Pricing of the Renewable Energy Certificates

Each Renewable Energy Certificate (REC) issued shall represent 1 MWh of electricity generated from renewable energy source and injected into the grid.

The price of Certificate shall be discovered in the Power Exchange. In between Central Electricity Regulatory Commission will provide information for the floor price and forbearance price. REC’s price range (Minimum and maximum) would be fixed separately for solar and non-solar Certificates.

Following factors are considered to fix the price range;

1. Variation in cost of generation of renewable energy such as Solar and Non Solar.

2. Variation in the Pooled Cost of Purchase across States in the country

3. Expected electricity generation from RE sources  such as

• Expected RE capacity under preferential tariff
• Expected renewable energy capacity under REC mechanism

4. Renewable Purchase obligation (RPO) targets set by State Electricity Regulatory Commissions

Forbearance price: The highest difference between RE tariff fixed by the CERC and the Average Pooled Power Purchase Costs has been taken as the forbearance (ceiling) price.

Floor Price:

• Difference between the minimum requirement for project viability of Renewable Energy Technologies and respective state average power pool cost of previous year.
• The RPO targets
• Market Equilibrium Price (MEP)  based on the supply and demand
• Basic minimum requirements (in terms of recovery of cost of generation)

Know more about the REC Mechanism

(Source: Determination of Forbearance and Floor Price for the REC framework, CERC)