Solar REC Trading Rises in January 2020

Entities rushed to buy renewable energy certificates (RECs) to meet their renewable purchase obligations (RPOs) in January 2020.

A cumulative sum of 76,220 solar RECs was traded on the Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL). Out of the total, 39,413 and 36,807 solar RECs were traded on the IEX and PXIL, respectively.

In December 2019, 61,871 solar RECs were traded on IEX and Power Exchange India Limited (PXIL) together. A total of 41,204 and 20,667 solar RECs were traded on the IEX and PXIL, respectively, according to Mercom in the previous month.

Compared to December 2019’s REC trading session, there has been a drop of 1,791 RECs on the IEX, while a rise of 16,140 solar RECs was recorded on the PXIL.


On the IEX, the sale bid in January 2020, was at 39,413 and the buy bid was at 1,052,954. Whereas on PXIL, the sale bid went up to 37,028, and the buy bid at 513,403, thus totaling to 1,572,357.

The number of solar RECs traded in January 2020 declined by 4.3% on the IEX and increased by 79.1% on the PXIL platform when compared with the numbers traded on both the platforms in December 2019.

A spokesperson of PXIL told Mercom that the reason behind the increase in the trade volume in January could be due to the “increase in the market participants who have fairly utilized their rights and have extracted the best service.”

“The other reason could be the PXIL’s newly launched trading platform called ‘Pratyay,’ which has eased the transaction process,” he added.

On the IEX and PXIL, however, the solar prices have remained constant since October 2019 at ₹2,400 (~$33. 53)/REC.

Solar REC Market Trading

January 2020 saw an upward trend in the non-solar REC trading compared to December 2019.

Rohit Bajaj, Head of Business Development, Indian Energy Exchange, said, “The continuing increase in REC prices has mainly been due to the shortfall on account of inventory since March 2018. The sell volumes in the market have reduced significantly, while the REC market has seen an increasing demand for participants to meet their Renewable Purchase Obligations (RPO). The constraint on the sell inventory is owing to two reasons. The first being, new REC projects are not taking off with only a few projects coming on stream. Secondly, the issuance of RECs to the distribution utilities that have already exceeded the RPO compliance has been slow owing to procedural delays. Therefore, there is a need for an expeditious policy and regulatory action to address the sell-side constraints and strengthen the market mechanism. “

According to Bajaj, RECs is the only market-based instrument for obligated entities to meet their RPO besides directly acquiring green energy. Solar REC prices are touching its ceiling cap of ₹2,400 (~$33. 53) /REC since October 2019, and “there is a need for prompt action towards addressing the market constraint.”

During the month, the total number of non-solar RECs that were traded stood at 494,484, an increase of nearly 12% compared to the previous month. In December 2019, 442,257 non-solar RECs were traded, recording a decrease of 2% compared to November 2019.

Non-Solar REC market Trading

On the IEX, a total of 323,647 non-solar RECs were traded with 359,639 sale bids, and 773,557 buy bids. So, the month witnessed an increase of 1.52% on the IEX platform.

All non-solar RECs were cleared at ₹2,200 (~$30.73)/REC on the IEX, an increase of ₹200 (~$2.82)/REC when compared with the price of these RECs in December 2019.

Similarly, on the PXIL, a total of 170,837 non-solar RECs were traded with 1,043,459 buy bids, and 183,307 sale bids for all RECs issued after April 01, 2017, showing a rise of almost 38% in January 2020.

All non-solar RECs were cleared at ₹2,100 (~$29.34)/REC on PXIL, an increase of ₹200 (~$2.82)/REC, compared to ₹1,900 (~$26.9)/REC in December 2019.

Recently, it was reported that the Central Electricity Regulatory Commission extended the validity of renewable energy certificates, which have or are due to expire shortly. The Commission observed that the RECs that have expired or are due to expire between November 1, 2019, and March 31, 2020, will now remain valid up to March 31, 2020.

 

Image credit: Greenskies