Energetica India 89 - May 2020

(Source: REC registry) Note: 1. 532 non-solar RECs were issued in March 2011 and 424 non-solarRECs were traded in March 2011 session 2. 249 solar RECs were issued in May 2012 and 10 non-solar RECs were traded 3. Trading in solar and non-solar RECs was suspended for 2 months of May 2017 and June 2017. Later trading in non-solar RECs resumed, however trading in solar RECs was suspend - ed for remaining months of FY 17-18 During the past 10 years of REC transaction, the REC market has faced two major challenges: a) Subdued participation by Distribution licensees: For the initial 6-year period, there was subdued participation by Distribution licensees as they were reluctant to purchase RECs due to their stressed financial position. Later, with the im - plementation of UDAY program by MoP, in FY 17-18 nearly 1.6 Crore Non Solar RECs were traded during the year. Similarly, after resumption of trading in Solar RECs in April-2018, nearly 71 lacs Solar RECs were traded in FY 18-19 b) Price band for trading in RECs The regulation specifies that REC shall be traded within the price band specified by CERC. When CERC notified a new price band on 30.03.2017, regulatory challenges were encoun- tered, trading in solar RECs was suspended from May-2017 till March-2018 session. For non-solar RECs, the final price of Non-solar RECs issued till 31.03.2017 is yet to be decided, the matter is still subjudice at the level of Hon’ble Supreme Court. Outlook for REC market The REC mechanism provides an opportunity for all the obli - gated entities to meet their RPO targets by purchasing solar and non-solar RECs at Power exchanges. The market based mechanism of trading in REC also provides signals for future investment in Renewable energy projects. With nearly 108 monthly REC sessions conducted till date, the next phase of trading in REC market would depend on follow - ing two factors: a) Continued focus on fulfilment of RPO: The requirement to fulfil RPO, whether by purchase of RECs or through direct purchase of RE generation, should be pur - sued strongly by the State Electricity Regulatory Commissions across the country. This is aligned to the need of the country to integrate renewable energy on a large scale basis. This would ensure that while RE sources may be concentrated in some parts of the country, the use of RE is far more widespread. b) Fungibility of RECs In case solar or non-solar REC is not available in sufficient quantity to meet the RPO target for the year then the obligated entity should be allowed to purchase the other type of REC to meet the shortfall. This would help the obligated entity to meet the RPO target for the year on composite basis. The flexibility in purchasing any type of RECs would help in easing the cash flow situation of renewable generating plants as RECs are sold in shortest possible time. 58 energetica INDIA- May_2020 RENEWABLE ENERGY