According to reports, the Central Electricity Regulatory Commission (CERC) has said that it cannot do anything in terms of enforcing ‘renewable purchase obligations’, that being not its remit.
Renewable Purchase Obligation refers to the obligation imposed by law on some entities to either buy electricity generated by specified ‘green’ sources, or buy, in lieu of that, ‘renewable energy certificates (RECs)’ from the market. The ‘obligated entities’ are mostly electricity distribution companies and large consumers of power. RECs are issued to companies that produce green power, who opt not to sell it at a preferable tariff to distribution companies.
In the last few months, trading in RECs – which happens for two hours on the last Wednesday of each month on one of the two power exchanges – has been very tepid, because those supposed to buy them are not doing so.
For instance, in January, 17.41 lakh non-solar and 3,559 solar RECs were offered for sale, but only 1.93 lakh and 2,308 respectively were bought. Many green power companies have been left with RECs that they are not selling in the market.
So, who is to ensure that the obligated entities fall in line and discharge their obligations? According to CERC, the various state electricity regulatory commissions have to do it.
In a recent ruling for extending the life of RECs from 365 days to 730 days from the date of issue, the CERC has observed that the success of the renewable energy capacity addition programme in general and REC mechanism in particular are largely dependent on enforcement of Renewable Purchase Obligation (RPO).
“This Commission does not have the jurisdiction to enforce the RPO on the obligated entities in the States. The responsibility of setting RPO targets and implementation thereof rests with the State Electricity Regulatory Commissions (SERCs).
Therefore, SERCs would have to strictly monitor RPO compliance made by the obligated entities and enforce compliance as per their REC regulations to make the REC programme successful.
“This Commission only hopes and expects that the SERCs will ensure and monitor compliance of RPO targets by obligated entities in their respective States’ CERC says. Since RECs are governed by the REC Regulations of this Commission, the maximum that this Commission can do is to extend the validity of RECs for a suitable period so that the RE generators get the opportunity to redeem the same.