Indian Solar Industry – Cautiously Optimistic

In December 2019’s renewable energy certificate (REC) trading session, there was a significant increase in the number of solar RECs that were traded when compared with the previous month of November 2019.

A total of 61,871 solar RECs were traded on the Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL) together. There were 41,204, and 20,667 solar RECs traded on the IEX and PXIL, respectively.

On the IEX, the sale bid was at 41,204, and the buy bid was at 672,090, whereas on PXIL, the sale bid was at 21,513 and buy bid at 283,340. The buy bids totaled 955,430, and sale bids summed up to 62,717 in both the exchanges.

These RECs were traded at ₹2,400 (~$33.9)/REC, and the price remained unchanged on both the trading platforms.


The number of solar RECs traded in December 2019 increased by 13.62% when compared with the numbers traded on the IEX and PXIL in November 2019.

On the IEX and PXIL, however, the solar prices have remained almost constant since October 2019 at ₹2,400 (~$33.9)/REC. In October 2019, Mercom reported that RECs were at a record high price of ₹2,400 (~$33.9)/REC.

Solar REC Market Trading

However, the month also saw a downward trend in the non-solar REC trading compared to November 2019. In December, there were 442,257 non-solar RECs traded, showing a decrease of 2% compared to the previous month when 451,220 non-solar RECs were traded.

On the IEX, a total of 318,785 non-solar RECs were traded with 370,458 sale bids, and 666,124 buy bids. All non-solar RECs were cleared at ₹2,000 (~$28.32)/REC; this was again an increase of ₹200 (~$2.82)/REC when compared with the price of these RECs in November 2019.

Non-Solar REC Market Trading

On the PXIL, a total of 123,472 non-solar RECs were traded with 128,385 sale bids, and 666,124  buy bids for all RECs issued after April 1, 2017. All non-solar RECs were cleared at ₹1,900 (~$26.9)/REC, an increase of just ₹50 (~$0.71) as compared to November 2019 where non-solar on the PXIL traded at a rate of ₹1,850 (~$25)/REC.

Once again, not a single non-solar REC issued before April 1, 2017, was traded on either of the two exchanges.

Buy bids continue to be more compared to the sale bids for both solar and non-solar RECs as the supply side of the REC market continues to be weak.

Shruti Bhatia, Head (Corporate Communications and CSR), Indian Energy Exchange, told Mercom that in December 2019, the primary reason for the increase in solar REC trading is attributed to better sell volumes on the IEX.

“As on December 26, the REC market at the IEX saw a total trade of 359,000 RECs comprising 318,000 non-solar RECs and 41,000 solar RECs. The price for non-solar RECs (issued after April 1,17) at ₹2,000 ($28.24) increased 11% from ₹1,800 ($25.41) in November 2019 and the price for solar RECs at ₹2,400 (~$33.98) remained unchanged from November. Furthermore, the RPO compliance cycle being fiscal to fiscal, utilities are keen to meet the annual compliance for FY20. The continuing increase in REC prices has mainly been due to a shortfall on account of low inventory since March 2019,” she added.

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 Renewable Energy