REC Trading – June 2013 – Solar RECs hit floor price limit

2 Comments / Markets, Renewable Energy Certificates (REC) / By

REC trading for the month of June 2013 concluded on Wednesday. Keeping up with the downward trend, the Solar RECs have reached new lows and hit the floor price for the first time since trading began trading at the floor price of Rs. 9300 per certificate at both IEX and PXIL. This appears to be a cause for concern as the solar REC market could follow the non-Solar REC market path by idling at the floor price for the foreseeable future unless RPO enforcement is stricter.

Non-Solar RECs
No surprises or changes in the non-Solar REC segment as the market continued to remain flat. The interest for non-solar RECs continues to grow as the number of buy bids increased rather significantly by about 37% compared to last month’s numbers with the total volume traded increasing in tandem by about 37%. The number of sell bids too increased by about 14% indicating that the the gulf between supply and demand would remain fairly constant (perhaps receding ever so slightly) and that the market would continue to witness a surplus of non-Solar RECs. The non-solar REC price continues to flatline, languishing at the base price of Rs. 1500 per REC both at the IEX and PXIL.
Solar-RECs
The dismal plight of the solar REC market has been typified by the waning demand for the solar certificates. The demand for solar-RECs fell by about 36% compared to last month with the total volume traded falling by 15% across both the trading platforms. The supply however continues to grow with the total volume available for sale increasing by about 18%. The price of the solar RECs has hit the floor price trading at Rs. 9300 on both IEX and PXIL with the prices having fallen by 24% and 18% respectively. This is how the the non-solar REC market got to where it is at today – steadily increasing supply and reduced demand. With more solar-REC based projects on the horizon, the gap will continue to grow unless there is a significant demand spike. In the end we could witness the solar-REC market mirroring the non-Solar REC market but for the price.
It should be noted that even at floor prices, solar projects are still financially viable. This however greatly depends on whether the RECs get sold out in the market. With the price having bottomed out, developers can no longer compete on price and just hope that there is an increased demand for solar RECs and that their RECs get sold out. This is likely to add additional pressure on developers who are looking to secure funding for their projects with RECs as their revenue stream.
The REC trading details for the previous months are available here and here.
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2 thoughts on “REC Trading – June 2013 – Solar RECs hit floor price limit”

  1. amarjeet singh

    need of the hour for CERC to immediately come out regulation for making quarterly limits for RPO targets instead of a yr and the same need to promoted by SERC to discoms also to bring regular demand into the market and all round trading potential in the market rather than seasonal or at the end of year only.

  2. rangarajan

    Dear Sir/Madam,
    As per elegibility of REC we understand that those power generating units connected to Grid for the purpose of captive or group captive are eligible.
    Now, if the Solar Plant is inside the premises of the factory (on ground or roof) and directly consuming energy at 415 V or 11 KV without using EB infrastructure, in this case whether it is eligible for REC or not.
    If solar purchase obligation is strictly implemented then the generation above SPO fulfillment can be eligible for REC or not. Kindly provide inputs and clarify.
    Kindly clarify.
    Thanking you.
    rangarajan
    9600009394

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