Renewable Energy Certificates
By:
Gensol Consultants Pvt. Ltd.
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Contents
 Renewable Energy Certificates (REC)
 Conceptual framework of REC
 Operational framework of REC
 REC Pricing
 Case Study
 Important features of REC mechanism
 Services offered
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Renewable Energy Certificates (REC)
 REC is deemed as certificate of power generated from Renewable Energy sources;
 1 REC = 1 Mega Watt hour of renewable energy generated;
 Can be sold or traded to meet mandatory RPO targets set by State Electricity
 Regulatory Commissions for renewable energy purchases by utilities/distribution
companies;
 Exchanges identified for REC trading- Indian Energy Exchange & Power
Exchange of India;
 REC would be divided into two categories:
• Solar Certificates
• Non-Solar Certificates
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Eligibility Criteria
 All renewable energy generators already NOT having PPA with the distribution
licensees for contracted quantum;
 RE generator selling electricity generated either :
i. to the distribution licensee of the area in which the eligible entity is located,
at a price not exceeding the pooled cost of power purchase of such
distribution licensee; or
ii. to any other licensee or to an open access consumer at a mutually agreed
price, or through power exchange at a market determined price;
iii. eligible CPP utilizes electricity for self consumption
 All REC based captive power produces shall be eligible for their entire energy
generation including self consumption.
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Conceptual framework
Sale at
Preferential
tariff
Obligated
Entities
Distribution Utility
at a price not more
than average pool
price
Third party sale on
mutually agreed
price
RE Generator
Electricity
Component
Sale in REC
framework
Renewable
Component
(REC)
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Sale through power
exchanges
Obligated Entities
(Sale through power
exchanges
Operational framework
Registration
by Central
Agency
Issuance of
RECs by
Central
Agency
Accreditation
by State
Agency
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Redemption
of RECs
Accreditation & Registration
Process
Verify Accreditation
Application
Eligible Entity
Confirmation
State Agency Intimation
SLDC
Confirmation
Central
Agency
Intimation
Application
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Power
Exchange
Issuance of REC Process
Verification
Pre Condition
State Agency
SLDC
Regular
Injection
Intimation
For Meter Reading
SLDC
Central
Agency
Application
Verify before
Issuance
Power
Exchange
Issuance
Apply for sale
of REC
Joint Meter Reading
Eligible
Entity
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REC Trading
RE Generators
1
1
Electricity
to Grid
4
RPS Obligated entities
Electricity
from Grid
Open access users
Discoms
Trading Platform
Other obligated
entities
Captive
generators
REC purchase agreement/ trading
5
Issuance of REC
Central Agency- NLDC
1
Redemption of REC
6
2
Energy
Accounting
Application to issue REC
Compliance reporting
3
7
SLDC
Quarterly Reporting
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Monitoring Committee of
each State
Redemption Process
Eligible Entity
Apply for
Sale of REC
Power
Exchange
Intimation
of Sale
Central
Agency
Purchase
Obligated
Entity
RPO
Intimation of
Sale
State Agency
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SERC
REC- Timelines, Fees & Charges
Application
Issuance
Validity
Fees
Charges at
Exchange
• Three months from the date of generation
• Fifteen days from the date of application
• 365 days from the date of issue or exchange by way of sale whichever
is earlier
• Registration, Annual & Transaction Fees
• Membership Charges
• Transaction Charges
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Pricing of REC
CERC has finalized the floor and forbearance price of REC based on:
 Variation in cost of generation of different renewable energy technologies
falling under solar and non-solar category, across States in the country;
 Variation in the Pooled Cost of Purchase across States in the country;
Expected electricity generation from renewable energy sources including:i. expected renewable energy capacity under preferential tariff
ii. expected renewable energy capacity under mechanism of certificates;
Renewable Purchase obligation targets set by State Commissions.
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Cont…
CERC has given the following price range for Solar and non-solar certificates:
Non-Solar REC
(Rs/MWh)
Solar REC (Rs/MWh)
Forbearance Price
3,900
17,000
Floor Price
1,500
12,000
These prices are calculated as under:
Forbearance Price = Maximum (Preferential Tariff- Average Power Pool Cost)
Floor Price = Market Equilibrium Price (Minimum requirement for project
viability of RE technologies - Average Power Pool Cost)
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Case Study - Solar
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Solar policy Landscape
Under JNNSM, targets set for Solar Penetration
Phase - 1
Phase 1 (2010 –2013)
Phase 2 (2013 –2017)
Phase 3 (2017 –2022)
1,100 MW
4,000 MW
20,000 MW
Category
Size of Project
Status of Allocation
90 MW , Small scale Projects
0.1 to 2 MW grid
connected
Projects have already been
shortlisted
10 MW Off-grid and
decentralized applications
Up to 100 kW
Applications open from
center. State notification
awaited. Haryana has released
policy
500 MW Grid Connected
Solar Photovoltaic technology
5MW +- 5%
1100 MW
500 MW Grid connected Solar
Thermal Projects
FY 2010-11 50MW
FY 2011-15 350MW
5MW +- 5%
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FY 2010-11 500MW
Off-grid Solar system with Battery Back-up
PARAMETERS
100 kW
200 kW
Solar Modules
120 Lacs
240 Lacs
Electric Equipments
60 Lacs
120 Lacs
Civil Work
30 Lacs
60 Lacs
EPC
30 Lacs
60 Lacs
Preoperative and Consultancy
10 Lacs
20 Lacs
250Lacs
500 Lacs
Area Requirement
1200 sq. Km.
2400 sq. Km.
Power Generation
1.5 Lac units
3.0 Lac units
TOTAL
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Off-grid Solar system with Battery Back-up
1
Renewable Energy Certificate
2
Tax Saving due to Accelerated Depreciation
3
Freedom from grid-based electricity
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Combined Benefits for a 100 kW system
Total Project Cost
Equity
Debt
250 Lacs
75 Lacs
175 Lacs
Incentive
Equity (75 Lacs)
Debt (175 Lacs)
Revenue from sale of REC
18.1 Lacs
-NA-
Revenue against tax saving
48 Lacs
-NA-
Revenue against saving from
grid based electricity
7.2 Lacs
-NA-
Returns in 1st year
73.3 Lacs
Loan repayment of Rs 175
Lacs at rate of 5%
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Combined Benefits for a 200 kW system
Total Project Cost
Equity
Debt
500 Lacs
150 Lacs
350 Lacs
Incentive
Equity (150 Lacs)
Debt (350 Lacs)
Revenue from sale of REC
36.2 Lacs
-NA-
Revenue against tax saving
96 Lacs
-NA-
Revenue against saving from
grid based electricity
14.4 Lacs
-NA-
Returns in 1st year
146.6 Lacs
Loan repayment of Rs 350
Lacs at rate of 10-12%
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Important features of REC
mechanism
 REC mechanism is NOT an incentive scheme. Rather it’s main aim is to enable
sale and purchase of renewable component across the State boundaries;
 REC mechanism will coexist with all current incentive based schemes, since most
of these schemes are based on certification of generation;
 In surplus scenario max 25% of REC, generated in a year, can be carried over only
for next year;
 Though REC represent environmental attribute, it will not be related to carbon
credits. These two mechanisms will operate independent of each other.
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Services Provided
Accreditation
&
Registration
support
Trading
strategies &
brokerage
Gensol
Consultants
Pvt. Ltd.
Data
compilation
& application
Obtaining
Issuance
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Contact Us
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Gujarat, India
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