CERC Amends REC Rules, Introduces VPPA Framework and Revises REC Multipliers

The Central Electricity Regulatory Commission (CERC) has notified the Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) (First Amendment) Regulations, 2026, introducing changes to the Renewable Energy Certificate (REC) framework to widen eligibility, regulate Virtual Power Purchase Agreements (VPPAs) and revise certificate multipliers.

The amendment has inserted new definitions for 'Designated Consumer', 'Renewable Consumption Obligation' (RCO) and 'Virtual Power Purchase Agreement' (VPPA) in the REC regulations. RCO has been defined as the minimum share of electricity consumption from non-fossil sources required under the Energy Conservation Act, 2001, while VPPA has been aligned with the definition under the CERC Power Market Regulations, 2021.

The regulations expand REC eligibility to renewable energy generating plants with self-consumption that do not meet the conditions of a captive generating plant under the Electricity Rules, 2005. Such projects will now be permitted to participate in the REC mechanism.

CERC has also prescribed a timeline for issuance of certificates to distribution licensees and open access consumers procuring renewable power beyond their Renewable Purchase Obligation. Applications for issuance of RECs must be submitted within three months from the date of certification by the concerned State Commission. No certificate will be issued for applications filed after the prescribed period.

A new Regulation 14A has been inserted to govern the treatment of RECs under VPPAs. Under the provision, RECs issued to an eligible renewable energy generating station operating under a VPPA will stand transferred to the consumer or designated consumer party to the agreement.

The transferred certificates may be used by the consumer or designated consumer to meet Renewable Purchase Obligation or Renewable Consumption Obligation requirements. Once utilised for compliance, the certificates will be extinguished by the Central Agency.

The regulations permit carry forward of certificates in excess of compliance requirements to subsequent years. However, such certificates will not be eligible for sale through power exchanges or traders.

The amendment also revises the REC multiplier structure. For projects commissioned after December 5, 2022 and before the new regulations come into force, the existing multiplier framework will continue to apply. Solar and onshore wind projects will continue to receive a multiplier of 1, hydro projects 1.5, municipal solid waste and non-fossil fuel-based cogeneration projects 2, and biomass and biofuel projects 2.5.

For projects commissioned after the amendment comes into effect, REC multipliers will be determined on the basis of tariff range, technology maturity and capacity credit or peak support.

CERC has assigned a weightage of 40 per cent to tariff range, 30 per cent to technology maturity and 30 per cent to capacity credit or peak support in determining the revised multiplier structure.

Under the new framework, solar and onshore wind projects have been assigned a multiplier of 1.0, hybrid renewable energy projects 1.5 and small hydro projects 2.5. Biomass, biofuel, municipal solid waste, cogeneration, pumped hydro, large hydro and renewable energy-based battery energy storage systems have been assigned a multiplier of 3.0, while offshore wind projects have been assigned the highest multiplier of 4.0.

The revised regulations provide that the multiplier assigned to a project will remain valid for 15 years from the date of commissioning. Thereafter, one REC will be issued for every megawatt-hour of electricity generated and injected, or deemed to be injected, into the grid.