The Central Electricity Regulatory Commission (CERC) has reduced the prices of Renewable Energy
Certificates (RECs) to a historic low in a move that could resurrect the market for them.
in its draft proposal has set the floor price of the solar REC at Rs 1/unit and forbearance at Rs 2.5/unit. These were earlier Rs 3.5/unit and Rs 5.8/unit, respectively. The floor price for non-solar RECs has been reduced to Rs 1 a unit and forbearance to Rs 2.9/unit. These were earlier in the range of Rs 1.5-3.5/unit.
Forbearance is the highest difference in the CERC-suggested price and the price discovered through the market. The floor price is the lowest optimal cost to run a project.
The move is likely to help cash-starved power
distribution companies meet their renewable energy
purchase obligation by buying the cheaper RECs. It is also a fallout of declining tariffs in auctions for solar energy projects and sliding costs of wind energy.