REC Trading – February 2013

The REC trading for the month of February concluded on the 27th of the month.
Given below is an overview of the trading.

Non-Solar RECs
The non-solar REC segment continued its poor showing. The prices remained flat at Rs. 1500 (floor price) across both trading platforms. The number of buy bids also dropped by about 20% with sell bids remaining fairly constant. Interestingly, all buy bids for non-solar RECs were cleared on both platforms suggesting that the sellers are no longer trying to get a price higher than the floor price on either trading platform. With an excess inventory of over 3.5 lakh RECs, this trend is only expected to continue unless RPO enforcement measures are tightened.
Solar RECs
The solar REC segment remained buoyant in the wake of the ever present supply-demand gap. The price of the solar REC remained at Rs. 12,500 at the IEX while it rose to Rs. 13,000 at the PXIL. Interestingly, the significant spike seen in the total amount of buy bids last month (42,245) can now be viewed as an outlier considering the fact that the trend did not continue to this month where the number of buy bids has decreased to 6777. The likley explaination for last months spike is early preparations for meeting the March compliance deadline for the current financial year. The solar REC market continues to be a seller’s market and would remain so until more solar power plants come up under the REC mechanism.

4 thoughts on “REC Trading – February 2013”

  1. paddy8@gmail.com

    There is a need for Option Trading in Solar REC market.With demand gap being so large as shown in Feb- Option trading will help REC based solar developers achieve finance close using the REC mechanism. Today- banks/FIs do not recognise REC flows as a part of cash flows for evaluating solar projects. Solution to this denial is a key challenge to growth of solar projects in the country.With bids around Rs 6.48 (in TN or Rajasthan)Solar IPPs/group captives are not viable.Govts and CERC killing solar IPP/Captive market by not enforcing RPOs and not encouraging instruments such as Option trading-Padmanabhan

    1. RPO enforcement is definitely the key to fostering the growth of the segment, especially in the non-solar space. I believe that once proper RPO enforcement is in place, cashflows could become more “stable” and hence the risk (from the lenders’ perspective) can be mitigated to some extent.

  2. Nrupesh Parekh

    Hello,
    I fully agree to both the comments. RPO is the most powerful tool to keep the ball in the game. In my opinion, Govt. is worried if the RPO is enforced strictly, ultimately the cost has to be borne by the electricity end-user. Companies should bear this cost and should not pass it to the customer and RPO enforcement made compulsory. Otherwise, the gap between of REC purchased and REC produced becomes wider month after month.

    1. Fromm what I can see, there is a proposal to transfer the liabilities entirely on to the consumer considering the fact that the discoms are in serious debt. So we can envisage a scenario much like the Solar Purchase Obligation (SPO) as has been introduced in Tamil Nadu where the end user (commercial/industrial entities) bears the financial burden of the solar energy.

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