The Electricity Act, 2003, the policies framed under the Act, as also the National Action Plan on Climate Change (NAPCC) provide for a roadmap for increasing the share of renewable in the total generation capacity in the country. However, Renewable Energy (RE) sources are not evenly spread across different parts of the country. On the one hand there are States (like Delhi) where the potential of RE sources is not that significant. This inhibits SERCs in these States from specifying higher Renewable Consumption Obligations (RCOs). On the other hand, there are States (like Rajasthan and Tamil Nadu) where there is very high potential of RE sources.

        It is in this context that the concept of Renewable Energy Certificates (REC) assumes significance. This concept seeks to address the mismatch between availability of RE sources and the requirement of the Designated Consumers (DCs) to meet their RCO. It is also expected to encourage the RE capacity addition in the States where there is potential for RE generation as the REC framework seeks to create a national level market for such generators to recover their cost.

        The Central Electricity Regulatory Commission (CERC) notified the Regulation on Renewable Energy Certificate (REC) Regulations, 2010 (Terms and Conditions for Recognition and Issuance of Renewable Energy Certificates for Renewable Energy Generation), on 14th January 2010. Over time, four amendments were introduced to the 2010 Regulations to refine and improve the REC mechanism.

        Further, in response to stakeholder feedback and drawing on over a decade of implementation experience, CERC notified the revised REC Regulations, 2022 in May 2022, which came into effect from 5th December 2022 These new regulations repealed the earlier REC Regulations, 2010 and all their subsequent amendments.

        The REC framework, as revised in 2022, is expected to further strengthen the promotion of renewable energy, facilitate cost recovery for RE generators, and support the development of a national electricity market based on non-fossil fuel energy sources.

Salient Features of the REC Framework

• The Central Electricity Regulatory Commission (CERC) has designated the National Load Despatch Centre (NLDC) as the central level for registration of RE generators participating in the Renewable Energy Certificate (REC) scheme.
• The RE generators will have two options - either to sell the renewable energy as green energy or to sell the electricity generation and environmental attributes associated with RE generation separately. On choosing the second option, the environmental attributes can be exchanged in the form of REC.
• The Central Agency will issue the REC to RE generators.
• The value of One Renewable Energy Certificate (REC) shall be equivalent to 1 Megawatt-hour (MWh) of electricity generated and injected into the grid from renewable energy sources, or deemed to be injected in the case of self-consumption by eligible captive generating stations based on renewable energy sources.
  (Exceptions apply where a Certificate Multiplier is provided.)
• The Certificates issued shall remain valid until they are redeemed.
• To promote the adoption of newer renewable energy technologies, the fungibility of RECs across different technologies is allowed, and technology-specific multipliers are provided.
• The Certificate Multiplier are provided to renewable energy generating stations and captive generating stations based on renewable energy sources that are commissioned on or after the effective date of the CERC REC Regulations, 2022 (i.e., 05.12.2022).
• The table below shows the Certificate Multipliers applicable to different renewable energy technologies for a period of three years

Renewable Energy Technologies	Certificate Multiplier
On-shore Wind and Solar	1
Hydro	1.5
Municipal Solid Waste and Non-fossil fuel-based cogeneration	2
Biomass and Biofuel	2.5

• The multiplier shall remain valid for a period of fifteen (15) years from the date of commissioning of such renewable energy generating station or captive generating station
• The Hon’ble Commission may, from time to time, review and revise the Certificate Multiplier, based on the maturity level and cost trends of various renewable energy technologies.
• The Renewable Energy Certificates (RECs) shall be exchanged in the Power Exchanges approved by the Central Electricity Regulatory Commission (CERC) at a discovered market price on the second and last Wednesday of each month or through an electricity trader at mutually agreed prices mutually agreed between eligible entities and the electricity traders, on all working days.
• The Designated Consumers (DCs) i.e., distribution companies, Open Access consumer, Captive Power Plants (CPPs) shall have the option purchase Renewable Energy Certificates (RECs) to fulfil their Renewable Consumption Obligations (RCOs). Pertinently, The RCO is a mandatory obligation notified by the Ministry of Power (MoP) under the Energy Conservation Act, which requires specified entities to ensure a minimum share of their energy consumption is sourced from non-fossil (renewable) sources by Generating and consuming their own renewable energy (RE) power or Purchasing Renewable Energy Certificates (RECs).

