CENTRAL ELECTRICITY REGULATORY COMMISSION NEW DELHI

Petition No. SM/016/2014 (Suo Motu)

Date of order: 30th September, 2014

Coram:                               Shri Gireesh B. Pradhan, Chairperson

Shri M. Deena Dayalan, Member

Shri A.K. Singhal, Member

Shri A.S. Bakshi, Member

ORDER

IN THE MATTER OF

Determination of Forbearance and Floor Price for the Solar REC

1. The existing REC framework provides that each certificate (REC) shall represent 1 MW hour of electricity generated from renewable energy source and injected into the grid. There is a minimum and maximum price of REC within which REC transactions can be undertaken. This has been provided to avoid adverse impact of price volatility. These are called the ‘floor price’ and ‘forbearance price.

2. The Central Commission in consultation with the Central Agency (National Load Despatch Centre) and Forum of Regulators (FOR) from time to time provides for floor price and forbearance price separately for Solar and Non-solar Renewable Energy Certificates. The REC Regulations provide for the guiding principles for determining the forbearance and floor price for solar and non-solar Certificates. The relevant provisions are extracted as under:

“Regulation 9 of REC Regulations Pricing of Certificate:

1. The price of Certificate shall be as discovered in the Power Exchange:

Provided that the Central Commission may, in consultation with the Central Agency and Forum of Regulators from time to time provide for the floor price and forbearance price separately for solar and non-solar Certificates.

2. The Central Commission while determining the floor price and forbearance price shall be guided inter alia by the following principles:

a) Variation in cost of generation of different renewable energy technologies falling under solar and non-solar category, across States in the country;

b) Variation in the Pooled Cost of Purchase across States in the country;

c) Expected electricity generation from renewable energy sources including:- i. expected renewable energy capacity under preferential tariff expected renewable energy capacity under mechanism of certificates;

d) Renewable Purchase obligation targets set by State Central Commissions”

3. Based on the above referred guiding principles, the Commission earlier came out with an Order dated 1.06.2010 in the matter of ‘Determination of Forbearance and Floor Price for the REC framework’ (suo motu Petition No.99/2010) and determined forbearance price and floor price for dealing in Certificates under the REC Regulations:

Table : Floor and Forbearance price

4. The above determined forbearance price and floor price were valid for the control period up to 31.03.2012.

5. Subsequently, based on the guiding principles specified in Para 3, the Commission vide its suo motu Order (No.142 / 2011) dated 13.06.2011 determined the following forbearance and floor prices for the control period from 1.04.2012 to 31.03.2017:

Table : Forbearance and Floor price

6. The Commission now proposes the following forbearance price and floor price for the Solar

REC :

i. Solar REC Floor price for the Solar projects commissioned on and after 4.2014: Rs. 3500 / Certificate

ii. Solar REC Forbearance price for the Solar projects commissioned on and after 4.2014: Rs. 5800/ Certificate

iii.        Solar projects that sell the electricity generated to the distribution licensee of the area in which the eligible entity is located, at the pooled cost of power purchase of such distribution licensee as determined by the Appropriate Commission, shall be issued Certificates, for one Megawatt hour of electricity injected into the grid, considering following Vintage Multiplier

(VM) :

Year of Commissioning         Multiplier

2013                                      1.47

2014                                      1.19

2015                                      1.00

1. iv. Solar projects that sell the electricity generated to any other licensee or to an open access consumer at a mutually agreed price, shall be issued Certificates for one Megawatt hour of electricity injected into the grid, considering following Vintage Multiplier (VM) :

Year of Commissioning         Multiplier

2013                                      0.74

2014                                      0.60

2015                                      0.50

v. Solar projects  which  are  CGP  shall  be  issued  Certificates  for  self  consumption  of one Megawatt  hour  electricity  generated  and  self  consumed.  considering  following Vintage Multiplier (VM) :

Year of Commissioning         Multiplier

2013                                      0.74

2014                                      0.60

2015                                      0.50

vi. The Vintage multiplier based on the above shall be provided for a period of 12 years, from the year of commissioning

vii.       The proposed Vintage Multipliers are derived based on the formulation as provided in the Regulation 7 of the Central Electricity Regulatory Commission (Terms and Conditions for recognition  and  issuance  of  Renewable  Energy  Certificate for Renewable Energy Generation) (Third Amendment) Regulations, 2014. This will be reviewed every year and on  such  review  the  revised  multiplier  shall  apply  for  projects  commissioned in  the respective years.

7. Detailed working of the proposal is attached as Annexure-1. Comments / suggestions/ objections of the stakeholders on the above proposal are invited by 30.10.2014. We direct that the matter  be  notified  for  hearing  on  4.11.2014  before  taking  a  final  decision  regarding  the Forbearance and Floor Price for the Solar REC framework.

Sd/-                                       Sd/-                                       Sd/-                                                       Sd/-

Click Below for the Complete Documents

CERC REC Regulation_Third Amendment Oct 2014.pdf Exp_memo30

CERC REC Regulation_Third Amendment Oct 2014.pdf Public_Notice30

CERC REC Regulation_Third Amendment Oct 2014.pdf Draft_notice30

CERC REC Regulation_Third Amendment Oct 2014