REC prices have moved from ₹400/MWh in May and June to ₹350/MWh on 27 August — just ₹3 above the CERC-determined RCO buyout price. The significance is not that ₹347 is a floor. It is that the market now has a published compliance alternative against which REC prices can be assessed.
MaxZen Energy Advisory | Electricity Markets & Regulation | 12 min read
Published 4 September 2026. Data and regulatory position as at 4 September 2026.
On 27 August 2026, the Indian Energy Exchange cleared its latest Renewable Energy Certificate session at ₹350 per REC. The RCO buyout price for FY 2025-26, determined by the Central Electricity Regulatory Commission (CERC) on 18 February 2026, is ₹347/MWh.
One REC represents the renewable attribute associated with one MWh of eligible generation, so the two prices are directly comparable.
The difference is only ₹3/MWh, or 0.9%.
That is the closest the traded REC price has come to the buyout since the buyout was finalized. Yet the path to ₹350 has not been linear. REC prices cleared at ₹337–340/MWh in February and March, climbed to ₹400/MWh in May and June, and then declined in every session from 24 June through 27 August.
The interesting question is therefore not whether the buyout is a price floor. The market has already shown that it is not.
The more relevant question is whether ₹347/MWh has become the reference point against which buyers now evaluate the value of an REC.
Our reading is yes — but with an important qualification. The available data cannot prove that the recent price decline was caused by the buyout itself. What it does show is that a published alternative compliance cost now sits directly inside the decision-making framework of RCO-obligated consumers.
With the FY 2025-26 compliance window running through 31 December 2026, that reference point is likely to become increasingly relevant as consumers finalize their compliance positions.
1. What the session data actually shows
IEX publishes REC trading data for each session. Looking at the complete record since the CERC buyout order provides a more useful picture than looking at individual monthly headlines.
| Session | Cleared price (₹/REC) | vs ₹347 buyout | Buy bids (lakh) | Sell bids (lakh) | Cleared (lakh) |
| 25 Feb 2026 | 337 | −2.9% | 30.18 | 13.59 | 8.24 |
| 11 Mar 2026 | 340 | −2.0% | 26.84 | 14.21 | 9.06 |
| 25 Mar 2026 | 340 | −2.0% | 22.19 | 32.20 | 19.88 |
| 8 Apr 2026 | 339 | −2.3% | 3.21 | 5.61 | 0.47 |
| 29 Apr 2026 | 370 | +6.6% | 5.35 | 1.59 | 0.71 |
| 13 May 2026 | 400 | +15.3% | 8.16 | 2.81 | 1.74 |
| 29 May 2026 | 400 | +15.3% | 6.41 | 6.46 | 4.36 |
| 10 Jun 2026 | 400 | +15.3% | 3.12 | 2.26 | 1.07 |
| 24 Jun 2026 | 395 | +13.8% | 3.56 | 5.58 | 1.43 |
| 8 Jul 2026 | 380 | +9.5% | 12.30 | 5.47 | 3.25 |
| 29 Jul 2026 | 376 | +8.4% | 7.00 | 6.01 | 3.86 |
| 12 Aug 2026 | 370 | +6.6% | 3.54 | 5.28 | 0.92 |
| 27 Aug 2026 | 350 | +0.9% | 3.96 | 5.32 | 1.99 |
Source: IEX REC session data, 25 February to 27 August 2026. One REC corresponds to one MWh. The ₹347/MWh buyout applies to FY 2024-25 and FY 2025-26.
Three observations stand out.
First, the buyout is neither a floor nor a ceiling
REC prices have traded on both sides of ₹347.
They were below the buyout in four sessions between February and April, reaching ₹337/MWh. They subsequently moved sharply above it, reaching ₹400/MWh in May and June.
The market therefore does not treat ₹347 as a mechanical ceiling.
Equally, the April price of ₹339 demonstrates that the buyout is not a hard floor.
The correct interpretation is more subtle: ₹347 is a reference value, not a price boundary.
Second, the August decline points to weaker demand
Between the July and August sessions, the more significant change occurred on the buy side.
Across the two July sessions, buy bids totalled 19.30 lakh certificates. Across the two August sessions, they fell to 7.50 lakh — a decline of approximately 61%.
Sell bids, by comparison, declined from 11.48 lakh to 10.60 lakh, or only around 8%.
The market therefore moved lower while certificates continued to be offered. The immediate evidence is more consistent with weaker buying pressure than a sudden disappearance of supply.
That distinction matters.
However, the session data cannot tell us exactly why buyers reduced their bids. Possible explanations include the timing of RCO procurement, changes in shortfall positions, off-exchange transactions, banking or self-retention of certificates, or simply weaker near-term demand.