Eligibility for Issuance of Certificates

Following entities will be eligible for the issuance of Certificates:
i. Renewable energy generating stations,
ii. Captive generating stations based on renewable energy sources,
iii. Distribution licensees, and,
iv. Open access consumers,

1. A REGS/CGP will be eligible for issuance of Certificates, if it meets the following conditions:

• The tariff of such REGS, for part or full capacity, has not been either determined or adopted under section 62 or section 63 of the Act respectively, or the electricity generated is not sold directly or through an electricity trader or in the Power Exchange, for RPO compliance by an obligated entity. In case, the part capacity of REGS is not tied up for sale to an obligated entity for RPO compliance, energy from such capacity will be eligible for issuance of REC.
• REGS selling power to the obligated entities including Distribution Company under MoU Route directly or through traders would be eligible under REC mechanism if such sale is not being accounted for RPO compliance of the obligated entity.
• REGS participating in IDAM (Integrated day Ahead market) and selling energy in the conventional segment of IDAM in case their bids remain uncleared in the RE segment of the IDAM. Such energy will be eligible for issuance of REC.
• RE generators not scheduling energy due to regulation of access to power in case of non-payment of dues as per Late Payment Surcharges and Related Matter Rules, 2022 and selling energy directly or through an electricity trader or in the Power Exchange, provided that such energy is not used for RPO compliance by an obligated entity. Energy from such regulated capacity shall be eligible for issuance of REC.
• Such REGS has not availed any (i) waiver of or concessional transmission charges or (ii) waiver of or concessional wheeling charges.
• Such REGS is grid connected

2. A CGP meeting the conditions as specified above will be eligible for issuance of Certificates. However, the Certificates issued to such CGP to the extent of self-consumption, will not be eligible for sale.
An obligated entity being a distribution licensee or an open access consumer, which purchases electricity from renewable energy sources in excess of the renewable purchase obligation as determined by the concerned State Commission will be eligible for issuance of Certificates to the extent of purchase of such excess electricity from renewable energy sources.

Accreditation of eligible entities under REC mechanism

Accreditation to the eligible entities connected to the intrastate transmission system shall be granted by the State Agency in which such eligible entities are located. Accreditation to the eligible entities connected to the inter-State transmission system shall be granted by the RLDC of the region in which such eligible entities are located.

Registration of eligible entities under REC mechanism

Registration to the eligible entities which are accredited by State Agency / RLDC and which are deemed accredited (Discom and Open Access Consumers) will be granted by the Central Agency.

Accounting of Energy generation

Registered Eligible entity being REGS and CGP based on Renewable Energy will apply to SLDC / RLDC for issue of Energy Injection Report (EIR) through REC portal. Based on application received from REGS and CGP based on Renewable Energy, SLDC / RLDC will issue EIR to eligible entity after verification of data.

Issuance of REC to eligible entities

Registered Eligible entity being RE Generator will apply on REC portal for issuance of REC based on EIR issued by SLDC / RLDC and upload corresponding documents on portal. Central agency will issue the REC to applicant after verification of data.
Registered Eligible entity being Discom and Open Access Consumer will apply on REC portal for issuance of REC based on recommendation issued by SERC / JERC and upload corresponding documents on portal. Central agency will issue the REC to applicant after verification of data.
Each Certificate issued under REC Regulations will represent one Megawatt hour (MWh) of electricity generated from renewable energy sources and injected or deemed to be injected (in case of self-consumption by eligible CGP) into the grid.

Trading of REC

For trading of REC through Power Exchanges, Power Exchange will apply for buyer code and seller code to Central Agency. Central Agency will issue buyer code, seller code to Power Exchanges. During trading session, Central agency will provide eligible seller list and defaulter seller list to Power Exchange for Trade.
For trading of REC through Electricity Traders, Electricity Trader will apply for buyer code and seller code to Central Agency. Central Agency will issue buyer code, seller code to Electricity Trader. Trader will apply for trade on REC portal and Central Agency will approve the trade.

Redemption of REC

Central Agency after trade will redeem and extinguish the sold REC from the seller account on First in First Out basis. Also, Central Agency will redeem the REC which are self-retained by RE Generator on First in First Out basis.

To act as repository of transactions in REC and maintain Registry of REC

Central Agency will keep record of each transaction of REC regarding issuance, Exchange and redemption and will act as repository of REC.