RENEWABLE ENERGY CERTIFICATE (REC)

In January 2010, hon'able Central Electricity Regulatory Commission (CERC) announced Regulation on Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation.

Renewable Energy Certificate (REC) mechanism is a market-based instrument to promote renewable energy and facilitate renewable energy purchase obligations amongst various stakeholders. RECs have been used extensively as a successful market based policy instrument to promote renewable energy in many countries, such as Australia, Japan, US, Netherlands, Denmark and UK.

Renewable Energy Certificates (RECs) represent the attributes of electricity generated from renewable energy sources. These attributes are unbundled from the physical electricity and the two products-the attributes embodied in the certificates and the commodity electricity-may be sold or traded separately. In other words, one REC represents that 1MWh of energy is generated from renewable sources. RECs are expected to become the currency of renewable energy markets because of their flexibility and the fact that they are not subject to the geographic and physical limitations of commodity electricity. RECs can be used by the obligated entities to demonstrate compliance with regulatory requirements, such as Renewable Purchase Obligations.

APPLICABILITY AND SCOPE

This procedure shall be applicable to all the generating companies engaged in generation of electricity from renewable energy sources such as small hydro, wind, solar including its integration with combined cycle, biomass, bio fuel cogeneration, urban or municipal waste and such other sources as recognised or approved by Ministry of New and Renewable Energy for their Renewable Energy Power Projects subject to fulfilment of eligibility conditions for participating in REC mechanism on or after April 1, 2010 in accordance with the provisions stipulated under the CERC REC Regulations.

Oligated to purchase RECs

  1. Distribution Licensees
  2. Captive Consumers
  3. Open Access users

Eligible to sell RECs

Eligible entities are those renewable generators who meet following criteria

  1. Distribution Licensees
  2. Captive Consumers
  3. Open Access users

All the Applications received up to 17:30 Hrs on the last day as mentioned above shall be taken up together for consideration. Applications received after prescribed time shall not be considered.

  1. Type of renewable source is approved by MNRE and respective State Commission
  2. Not have any Power Purchase Agreement (PPA) for the capacity related to such generation to sell electricity at a preferential tariff determined by the appropriate commission.
  3. Not having agreement to sell electricity to local distribution company at price not exceeding pooled cost of power purchase of that distribution company Sells electricity to the

A) Distribution licensee of the area at a price not exceeding the pooled cost of power purchase of such distribution licensee,

OR

B) To any other licensee or to an open access consumer at a mutually agreed price, or through power Exchange at market determined price. Selling electricity to any entity other than local distribution company at market driven prices or otherwise

In case, the nodal RLDC still anticipates Congestion, it may invite electronic bids for advance scheduling on 4th day after applicable last date for submission of Application. In case, the nodal RLDC still anticipates Congestion, it may invite electronic bids for advance scheduling on 4th day after applicable last date for submission of Application. PROCEDURE FOR SCHEDULING OF BILATERAL TRANSACTION ON "FIRST-COME-FIRST-SERVED" BASIS :

Categories of Certificates

There are two categories of certificates:

  1. Solar Certificates issued to eligible entities for generation of electricity based on solar as renewable energy source.
  2. Non-solar certificates issued to eligible entities for generation of electricity based on renewable energy sources other than solar.

Procedure for Application of Issuance of Renewable Energy Certificates

Step 1. Accreditation

Through this process State Nodal Agency (SNA) authorizes or endorses the RE Generator and recommends it for registration.

  1. Accreditation Certificate valid for 5 years from the date of accreditation.
  2. Separate applications for separate RE generation projects
  3. Minimum capacity of RE generation project to be 250 kW.

Timelines Min= 7 Weeks

Step 2. Registration

Through this process, NLDC (Central Agency) registers their Generator as 'Eligible Entity' for its RE Generation Project.

  1. Eligible Generator can get registered not before 3 months prior to the proposed date of commissioning.
  2. Registration can only be done after receipt of the 'Certificate of Accreditation' for the RE Generation Project from the concerned State Agency.
  3. Registration is valid for 5 years from the date of Registration.

Timelines Min= 4 Weeks

Step 3. Issuance of REC

  1. The electricity generated from RE project is injected into the grid and sold to either a distribution licensee or open access consumer with whom it has contract or sold through the power exchange. The metering of quantum of Renewable Energy injected into the grid is approved by or recorded through energy accounting by SLDC.
  2. Eligible RE Generator to apply to NLDC to issue the RE certificates equivalent to the amount of electricity injected into the grid as certified by the SLDC. The application to be filed within three months from the date of renewable energy generated.
  3. Application can be made on a fortnightly basis, i.e., on the 1st day of the month or on 15th day of the month.
  4. NLDC to issue RECs to Eligible RE Generator within 15 days as per SLDC and State Agency's generation report.
  5. RECs to be sold within 365 days of issuance or else they will lapse.

Step 4. REC Trading at Exchange Platform

Once the RECs are issued to the RE Generator (Eligible Entity), sale/purchase of RECs amongst Eligible RE Generators and Obligated entities to be undertaken only through Power Exchanges.

  1. Call of bids from 13:00 Hrs to 15:00 Hrs on the auction day(T-day).
  2. PXs to intimates details of maximum sale bids placed by each Eligible RE Generator to NLDC by 15:30 Hrs .
  3. NLDC to check availability of RECs with the eligible entity by 16:00 Hrs.
  4. Post-confirmation from NLDC, PXs to determine Market Clearing Price and Market Clearing Volume and send the details final cleared trades to NLDC for extinguishing of RECs sold in the records of NLDC by 17:00 Hrs.

Step 5. Surrender/Redeeming of RECs

The Obligated Entities purchase RECs through PXs and to surrender to SERC or other agency as specified by SERCs as to meet their RPO. NLDC (REC Registry) to maintain record of RECs sold and purchased.

Step 6. Compliance Reporting