After touching new highs in December 2017, the trade in non-solar Renewable Energy Certificates (RECs) declined by almost two-thirds in January 2018 to 1.2 million total buy bids. The decline appeared stark following a December boost in trading that was caused by bulk purchase by obligated entities scrambling to meet their REC targets.

Non-solar REC trading activity returned to normal and open access consumers emerged as the major buyers in the January trading session. Solar REC trading continues to be suspended until the matter is resolved in the courts.

The Power Exchange India Limited (PXIL) accounted for the majority of January trading, even as the total trading of non-solar REC buy bids on the exchange fell roughly 50 percent from December to 1.0 million. A total of 3.4 million sell bids were also traded on the exchange in January. All bids cleared at a floor price of ₹1,500 (~$23.4) per REC, the same floor price reported on the IEX.

The Indian Energy Exchange (IEX)’s share of non-solar REC trading declined in January, with a total of 182,000 buy bids logged against 2.3 million sell bids. According to IEX, a total of 646 participants traded in non-solar RECs on the IEX during the month.

The trade in RECs is expected to receive a boost if stricter rules for the enforcement of Renewable Purchase Obligations (RPOs) are imposed. There were previously no provisions to penalize entities that failed to meet their RPOs, but the government’s proposal to penalize DISCOMs that lack the Power Purchase Agreements (PPAs) needed to cover 100 percent of their RPO requirements can spur future trade.

In October, Mercom reported that the Indian government was mulling plans to amend laws that would make PPA obligations legally binding in statute. The plan aims to ensure that all power distribution companies purchase enough PPAs to cover 100 percent of their RPO requirements.

Many state DISCOMs have not been in full compliance with their RPO targets due to a lack of enforcement and the absence of penalties when obligations are not met.