We therefore would not describe the August decline as proof of a single causal factor.
Third, ₹350 is significant because of where it sits in the compliance cycle
The 27 August price is only ₹3/MWh above the FY 2025-26 buyout.
That would be unremarkable if ₹347 were simply another market price.
It is different because ₹347 is a regulator-published alternative compliance cost.
For an obligated consumer with an RCO shortfall, the relevant economic question is therefore not simply:
“What is today’s REC price?”
It is:
“What does it cost to acquire an REC compared with the alternative cost of addressing the shortfall through the buyout mechanism?”
That comparison becomes particularly relevant as the FY 2025-26 compliance window approaches its 31 December 2026 close.
The conclusion should nevertheless remain narrow.
Six months of REC sessions are insufficient to distinguish a genuine anchoring effect from the normal timing of compliance procurement, changes in demand, off-exchange purchases, banking, certificate retirement or thin market depth.
What the data does establish is that ₹347/MWh is now the clearest published compliance benchmark against which the traded REC price can be evaluated.
2. The buyout was published in February — and the number runs to 2030
The Ministry of Power specified the Renewable Consumption Obligation by notification S.O. 4421(E) dated 27 September 2025. It binds distribution licensees, open access consumers and captive users as designated consumers under the Energy Conservation Act, and gives three ways to discharge the obligation, in the alternative:
“(i) consumption of renewable electricity, either directly or through an energy storage system; (ii) purchased or self-generated Renewable Energy Certificates issued in accordance with regulations notified by the Central Electricity Regulatory Commission including Renewable Energy Certificates acquired under Virtual Power Purchase Agreements; and (iii) payment of the buyout price specified by the Central Electricity Regulatory Commission.”
CERC specified that price in Petition No. 12/SM/2025 (Suo-Motu) on 18 February 2026, fixing it upfront for six target years rather than annually in arrears.
| Target year | RCO for captive and open access designated consumers | Buyout price (₹/MWh) | Buyout per unit of obligation (paise/kWh) | Effective cost over obligated consumption (paise/kWh) |
| FY 2024-25 | 29.91% | 347 | 34.7 | 10.38 |
| FY 2025-26 | 33.01% | 347 | 34.7 | 11.45 |
| FY 2026-27 | 35.95% | 364 | 36.4 | 13.09 |
| FY 2027-28 | 38.81% | 382 | 38.2 | 14.83 |
| FY 2028-29 | 41.36% | 401 | 40.1 | 16.59 |
| FY 2029-30 | 43.33% | 421 | 42.1 | 18.24 |
Source: Ministry of Power RCO trajectory and CERC buyout-price determination.
This creates an important change for corporate procurement.
The compliance cost is no longer an uncertain number that has to be inferred from the REC market each year. There is now a published regulatory alternative.
That does not mean the buyout determines REC prices.
It means that REC prices increasingly have an outside reference point.
The distinction is important because the CERC buyout itself was derived using REC market prices. CERC considered the weighted average REC price across IEX, PXIL, HPX and bilateral trades for the relevant period, which resulted in a figure of approximately ₹346.74/MWh.
The regulator therefore used the REC market to establish the buyout, and the resulting buyout can now influence how market participants value RECs.
That creates an interesting feedback relationship:
REC market → buyout determination → compliance alternative → REC valuation.
Several stakeholders highlighted this potential circularity during the consultation process, including concerns that a lower buyout could reduce REC demand, which could then reduce REC prices and influence future buyout calculations.
The decision to publish a forward buyout trajectory reduces that uncertainty.
For a corporate buyer, the practical implication is straightforward:
the compliance component of a renewable procurement decision can now be benchmarked against a published number rather than an assumed future REC price.
One further point deserves attention.
The buyout price itself rises from ₹347/MWh to ₹421/MWh by FY 2029-30 — an increase of approximately 21%.
But the RCO percentage also rises, from 33.01% in FY 2025-26 to 43.33% in FY 2029-30.
The combination means that the maximum compliance exposure per unit of captive and open-access consumption rises much faster than the buyout price alone suggests.
For consumers building long-term procurement models, the obligation trajectory matters as much as the buyout trajectory.
3. The obligation is narrower than most consumers assume
The next question is not how much the buyout costs.
It is how much electricity is actually subject to the RCO.
This is an important distinction for C&I consumers.
Under the BEE Operational Guidelines, captive and open-access designated consumers are subject to the RCO to the extent of their consumption from the relevant sources. The guidelines distinguish this from electricity supplied by a distribution licensee, which sits within the licensee’s own RCO framework.
