Please explain about Forbearance and Floor Prices for RECs
Forbearance Price: It is the highest difference between the CERC tariff and the APPC across states.
Floor Price: This is the price to keep the project viable in terms of meeting the O&M expenses, Interests on loan and working capital, principal repayment etc. It is taken as the highest difference between the minimum requirement for project viability and respective state APPC of pervious year.
The proposed downward revision is in line with the practices in other countries (say Germany) where the Feed-in-Tariff (FiT) is periodically reduced. It is known as digression and is done to ensure that the subsidy (offered as FiT) follows the falling market prices of the renewable energy systems. The details can be found on this webpage of CERC.
If you want any further clarification, feel free to contact us