The Central Electricity Regulatory Commission (CERC) has accorded its permission for the trade of renewable energy certificates (REC) within Indian Energy Exchange Limited (IEX) and Power Exchange of India Limited (PXIL). The value of an REC will be equal to 1 MW-hour of electricity injected into the grid from clean energy sources.- The Commission has mandated that a double-sided closed bid auction with a uniform price solution be utilized as the price discovery mechanism for such contracts.
- The apex regulator will review the suitability of this methodology after one year, since trade in RECs is new to the Indian electricity market. The Commission may, at that time, prescribe changes on the basis of market feedback and effects on market liquidity and transaction volumes.
- A double-sided auction differs from a conventional auction process by the presence of many sellers and many buyers, as against one auctioneer and many bidders. The proposed auction will solicit bids from, both, sellers and the buyers of the RECs.
- Besides, uniform pricing for the transfer of RECs will provide for the same price for every accepted bid that will be set according to the price limit of the last accepted bid.
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