CERC Renewable Energy Certificate Amendment Regulations 2026: Updated Framework for RECs in India

On 30 March 2026, the Central Electricity Regulatory Commission (CERC) notified the CERC (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) (First Amendment) Regulations, 2026. These amendments update the framework governing the issuance, trading, and redemption of Renewable Energy Certificates (RECs) on Indian power exchanges. RECs have been a cornerstone of India's renewable energy compliance architecture since 2011, enabling obligated entities to meet their Renewable Purchase Obligations (RPO) by purchasing certificates that represent one megawatt-hour of electricity generated from eligible renewable sources. The 2026 amendment refines several aspects of this framework, reflecting the significant changes in India's energy market since the regulations were last substantively updated.

How the REC Mechanism Works

Under the Electricity Act, 2003, and regulations issued by CERC and State Electricity Regulatory Commissions (SERCs), distribution licensees and certain categories of open access consumers and captive power producers are required to purchase a specified percentage of their total electricity consumption from renewable sources. This is the Renewable Purchase Obligation (RPO). Entities that cannot source enough renewable power directly can fulfil their RPO by purchasing RECs from the power exchange. Each REC represents one megawatt-hour of renewable electricity generated by an eligible generator. Generators who sell their power at the average pooled purchase cost, rather than at a preferential tariff, are eligible to receive RECs for the renewable attribute of their generation. These RECs are then listed on power exchanges where obligated entities can buy them. The REC mechanism effectively unbundles the electricity component from the green attribute, allowing renewable energy to be valued and traded as a distinct commodity. This market-based approach supplements the direct procurement route and provides flexibility to obligated entities who may not have access to adequate renewable generation in their own states.

Key Changes in the 2026 Amendment

The First Amendment Regulations of 2026 introduce several changes to the terms and conditions for REC issuance and trading. Among the key updates are refinements to the eligibility criteria for renewable energy generators seeking REC accreditation, updated procedures for the registration and verification of generating stations, and revisions to the validity period and banking rules for RECs. The amendment also addresses the treatment of RECs from different renewable energy technologies, such as solar, wind, biomass, and small hydro, which have different cost structures and capacity factors. The regulations update the floor and forbearance price mechanisms that govern the price band within which RECs can be traded, reflecting changes in the cost of renewable energy generation since the original regulations were framed. Additionally, the amendment incorporates provisions for the interaction between the REC mechanism and the newly notified Carbon Credit Certificate (CCC) framework under the CERC Carbon Credit Regulations, 2026, addressing potential questions about double counting where a single renewable energy project may be eligible for both RECs and CCCs.

RPO Compliance and Enforcement

The updated REC framework must be read alongside India's RPO trajectory, which requires progressively higher percentages of renewable energy in the overall electricity mix. The Ministry of Power has set RPO targets that increase annually through 2030, with separate sub-targets for solar and non-solar renewable energy. Non-compliance with RPO carries penalties under the Electricity Act, 2003, and SERCs have the authority to initiate proceedings against defaulting distribution licensees and open access consumers. The REC mechanism provides the primary market-based pathway for RPO compliance, particularly for entities in states with limited renewable energy potential. The 2026 amendment strengthens the compliance framework by clarifying the obligations of power exchanges in facilitating REC trading, improving the transparency of trading data, and enhancing the monitoring and reporting requirements for accredited generators. State regulators are expected to align their RPO enforcement actions with the updated CERC regulations, creating a more uniform national framework for renewable energy compliance.

Practical Takeaways

Renewable energy generators currently accredited under the REC mechanism should review the amended regulations to ensure continued compliance with updated eligibility and registration requirements. Generators who have not previously participated in the REC market should assess whether the revised terms make participation commercially attractive, particularly if they are selling power at average pooled purchase cost rather than at preferential tariffs. Distribution licensees and open access consumers with RPO obligations should factor the updated price band and trading rules into their procurement planning for the current financial year. The interaction between RECs and CCCs is a new area that project developers and their legal advisors should monitor closely, as the rules on double counting could affect the combined value proposition of a renewable energy project. Power exchanges facilitating REC trading should update their systems and compliance processes to reflect the amended regulations. For corporate buyers pursuing ESG commitments and voluntary renewable energy procurement, the updated REC framework offers a transparent, exchange-traded instrument for demonstrating their green energy credentials. Overall, the 2026 amendment ensures that India's REC mechanism remains fit for purpose as the country scales up its renewable energy ambitions towards 500 gigawatts of non-fossil fuel capacity by 2030.