Government agencies are exploring the possibility of increasing the frequency of Renewable Energy Certificate (REC) trading sessions on power exchanges.

Following an order of the Central Electricity Regulatory Commission (CERC), the Grid Controller of India (Grid-India) has sought suggestions from stakeholders by April 25, 2025, on increasing REC trading sessions from two a month.

In March this year, the CERC said it found merit in the Power Exchange of India’s (PXIL)  contention that the existing two auction sessions in a month allowed on power exchanges do not provide them with a level playing field vis-à-vis traders who are allowed to trade RECs on all days of the month.

The CERC, responding to a report submitted by Grid-India in April 2024, said it noticed that the increased frequency of REC auction sessions, from once to twice a month, contributed to the increase in REC transactions. Most stakeholders also supported the increased frequency of REC auctions at power exchanges.

“Accordingly, we direct Grid-India to review the recent trend in REC transactions (both on power exchanges and bilaterally through traders), particularly in light of the recent developments in the REC market, and give recommendations on increasing the frequency of REC auction sessions at power exchanges in consultation with the stakeholders,” the central regulator said in its March order.

In its petition, PXIL cited Regulation 11(2) of the Central Electricity Regulatory Commission (Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation) Regulations, 2022 (REC Regulations 2022), which provides for the bilateral trade of RECs through traders on any or all days of a month.

“However, the existing two auction sessions, i.e., on the second Wednesday and last Wednesday of the month, for the trading of RECs on a power exchange, restrict the power exchange to only two sessions on specific days of the month. This denies a level playing field for the power exchanges vis-à-vis the trading licensees, who are dealing with the same products,” PXIL said.

It contended that with increasing Renewable Purchase Obligation (RPO) targets for distribution companies and obligated entities, the demand for RECs was expected to rise, necessitating more frequent trading sessions to prevent financial year-end price disruptions.

PXIL said frequent sessions will enable buyers to plan procurement and allocate funds effectively, while sellers can offload RECs regularly to stabilize prices. Additionally, allowing the exchanges to conduct exclusive trading sessions through Any Day Single-Sided Auctions will enhance client service and flexibility.

REC trading in the Indian Energy Exchange witnessed its highest-ever increase in the financial year (FY) 2025, with 17.8 million RECs traded, up 136% from FY 2024.

In October 2023, the CERC allowed fortnightly trading of RECs on the power exchanges from once a month to six months. This practice has continued since.