CERC looking for consultants for Regulatory Impact Assessment of REC Mechanism

Central Electricity Regulatory Commission (CERC) floated terms of reference (tor) for assessment of regulatory impact of renewable energy certificate mechanism.

Renewable Energy Certificate (REC) Mechanism, a market based instrument, was introduced in 2010 by Central Electricity Regulatory Commission (CERC) through notification of CERC (Terms and Conditions for Recognition and Issuance of Renewable Energy Certificates for Renewable energy Generation) Regulations, 2010 (henceforth REC Regulations) on January 14, 2010. The REC Mechanism was designed by considering energy generated from Renewable Energy (RE) generator into two components to facilitate inter-state procurement of green power through market mechanism.

The implementation of regulations enables the obligated entities to meet their respective Renewable Purchase Obligation (RPO) targets through purchase of REC which may have been generated in other States. Further, the Regulations notified by the CERC also envisage the price of the REC to be determined through market mechanism at the exchange platform only. However, in order to safeguard the interests of various stakeholders it is also envisaged that the price of REC shall be governed by the forbearance (ceiling) price and a floor price to be determined by the CERC from time to time. The CERC, in order to operationalize the REC Mechanism, has issued the orders in the matter of determination of forbearance and floor price for the REC Framework.

CERC notes that the Consultants shall undertake study including detailed consultation with various stakeholders to assess the Regulatory Impact of REC Mechanism. Some of the key issues as currently identified and to be covered as part of this Study shall be as under:

  • To study and suggest the methodologies which need to be adopted for Regulatory Impact Assessment of renewable energy certificate based on National and International Experiences.
  • To develop RIA tools for impact assessment of CERC REC Regulations.
  • To undertake Regulatory Impact Assessment of the CERC REC Regulations

Study of Salient Features and Objectives

  • To study and list down salient features and objectives of framing regulations and subsequent amendments in:-
  • CERC approved Procedures and Orders regarding REC Mechanism.
  • Amendments in the REC Regulations and its implications.
  • To identify issues arising in the context of the CERC REC Regulations including based on judicial pronouncement

Impact on Eligible Entities

  • To undertake impact analysis of, including but not limited to REC Regulations and its subsequent amendments, REC Procedures, Notification of Forbearance and Floor Price of REC etc. for the Eligible Entities.
  • To analyse inventory statements of renewable energy generators and reflect on their performance (e.g. status of inventory, participation in trading sessions, clearing ratio etc.) in the light of amendments in REC Regulations, Floor and Forbearance Price, judicial pronouncements etc.
  • To analyse and compare the trends in preference of routes opted for off-take of power by eligible entities.
  • Review of existing methodology of interaction with Central Agency and State Agency, Power Exchanges and suggest modifications required if any.
  • Impact analysis of external factors like Government policies and taxes, duties, funding etc.

Impact on Obligated Entities

  • To undertake impact analysis of including but not limited to REC Regulations and its subsequent amendments, REC Procedures, Notification of Forbearance and Floor Price of REC etc. for Obligated Entities buyer/beneficiary.
  • Analysis of participation of obligated entities in the REC mechanism.
  • Impact analysis in terms of availability of RECs, trends of participation in trading sessions and volume purchased etc.
  • Comparison of cost of RPO Compliance through REC Mechanism vis-à-vis other modes of RPO Compliance

Impact on Central Agency, State Agency and Power Exchanges

  • To undertake impact analysis of the methodology adopted by State Agency and Central Agency while granting accreditation and registration to eligible renewable energy generators.
  • Review of parameters of operational efficiency (e.g. time taken for final grant of accreditation or registration, pendency of applications, petitions filed with SERCs and CERC, manpower and technical support, communication with stakeholders etc.).
  • Grading of State Agencies involved in the REC mechanism for promoting better discipline and efficiency.
  • Identifying barriers and challenges before State Agency, Central Registry and Power exchange and suggest way forward to overcome these barriers.

Consultants also have to review extant norms, financial, legal as well as technical for accreditation and registration of renewable energy generators by State Agency and Central Agency respectively, issuance of RECs by Central Agency and redemption of RECs.  Beside Analysis of CERC notified floor and forbearance price in the light of the emerging market realities like tariff discovery through competitive bidding process.

They will have to review extant reports issued by the Ministry, Other literature published by other organisations, institutions, think-tanks etc. Analyse the key findings and the recommendations in the reports and recommend changes which shall enhance the operational efficiency.

Qualification Criteria:

The Consultant should have completed at least three assignments in the last five years of assisting SERC/CERC/FOR/MNRE on Renewable Energy related matters. The consultant should also have experience in advising on regulatory issues regarding Renewable Energy in general and Renewable Energy Certificate Mechanism in particular.

The bidder is expected to have complete knowledge of Electricity Act,2003 as well as policies, Rules, Regulations and guidelines issued under the Act.

The Consultant should have legal and financial background. 6.4 The organization should not be blacklisted/debarred for conducting studies or consultancy services, by  any Government/semiGovernment/quasi-judicial agency. An undertaking in this regard shall be given by the consultant in the format at Annexure-III. 6.5 The Turnover and Net Worth of the Consultant should be a minimum of Rs.50 lakh.

CERC notes that the above assignment shall commence with effect from [the date of this agreement] and shall be valid for a period of 120 days.

From 2010 onwards, capacity of 4,469 MW has been registered under REC mechanism. These included 1,489 MW capacity from older projects (before 2010) and the remaining 2,980 MW capacity have been registered under REC mechanism after 2010. In addition, around 7% of new renewable energy investment in the period 2010-2017 came through REC mechanism.

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