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CERC Notifies First Amendment to Renewable Energy Certificate Regulations, 2026
The Central Electricity Regulatory Commission (CERC), vide Notification no. RA-14026(11)/1/2022-CERC dated March 24, 2026, has notified the Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) (First Amendment) Regulations, 2026, thereby amending the Renewable Energy Certificate (REC) framework under the principal 2022 REC Regulations. The revisions are aimed at expanding participation in the REC mechanism, strengthening compliance pathways for renewable consumption obligations, and aligning the REC regime with emerging market instruments such as Virtual Power Purchase Agreements (VPPAs).
The Amendment Regulations insert key definitions, including “Designated Consumer” (aligned with the Energy Conservation Act, 2001), “Renewable Consumption Obligation” (RCO), and VPPAs (aligned with the Power Market Regulations, 2021), thereby aligning the REC framework with evolving regulatory and market structures.
One of the most consequential amendments relates to the expansion of eligibility criteria under Regulation 4 of the principal regulations. The Amendment Regulations expressly permit participation of captive renewable generating stations that do not satisfy the captive plant conditions prescribed under the Electricity Rules, 2005 but undertake self-consumption of renewable energy. This clarification significantly enlarges the scope of the REC mechanism by bringing within its ambit a category of captive renewable generators that were previously outside the eligibility framework.
The Amendment Regulations also introduce a clear procedural timeline for REC issuance. Distribution licensees and open-access consumers are now required to apply for issuance of certificates within three months from certification by the concerned State Commission regarding excess renewable procurement beyond applicable Renewable Purchase Obligation (RPO) requirements, failing which certificates shall not be issued. This provision strengthens procedural discipline within the REC issuance process and ensures timely compliance tracking within the renewable procurement ecosystem.
The Amendment Regulations further revise the certificate multiplier structure applicable to eligible renewable generating stations Regulation 12. For projects commissioned between December 5, 2022, and March 24, 2026, the following multipliers have been specified:
- For solar and on-shore wind- multiplier of 1;
- For hydro- multiplier of 1.5;
- For municipal solid waste and non-fossil fuel-based cogeneration- multiplier of 2; and
- For biomass and biofuel-based projects- multiplier of 2.5.
For projects commissioned thereafter, multipliers will be determined through a principles-based methodology under Appendix-1 incorporating:
- tariff range;
- technology maturity; and
- capacity credit or peak-support contribution.
The revised multiplier framework introduces flexibility and ensures that REC incentives remain responsive to technological evolution and system-level grid support characteristics.
The assigned multiplier remains valid for 15 years from the date of commissioning, after which certificates are issued at the base rate of one REC per megawatt hour (MWh) of electricity generated or injected, thereby maintaining continued participation while rationalising long-term incentive structures. This clarification improves long-term certainty for renewable project developers participating in REC-linked revenue structures.
A new Regulation 14A has been introduced which governs RECs issued under VPPAs, providing that:
- RECs generated from VPPA-linked renewable projects shall automatically stand transferred to the consumer or designated consumer;
- Such certificates can be utilised for compliance with either RPO or RCO requirements; and
- upon transfer, such certificates shall stand extinguished.
Importantly, the Amendment Regulation clarifies that certificates to the credit of the consumer or the designated consumer, over and above the applicable RPO or RCO requirements, can be carried forward for compliance in subsequent years but cannot be traded on power exchanges, thereby preserving the integrity of compliance-linked certificate utilisation.
Overall, the Amendment Regulations introduce a calibrated update to the REC framework by expanding eligibility, tightening procedural timelines and transitioning to a principle-based multiplier regime. The recognition of VPPAs and alignment with RCO requirements reflect evolving market practices, and are likely to enhance flexibility while strengthening compliance discipline in the REC mechanism.