The practical implication is that a company’s total electricity consumption is not necessarily the same as its RCO-obligated base.
For a consumer with captive generation and open-access procurement, the calculation needs to consider:
- captive self-consumption;
- auxiliary consumption;
- open-access drawal;
- eligible and excluded generation;
- cogeneration treatment;
- waste-heat and waste-energy exclusions; and
- the applicable designated-consumer status.
The BEE guidelines also distinguish the treatment of distribution licensees from captive and open-access consumers. The component-wise wind, hydro, distributed RE and other-RE sub-targets apply to distribution licensees, while captive and open-access consumers are subject to the specified total RCO irrespective of the eligible non-fossil source.
This distinction can materially change the size of the compliance position.
Illustrative example
Consider a consumer with 300 MU of annual electricity consumption:
- 180 MU of self-consumption from a captive plant;
- 60 MU through open access; and
- 60 MU supplied by the distribution licensee.
If the captive and open-access volumes constitute the relevant obligated base, the RCO base would be 240 MU rather than 300 MU.
| FY 2025-26 | FY 2026-27 | |
| Obligated base (captive + open access) | 240 MU | 240 MU |
| RCO percentage | 33.01% | 35.95% |
| Obligation | 79.22 MU | 86.28 MU |
| Buyout price | ₹347/MWh | ₹364/MWh |
| Cost of discharging the whole obligation by buyout | ₹2.75 crore | ₹3.14 crore |
| Expressed over the 240 MU obligated base | 11.45 paise/kWh | 13.09 paise/kWh |
| Expressed over total 300 MU consumption | 9.16 paise/kWh | 10.47 paise/kWh |
Illustrative only. Actual treatment depends on the consumer’s configuration, applicable exclusions, auxiliary consumption, state-level implementation and the prevailing regulatory framework.
The lesson is simple:
Determine the obligated base before calculating the compliance cost.
A procurement model that applies the RCO percentage to total electricity consumption without first determining the relevant obligated base can materially overstate the compliance requirement.
4. The economic decision ultimately comes down to the incremental cost
Once the obligated volume is known, the procurement question becomes relatively simple.
One unit of eligible renewable electricity can discharge one unit of RCO obligation. An eligible REC can also discharge one unit. The buyout provides an alternative monetary route.
For FY 2025-26, the buyout is equivalent to 34.7 paise for each unit of obligation.
That creates a useful economic test.
Compare the incremental cost of renewable procurement with the applicable buyout cost.
If renewable electricity costs ₹4.90/kWh and the conventional alternative costs ₹4.60/kWh, the incremental premium is 30 paise/kWh.
That is below the 34.7 paise/kWh buyout cost.
On compliance economics alone, the renewable route can therefore still be cheaper.
If the renewable premium rises to 50 paise/kWh, the compliance argument no longer covers the premium.
| Landed RE cost | Avoided conventional cost | Premium | Incremental cost of the RE route | Buyout cost | Cheaper route |
| ₹4.20/kWh | ₹4.60/kWh | −40 paise | −₹3.17 crore | ₹2.75 crore | Physical RE |
| ₹4.90/kWh | ₹4.60/kWh | +30 paise | +₹2.38 crore | ₹2.75 crore | Physical RE |
| ₹5.10/kWh | ₹4.60/kWh | +50 paise | +₹3.96 crore | ₹2.75 crore | Buyout |
Illustrative on a 240 MU obligated base and FY 2025-26 obligation of 79.22 MU. The calculation excludes transmission and wheeling losses, banking charges, temporal matching, contract tenure, curtailment risk and transaction costs.
This is an important discipline for renewable procurement.
A long-term renewable contract should not be justified entirely by the RCO benefit if its economics do not survive when that benefit is capped at the applicable buyout value.
The compliance benefit has a ceiling in economic terms even if the REC market itself can trade above it.
The August market provides a useful real-world comparison
In August 2026, IEX’s Green Day-Ahead Market cleared at a volume-weighted price of approximately ₹3.92/kWh, while the conventional Day-Ahead Market’s comparable figure was lower.
Green electricity therefore carried a premium of approximately 30 paise/kWh in the exchange data for that month.
That premium is below the FY 2025-26 buyout equivalent of 34.7 paise/kWh.
On those assumptions, the green-power route could still pass the compliance-only test.
But the margin is small.
This is why like-for-like price comparisons matter. Simple-average and volume-weighted clearing prices should not be mixed to manufacture an apparent discount or premium.
Renewable electricity is not automatically cheaper. Its compliance value needs to be measured against the actual alternative.
5. The arithmetic is clearer; the procedure still has open questions
The economics are becoming easier to model.
