REC Trading for January 2014 – Solar drops by 19%; Non-solar drops by 11%

After growing marginally in December 2013, the solar REC trading dropped to its lowest levels in 5 months. Non-solar REC trade also dropped after increasing continuously for 4 months. Since the number of RECs traded were less than the number of RECs issued, the inventory of both solar and non-solar RECs continued to grow.
Both Solar and non-solar RECs traded at their floor price of Rs. 9,300 and Rs.1,500 per REC respectively.
Solar REC
The trading trend of Solar RECs is given below.
Solar Jan 14
Non-solar REC
The non-solar REC trading is as follows.
Non-Solar Jan 14
REC Inventory
The REC inventory details are as follows.
(Source: REC Registry of India)
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4 thoughts on “REC Trading for January 2014 – Solar drops by 19%; Non-solar drops by 11%”

  1. My opinion on REC: Hope REC benefits will not be allowed with such roof top installations as the REC business model is not good and non democratic as the power exchange promoters are the Renewable Power Producers i.e REC Beneficiaries with the possible conflict of interest….
    In my personal View, Planning Commission can adjust (with necessary mandate, if not existing) the State Budget allocation, after considering the Every State complying RPO with a standard National Percentage with deliberations viz Thermal 35%, Large Hydro 40% (and more), Renewables 15%, others 10% etc (this can be varied every year or two to promote more renewable energy generation and consumption and compensation by all the states with One Nation One Grid concept with APPC re-definition to have low cost energy tariff), thus, we do not need the REC certificate buying and selling, which is making the common man (through DISCOMs) to buy at a total cost Rs. 21/kwh or more apart from tax collection loss through Accelerated Depreciation.
    The idea of REC is to reduce the State DISCOMs non payment issues (but the REC price variation is controlled like Stock market without SEBI like regulators, which will lead to many hits on balance sheets as many developers may have to sell at floor price, whereas a possible INSIDER TRADING like situation, will give an upper hand for few power producers (who can also be promoters of Power Exchanges), so why promote such unsustainable and unethical way of business model, why not compel many states to compel the Renewable Energy Purchase Obligations while allocating the State Budget, which reduces the costs of transactions, which otherwise developers (and the common man too) are paying the charges related to REC mechanism.
    Needless to say who are the promoters of the Power Exchanges of REC buy and sell platform…

  2. Most of the state owned Discom’s are highly debt burdened, these entities not having sufficient funds to make payment of salaries, contractors, operating expenses, regular power purchase etc……….(many times news on media), so how we expect these discoms to purchase REC @ Rs. 9.30 per unit. Further, it is still not mandatory and not having any penal provisions for non-compliance.
    This is making future of REC based Solar Projects as Non-bankable.
    Yogesh Birla
    Birla Wealth & Project Management Co.
    (Solar Project Div.)

  3. The whole concept of REC and VGF is misleading. It does not promote free and competition based tariff determination. I think the time has come for India to move away from protectionism kind of tariff for power. You look at the industries which were decontrolled from price and distribution control regime. Look at Cement, telecom and even fertilizer (fertilizer is largely free from distribution control except State/district level of ‘allocation’) where the goods produced are world class in terms of quality and extremely price competitive except the State/Tariff based input costs.
    You need support and nurturing to a young child and as soon as the child attains some age, you have to set him free to stand up on its own to face the world.
    Kamal Garg

  4. While framing the REC mechanism, CERC had simultaneously introduced concept of generic tariff and given two options to RE generators. Either get assured return on investment thro’ sale to state discom on preferential generic tariff or else sway with market by earning thro’ sale of power on market determined rates along with earnings from REC sale.
    While original scheme of REC was only for bringing in new investments in RE sector, subsequently self consumption of existing CPPs was also made eligible for RECs though with some conditions, primarily of Electricity duty. Thereafter even self consumption of non CPPs (CGPs)was also made eligible and the condition of ED was also removed. This has made even those RE CGPs eligible for claiming RECs which are running the plants only on O&M+Fuel costs.
    Additionaly all Co gen plants were exempted from RPO as per provisions of the Electricity Act 2003. Thus all big conventional fuel based plants of refineries, Steel producers etc were out of REC net.
    While setting up the RE projects and opting for market sales, developers have assumed that RECs will be sold readily in the market. However with SERC regulated state Discoms not complying with RPOs has resulted in ever increasing inventory of RECs. Under these circumstances, while old CPP/CGP projects have nothing to loose, new projects for which this programme was launched will loose heavily and very soon their projects will become sick, unless of course, Regulatory intervention takes place to put the scheme on right track.

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