggest means of clearing the existing stock of RECs. “While APTEL agreed to clear the stock by using the ‘Vintage Multiplier’ method it did not agree to put a stay on the REC trading. The Supreme Court has put a stay on the whole mechanism and trading. This would harm the sector more,” said a sector expert.
The Vintage Multiplier lets the REC generator sell more RECs for 1 unit of power. The REC market, launched in 2010, crashed last year with more than 10 million certificates going unsold, and has not made a significant improvement since then. The price discovered in the REC trading during April was Rs 1 a unit for both non-solar and solar RECs. The Renewable Purchase Obligation, notified under the National Tariff Policy, makes it obligatory for distribution companies, open-access consumers and captive power producers to meet part of their energy needs through green energy.