AAI Urges CERC for Price Correction in RE Certificates to Avoid Industry Burden

The Aluminium Association of India (AAI) has urged power sector regulator Central Electricity Regulatory Commission (CERC) for price correction in the Renewable Energy Certificates (RECs) in order to avoid the unnecessary burden on the industry.

AAI requested to immediately look into the skewed market of REC which, according to it, is resulting in artificial demand and price rise in the power exchange.

On this matter, Rahul Sharma, vice-chairman of Aluminium Association of India, said, quoted PTI that, the association feels that it is apparent that the prices of Solar RECs in the last one year have shot up by over 125 percent from Rs 1,000/MWhr to Rs 2,250/MWhr, putting an additional burden of Rs 1.25/kWh of RE energy compliance for all consumers.

Sharma further added that this huge burden on the consumers is due to non-revision of REC prices since 2017 by the regulator, despite steep fall in RE generation costs.

In a recent representation to the CERC, the AAI, which was formed to cater the needs of Indian Aluminium industry, said quoted PTI that “there is an acute shortage of RECs in the market which has prompted the market to be a sellers one. REC prices have spiked up in past 12 months to as high as Rs 2.25/kWh for Solar RECs while it is a known fact that Solar power itself has been getting auctioned at an average rate of Rs 2.50/kWh since FY17-18.”

The primary reason behind illiquidity in the power exchange or REC market for failed trades is that the utilities or demand-side participants understand that the actual price of REC is much lower than the floor price allowed by the Commission and their prices are expected to go down in time.

Sharma also said that “India has seen a steep increase in Renewable generation with installed RE capacity reaching 82,000 MW in March 20. While the RE generation capacity has grown rapidly, even more, rapid has been the pace of increase in RPO burden on the consumer. This is primarily due to the delay in much-needed price band correction which is regulated.”

Meanwhile, the current market is facing over 90 per cent deficit in the supply of REC, the representation said adding that the Revised Tariff Policy, 2016 provides discretion to the Commission to prescribe a vintage based REC multiplier in order to grant a higher or lower number of RECs.