Weekly Update: India’s largest solar REC project of 33 MW commissioned

Weekly Update: India’s largest solar REC project of 33 MW commissioned

India’s largest solar REC project of 33 MW was commissioned last week. The promoter of the plant is Giriraj Enterprises, which has diversified business interests. Sterling and Wilson was responsible for the EPC for the entire 33 MW and will also be responsible for the Operation and Maintenance (O&M) of the plant for the next five years.

  • The project estimates an average of 53,000 RECs per annum, which will boost the solar REC supply in the market
  • Unless demand is corrected, the future of the REC market looks grim due to non-enforcement of RPOs
  • Tamil Nadu seems to be set to launch its own state specific solar REC market, monitored and enforced by the state DISCOM – TANGEDCO

The project is registered under the REC registry as three separate projects of 11 MW, 19 MW and 3 MW. The project was accredited on March 5th 2013 and registered on March 21st 2013.

The project has entered into a Power Purchase Agreement (PPA) with the local Distribution Company (DISCOM) in Rajasthan. The PPA is signed at the Average Pooled Purchase Cost of power paid by the DISCOM (the exact price is unknown). RECs will be availed over and above the PPA. The project estimates an average of 53,000 RECs per annum. This will boost the solar REC supply in the market. Solar RECs are currently trading close to the forbearing price of INR 13,400 per REC. This is in contrast to the non-solar REC market, which is trading at the floor price of INR 1,500 per REC. This difference is largely due to the constraint of supply of solar REC on the market (refer). The promoter plans additional solar REC projects in the coming financial year (exact capacity unknown). This will definitely ease supply issues and is likely to drive down REC trade prices.

The REC market still remains suspect due to the non-enforcement of the RPO on obligated entities. Although there have been a few announcements and notifications from the CERC with regards to enforcements, nothing concrete has manifested. Unless demand is corrected, the future of the REC market looks grim.

On the other hand, Tamil Nadu seems to be set to launch its own state specifc REC market that caters to the Solar Purchase Obligations (refer). The SPOs shall be monitored and enforced by the state DISCOM – TANGEDCO. Since all SPO obligated entities are connected to the grid via TANGEDCO, this gives TANGEDCO more leverage in monitoring and enforcing the SPO. It remains to be seen how the state specific RECs relate to the national RECs. Nevertheless, state specifc REC are likely to be more successful from an enforcement perspective when compared to the national REC market.

This post is an excerpt from this week’s INDIA SOLAR WEEKLY MARKET UPDATE. Sign up to our mailing list to receive these updates every week.

You can view our archive of INDIA SOLAR WEEKLY MARKET UPDATES here.

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