CERC Proposes REC Reform with Expanded Access, VPPA Framework and Revised Certificate Multipliers

The Central Electricity Regulatory Commission (CERC) has issued draft amendments to the Renewable Energy Certificate (REC) Regulations, 2022, aiming to expand eligibility, extend compliance timelines, and redesign incentives to support newer and grid-friendly technologies.

The proposals clarify that renewable energy projects set up for self-consumption, such as factory-owned solar plants, will now be eligible for RECs, even if they don’t qualify as captive generating plants. This change is expected to encourage commercial and industrial players to monetize the environmental attributes of their own green power.

Distribution companies (DISCOMs) have also been given more flexibility, with the deadline to apply for RECs shifted from three months after the close of the financial year to three months from certification by state electricity regulators.

The most significant reform lies in the revamp of the certificate multiplier system. Further, REC allocation will be based on a weighted scoring model considering tariff levels, technology maturity, and capacity to supply during peak demand. Mature technologies such as solar and wind will continue with a 1.0 multiplier, while higher values are reserved for emerging and grid-supportive options,  from 2.5 for large hydro and biomass projects to 3.5 for offshore wind. Battery energy storage and pumped hydro will receive a 3.0 multiplier. Multipliers will apply for 15 years, after which projects will earn 1 REC per MWh.

The draft also introduces a legal framework for Virtual Power Purchase Agreements (VPPAs). Under the new rules, RECs from generators will be automatically transferred to the corporate buyers, who can use them to meet Renewable Purchase Obligations (RPOs) or Renewable Consumption Obligations (RCOs). These RECs cannot be traded and will be extinguished once used, closing the door to double counting.

In addition, the amendment adds new definitions, including 'Designated Consumer', 'Renewable Consumption Obligation,' and 'Virtual Power Purchase Agreement,' to align REC rules with broader energy and climate regulations. CERC has invited comments and objections from stakeholders until October 23, 2025.