SC Cancels Green Energy Association Appeal on CERC’s REC Price Revision

The apex court has dismissed the application of Green Energy Association (GEA) seeking a stay on price revision of REC (Renewable Energy Certificates) by power sector regulator Central Electricity Regulatory Commission (CERC).

The Supreme Court (SC) bench headed by Justice Arun Mishra took cognizance of a matter on June 16, 2020, and dismissed the application of Green Energy Association for stopping REC price revision by CERC.

Earlier, the Appellate Tribunal of Electricity (APTEL) had also dismissed the petitions filed by GEA against the issue of new forbearance and floor prices for solar and non-solar RECs by CERC. Then the stakeholders decided to appeal in the Supreme Court.

Under the Renewable Purchase Obligation (RPO), obligators like Discoms, Captive Power Plants (CPPs) and other consumers, have to either buy electricity generated by specified green sources or buy, in lieu of that, RECs from the market.

The government had introduced RECs with an aim to promote and incentivize green energy and facilitate the compliance of RPO by obligator/conventional power generators, who do not have solar or other renewable energy generating resources like land, roof or 270 days sunshine or located in coastal areas facing frequent cloudy weather.

GEA contended that each REC it holds, the company should be given 3.5 certificates since the minimum value of certificates was reduced by 3.5 times i.e. from Rs 3,500 to Rs 1,000 by CERC. APTEL reduced the price band for solar RECs for minimum/floor price from Rs 3,500 to Rs 1,000, and max/forbearance price from Rs 5,800 to Rs 2,400, as per the IANS report.

As per the reports, GEA in its application said that “if this is permitted, even if the relief sought in the appeal is granted by the court, that is Supreme Court grants 3.5 certificates for each certificate, there would be no guaranteed minimum at which the Appellant (GEA) can sell those certificates. The very purpose of asking for 3.5 certificates for one certificate will get defeated i.e. the Appellant companies will lose value drastically”.

Recently, Aluminium Association of India (AAI) urged power sector regulator CERC for price correction in 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 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 per cent from Rs 1,000/MWh to Rs 2,250/MWh, putting an additional burden of Rs 1.25/kWh of RE energy compliance for all consumers.

As per the sources, this is a significant development, as the high prices of RECs had been causing an additional burden to the tune of Rs 654 crore annually (based on FY19-20 figures from Power Exchange) on the consumers in power tariffs.

Besides, industry experts opined that the impact would be much higher in the coming years when compliance levels are expected to rise. Meanwhile, the top court summarily dismissed any prayers of stay on CERC order realizing the impact that the delay in regulations may be causing.