REC Trading – April 2013

REC trading for the month of April 2013 concluded last week. As expected, with the end of the previous compliance year, the trading saw a significant drop in numbers for the month of April both in terms of volume traded as well as the price discovered for the RECs. The trading data for the month is provided below.

 Non-Solar RECs
With the end of the compliance year completed last month, the brunt of the trading deficit fell on the non-solar REC segment. The interest for non-solar RECs plummeted as the number of buy bids dropped by about 90% compared to last month while the volume cleared/traded also fell by a similiar percentage. The price remains flat at Rs. 1500 per REC and is expected to continue. There is significant surplus of non-Solar RECs in the market and with the CERC guideline recommendation extending the validity period of RECs to two years, this trend is expected to continue unless more stringent RPO enforcement guidelines are in place.
Solar-RECs too were not spared from the waning demand on account of end of the compliance window after hitting the forbearance price for the first time last month. The end of the compliance period meant that the number of obligated entities looking for solar RECs would drop and this is reflected by the number of buy bids seen which dropped to below 50% of the number seen last month. The volume of RECs traded also dropped by about 40% while the price of the solar RECs dropped for the first time in the past three months which witnessed a steady growth in solar-REC prices. Prices dropped by about 10% and 8% at the IEX and PXIL respectively with trading ending with a discovered price of Rs. 12,206 at IEX and Rs. 12,000 at PXIL. This is not very comforting news for the solar REC segment especially considering that a whole bunch of solar REC projects have recently come up in Rajasthan which are expected to begin generating certificates soon. However it is not certain if these projects are for self fulfilment of RPO or if the certificates generated are to be traded in the open market. If the latter is true, then there would be an additional supply of RECs and there might be a possibility that solar RECs price could drop further if there is no interest in compliance.
The REC trading details for the previous months are available here and here.

2 thoughts on “REC Trading – April 2013”

  1. Here I need one clarification. Recently TNERC commission released one amendment order on SPO (Solar Power Obligation), that consumers to meet 3% SPO upto 2013 and 6% SPO from 2014. Earlier CERC directed that consumers shall meet 9% RPO (Renewable Power Oblication) out of which 0.05% SPO. Is these two are to be adhered separatly or compliying to TNERC directive will cover CERC directive?

    1. @Ganesh, my understanding is that the solar RPO under the TN policy obligation is inclusive of the CERC directive. It should be noted that the CERC directive is merely a regulation and it is up to the state electricity regulation boards to see how it is enforced.

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