REC – Salient Features

What is a Renewable Energy Certificate (REC)?

The concept of Renewable Energy Certificate (REC) already exists successfully in Europe, USA and Australia and provides an additional source of revenue to renewable energy generators. They are tradable instruments similar to carbon credits and are also known by other functionally equivalent names such as Green Tags, Renewable Obligation Certificates or Tradable Renewable Certificates.

The RECs are divided into two categories: Solar Certificates and Non-Solar Certificates. They are market-based instrument to promote renewable energy and facilitate renewable energy purchase obligations amongst various stakeholders – distribution Licensees, Captive Consumers, or Open Access users.

An REC is deemed as certificate of power generated from Renewable Energy sources: 1 REC implies generation of 1 Mega Watt hour of renewable energy. It can be traded at the Power Exchanges.

Under the REC Mechanism, renewable energy is separated into two components – the commodity part – electricity – and the trad-able “environmental” attribute – REC. The REC is valid for 365 days and can be traded at the energy exchanges.

REC separates "Electricity" and "Green" components

Salient Features of REC

Participation Voluntary
REC Denomination
1 MWh
Validity
365 Days after issuance
Categories
1. Solar and 2. Non-Solar
Trading Platform
Power Exchange Only
Central Agency
National Load Despatch Center (NLDC)
Banking
Not Allowed
Borrowing
Not Allowed
Transfer Type
Only Single transfer; Repeated trade not allowed
Penalty for Non-Compliance
“Forbearance” Price (Max Price)
Price Guarantee
“Floor” Price (Minimum Price)
Price Discovery Mechanism
Closed Double-sided Auction*
Trading Calender
Last Wednesday of each month
Prading Period
13:00 — 15:00 hrs
Mrarket Clearing
17:00 hrs (Same Day)
Financial Settlement
Buyers pay Upfront (Same Day); Sllers receive next day
*As Advised by CERC