The implementation questions are not all settled.
First: is buyout a completely independent route?
CERC stated in its order that it did not intend to create a hierarchy among the available compliance choices.
However, the BEE Operational Guidelines contain language around buyout in the context of a shortfall in the availability of RECs.
That creates a procedural issue that should not be ignored.
Until the regulatory position is clarified, consumers considering buyout should maintain a documented compliance trail, including:
- their calculated RCO obligation;
- REC procurement analysis;
- relevant market prices;
- the reason for selecting the compliance route; and
- supporting records for the final declaration.
The economic availability of a route and the procedural certainty of using it are not necessarily the same thing.
Second: what is the tax treatment?
The effective comparison between REC procurement and buyout should be made on a landed-cost basis.
An REC purchased through an exchange involves the clearing price plus applicable exchange charges and taxes.
CERC’s buyout-price order did not settle the GST treatment of the buyout mechanism.
That means a ₹350 REC versus a ₹347 buyout is not necessarily a ₹3/MWh economic difference.
Depending on the applicable tax treatment, the effective difference could be wider.
For transaction-specific decisions, this should be confirmed with appropriate tax advice rather than assumed.
Third: not every certificate necessarily reaches an exchange session
The CERC REC framework now includes provisions relating to virtual power purchase agreements.
Certificates associated with VPPAs can reach the consumer without necessarily appearing as exchange-traded supply.
That matters because exchange session data does not necessarily capture every REC-related transaction or every certificate available to meet compliance.
We therefore would not attribute the recent contraction in exchange volume to VPPAs without transaction-level data.
The structural point is simply that exchange volume is not synonymous with total REC availability or total REC procurement.
What to watch next
The next few months provide a useful test of the reference-point thesis.
1. September and October REC sessions
REC prices have already traded below ₹347 several times in 2026.
The question now is whether prices continue to move around the buyout level or establish a sustained premium/discount.
2. The 31 December 2026 compliance window
Under the BEE Operational Guidelines, designated consumers can address an RCO shortfall through REC purchase/self-retention or buyout during the nine-month compliance window ending 31 December of the assessment year. Form D follows within 15 days after the close of that window.
This is the most important date for the FY 2025-26 cycle.
3. BEE/CERC clarification
Market participants should watch for further clarification on:
- the procedural use of buyout;
- interaction between REC purchase and buyout;
- documentation requirements; and
- GST/tax treatment.
4. FY 2026-27 economics
The buyout rises to ₹364/MWh for FY 2026-27, while the RCO percentage rises to 35.95%.
A procurement strategy based only on the FY 2025-26 ₹347/MWh number will therefore understate the forward compliance exposure.
MaxZen Energy Advisory’s Perspective
The August REC market is better understood as a price correction accompanied by a sharp contraction in buying interest than as evidence of a structural collapse in certificate supply.
The session data shows that the sharpest change occurred on the buy side. At the same time, the market continued to attract a meaningful number of participants and certificates remained available for sale.
But we would be careful about taking the next step and saying that ₹347 has become a hard price floor.
It has not.
The market has already demonstrated that it can trade at ₹337 as well as ₹400.
What has changed is the decision framework.
A regulator has now published an alternative compliance cost and fixed its trajectory through FY 2029-30. For an obligated consumer, that number provides a visible benchmark against which the cost of an REC, physical renewable procurement or other compliance route can be assessed.
That changes the commercial question from:
“What will an REC cost?”
to:
“What premium, if any, are we willing to pay over the alternative cost of compliance — and what additional value do we receive for paying it?”
That is a more useful question for C&I procurement teams.
Renewable procurement can still make strong economic sense where it provides:
- competitive landed energy cost;
- a hedge against wholesale-market volatility;
- predictable long-term pricing;
- Scope 2 emissions benefits;
- customer or supply-chain decarbonisation value; or
- other strategic benefits that a buyout payment cannot provide.
But the compliance component of the business case should be capped at the applicable alternative compliance value.
The practical consequence is therefore not a retreat from renewable procurement. It is a higher standard for underwriting it.
A long-term renewable contract that works only because the buyer assigns an unlimited value to RCO compliance is difficult to defend when the regulatory alternative is explicitly priced.
The renewable contract needs to earn its place on its broader economics.
Key takeaways for C&I consumers
- Determine the obligated base before sizing the RCO. Separate relevant captive self-consumption and open-access consumption from other electricity volumes and apply the applicable exclusions.
- Use ₹347/MWh as a benchmark, not a forecast. It is the FY 2025-26 buyout price, not a guaranteed REC floor.
