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CERC introduces certificate multiplier to boost adoption of new RE technologies

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The certificate multiplier assigned to RE technologies will be applicable for 15 years from the date of commissioning of the project

The Central Electricity Regulatory Commission (CERC) has introduced the concept of multiplier for renewable energy certificates (RECs) for new projects based on the tariff range of various RE technologies by notifying the REC Regulations 2022.

Introducing a technology multiplier will help boost adoption of new and costly RE technologies depending on the type of technology to be encouraged. Besides, the concept will provide an avenue to offer incentives for promoting less mature technologies.

Certificate Multiplier

The certificate multiplier assigned to RE technologies will be applicable for 15 years from the date of commissioning of the project. For the next three years, the CERC has assigned a certificate multiplier value of 1 for on-shore and off-shore wind projects, while Hydro has been assigned a value of 1.5.

However, to boost the adoption and use of new technologies for municipal solid waste (MSW) and non-fossil fuel-based co-generation, the commission has assigned it a value of 2. Also, biomass and bio-fuel projects have been assigned the highest certificate multiplier of 2.5, which indicates the regulator’s intent of offering maximum incentives to this technology.

In a notification on Monday, the CERC said that each REC issued under these regulations shall represent one megawatt hour (MWh) of electricity generated from RE sources and injected or deemed to be injected into the grid.

Renewable Energy Certificates

Besides, the notifications allow any RE generator, whose tariff has not been determined under Section 62 or 63 of the Electricity Act or who has not sold power directly or through traders or in power exchange for Renewable Purchase Obligation (RPO) compliance would be eligible for RECs.

However, the generator should not have availed benefits of concessional or waiver of transmission charge or wheeling charge. Also the registration of such entities would be valid for 25 years from the date of registration.

Captive generating stations (CGP) based on RE sources will also be eligible for the sale of REC beyond self-consumption. Discoms or open access consumers shall also be eligible for REC to the extent of excess RE procurement above their RPO as specified by the respective State Commission.

Besides, the transactions of RECs through power exchanges, transactions of certificates through electricity traders at mutually agreed prices have also been allowed. Also, there will be no floor or forbearance price for certificates. RECs issued to an entity shall remain valid till they are sold in power exchange or through a trader and used for RPO compliance.

In January 2010, the CERC introduced REC in the Indian electricity sector. The mechanism essentially seeks to address the mismatch between the availability of RE sources and the requirement of the obligated entities to meet their renewable purchase obligation (RPO) and the constraint in transferability of infirm renewable power across States.

As renewable energy (RE) sources are not uniformly located in India, the REC Mechanism provided additional instruments for the obligated entities like Discoms, captive consumers, and open access consumers to fulfil the requirements of RPO. It also provided an alternate avenue for investment in the RE segment.

Published on May 12, 2022

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