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Solar power firms in a jam over poor implementation of REC norms

According to reports, most States are not honouring the Renewable Energy Certificates (REC) mechanism, launched to promote solar power generation in the country, leaving such power companies in financial strain, according to industry representatives.

The REC mechanism, launched in 2010, sets higher purchase obligation of renewal power for distribution companies and other obligated entities (which naturally creates higher demand for renewable power), and issues REC certificates to energy generators.

However, the poor implementation of the mechanism has led Rays Power to knock at the doors of the Appellate Tribunal for Electricity (APTEL), making various state regulatory commissions respondents.

“If the REC mechanism is extended as per the national solar policy, the per unit purchase price works out to about Rs 9.30. In fact, we are now getting only Rs 2.75 per unit through third party sales as there is no power purchase agreement obligation,” Rahul Gupta, Director of Rays Power, told Business Line.

“This (poor implementation of the mechanism) is making projects which have come up based on REC mechanism financially unviable. Therefore, we have approached APTEL seeking justice. The Central Electricity Regulatory Commission is also looking into the matter,” he said.

The company has set up three solar parks in Rajasthan near Bikaner with a total installed capacity of 60 MW and expects to take the capacity to 100 MW by March 31.

Narender Surana, Managing Director of Surana Ventures, said: “The sector with so much promise is not being given the due importance it deserves. Therefore, many projects developers, who have based their projects on the REC mechanism, are forced to sell at a tariff of about Rs 3 per unit. If the mechanism were to be implemented, developers would get Rs 9.30.”

Gautham Nalamada, Managing Director of Photon Energy, said, “There is no movement in the REC mechanism. There is also no clarity on its future. Barely 8-10 per cent is being purchased by some companies to meet the renewable purchase obligation.”

Rays Power clients include Rajasthan Patrika and food and beverage makers Haldiram and Bikaji for whom it has set up units.

The Indian Wind Power Association has also filed a similar petition at APTEL.

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