- Compare all compliance routes on a landed-cost basis. For FY 2025-26, compare physical renewable procurement, REC procurement including applicable fees/taxes, and the ₹347/MWh buyout.
- Complete the FY 2025-26 compliance strategy before 31 December 2026. The BEE framework provides the compliance window through that date.
- Re-test long-term renewable contracts against the applicable compliance alternative. For FY 2026-27, the buyout rises to ₹364/MWh.
- Do not mix price statistics. Simple-average and volume-weighted market prices are different measures and must be compared on a like-for-like basis.
- Budget for the trajectory, not just the current year. The buyout and RCO percentage both rise through FY 2029-30.
- Treat VPPA certificates differently from ordinary exchange-traded RECs. Understand the treatment of surplus certificates before relying on resale value.
The compliance question is becoming clearer; the energy question remains
CERC has now given the market something it did not previously have: a published rupee value for the alternative cost of RCO compliance, extending through FY 2029-30.
That removes an important uncertainty from industrial power planning.
But it does not make renewable procurement less attractive.
It makes the procurement decision more disciplined.
The compliance benefit of renewable energy can now be benchmarked against a known alternative. The remaining value has to come from the economics and strategic benefits of the power itself — landed energy cost, market-risk protection, load matching, sustainability requirements and the value of long-term price certainty.
The implication for C&I consumers is straightforward:
The RCO obligation has a price. The renewable power still has to earn its way.
Frequently asked questions
Does the RCO apply to electricity we buy from our distribution licensee?
For captive and open-access designated consumers, the BEE Operational Guidelines indicate that the obligation attaches to consumption from the relevant captive and open-access sources, while distribution-licensee supply sits within the licensee’s own RCO framework.
Because the calculation can depend on the consumer’s configuration and applicable exclusions, the position should be confirmed with the relevant State Designated Agency.
Do the wind, hydro and distributed-RE sub-targets apply to captive and open-access consumers?
The BEE framework distinguishes distribution-licensee obligations from those applicable to captive and open-access consumers. The latter are subject to the specified total RCO irrespective of the eligible non-fossil source.
Is the buyout a penalty?
No. The buyout is an alternative compliance mechanism under the RCO framework.
Penalty provisions apply to non-compliance and are a separate matter.
Can a consumer simply choose buyout every year?
The regulatory framework recognises buyout as an alternative compliance mechanism, but the BEE guidance contains language concerning buyout in the context of REC availability.
Until the procedural position is clarified, consumers should not treat buyout as completely risk-free. Maintain a clear record of the compliance calculation and procurement analysis.
What does an REC actually cost compared with the buyout?
The correct comparison is landed cost versus landed cost.
For an exchange-purchased REC, this includes the clearing price plus applicable fees and taxes.
For the buyout, the applicable payment and tax treatment need to be confirmed.
At ₹350/MWh on 27 August, the REC clearing price was already ₹3 above the ₹347 buyout before considering additional transaction costs.
We have a virtual PPA. Can we sell surplus certificates?
The treatment of certificates associated with VPPAs differs from ordinary exchange-traded certificates. Surplus certificates may be carried forward subject to the applicable framework, but they should not automatically be valued on the assumption that they can be freely sold through the exchange.
Consumers should confirm the treatment applicable to their specific VPPA structure.
Sources and methodology
The regulatory analysis is based primarily on:
- Ministry of Power notification S.O. 4421(E), dated 27 September 2025;
- CERC Order in Petition No. 12/SM/2025, dated 18 February 2026;
- BEE Operational Guidelines for RCO Compliance; and
- CERC’s applicable REC regulations and amendments.
BEE’s published RCO materials include the September 2025 amendment notification, the CERC buyout-price determination, the April 2026 extension for FY 2024-25 and the Operational Guidelines.
Market figures are based on IEX REC session data for 2025 and 2026. Calculations presented in the article are independently derived and labelled as illustrative where appropriate.
Where the article presents an interpretation rather than a direct regulatory requirement — particularly the view that ₹347/MWh is becoming a REC market reference point — that interpretation is identified as such.
About MaxZen Energy Advisory
MaxZen Energy Advisory works with large commercial and industrial consumers in India on power procurement strategy, open access and renewable structuring, regulatory impact assessment and energy analytics. We are independent of developers, traders and vendors.
If you are sizing an RCO position for FY 2025-26 before the December window closes, or re-testing a renewable contract against the published buyout price, we would be glad to talk.
MaxZen Energy Advisory — Powering Decisions. Delivering Outcomes.
This article is provided for general information and does not constitute regulatory, legal or financial advice. Illustrative figures are indicative only. Readers should evaluate their specific circumstances and applicable state regulations before acting.