Clean Energy And Sustainability Bulletin (June 2011): The Indian Central Electricity Regulatory Commission (CERC) proposes a reduction in Indian Renewable Energy Certificate (REC) prices

Author:Ms Michelle Thomas
Profession:Eversheds
 
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The Proposal

The CERC has issued a suo motu petition proposing a downward revision of the trading floor and forbearance (ceiling) prices of RECs between 6.7% and 17.9% for the financial year 2012-2013. Lower price bands for both solar and non-solar RECs are proposed (see table below) and the CERC is seeking comments and suggestions on its proposal by 5 July 2011. The hearing on the petition will be held on 14 July 2011. 

The CERC is permitted (in consultation with the Central Agency and Forum of Regulators) to specify floor and forbearance prices for RECs from time to time by the Central Electricity Regulatory Commission (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations (Regulations). The Regulations specify a number of principles which the CERC should take into consideration when setting the floor and forbearance price, including: variation across states in the cost generation of different renewable energy technologies under the categories of solar and non-solar variation in the Pooled Cost of Purchase and expected electricity generation from renewable sources. Key data used by the CERC in setting the price bands is the Annual Pooled Purchase Cost (APPC) which is the weighted average pooled power purchase by distribution licensees (excluding power sourced from renewable energy projects and costs of transmission) in the Indian states during the financial year 2011-12. The floor price for non-solar RECs is based on the difference between the APPC and project viability costs corresponding to the renewable power generation forecasted for 2012. The forbearance price for non-solar RECs is based on the highest difference between the forecasted APPC for all...

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