According to reports, the Central Electricity Regulatory Commission has suggested a 15 to 30 per cent cut in prices for renewable energy certificates (RECs) effective April 2012 for five years.
This move is intended to make REC trading attractive. The CERC has reduced the forbearance price for non-solar REC to Rs 3.3 a unit (Rs 3,300/ MWh), while keeping the floor price at the current level of Rs 1.5 a unit (Rs 1,500/MWh).
For solar REC the forbearance price has been reduced to Rs 13.4 /unit (Rs 13,400/MWh) from Rs 17/unit (Rs 17,000/MWh) and floor price to Rs 9.3/unit (Rs 9,300/MWh) from Rs 12/unit (Rs 12,000/MWh).
But, the industry has been voicing its concern as they felt that downward price revision will jeopardise the flow of investments in green projects. The industry has been seeking that the price should be kept at the same level for the REC mechanism, which is still at a nascent stage to be stabilised.
The REC mechanism is meant to provide an additional stream of revenue for green energy project proponents.
The trading is confined to non-solar projects such as wind power, bio-mass and hydro-electric.
Most of the stakeholders felt that there is a need for longer term control period as RE project developers as well as lenders seek a long term visibility to make necessary decision for participating in the REC mechanism upon evaluating price risk and off take risk.