Solar RECs Traded at the Price of ₹2,000 in IEX and PXIL During May 2019

Entities rushed to buy renewable energy certificates (RECs) to fulfill their renewable purchase obligations (RPOs) in May 2019. This led to solar RECs being traded at ₹2,000 (~$28.68)/REC on both the Indian Energy Exchange (IEX) and the Power Exchange India Limited (PXIL). There was a ₹50 (~$0.7156)/REC difference between the prices at which non-solar RECs traded at both the exchanges in May 2019.

In May 2019, a total of 187,179 solar RECs were traded on the IEX and PXIL combined. This is 104,201 more solar RECs than the 82,978 solar RECs traded in April 2019.

Solar REC Market Trading

On the IEX, a total of 134,688 solar RECs were traded at ₹2,000 (~$28.20)/REC in May 2019. The price of solar REC trading on IEX was the same as in the past two months (April and March 2019). A total of 169,438 sale bids and 614,170 buy bids were registered on the IEX for solar RECs.

On the PXIL, a total of 52,491 solar RECs was traded in May 2019. The solar RECs traded at ₹2,000 (~$28.68), an increase of ₹200 (~$2.86071), when compared with the price of ₹1,800 (~$25.7464)/REC registered in April 2019. On the PXIL, the price of solar RECs has steadily gone up over the past two months.

Not a single non-solar REC issued before April 1, 2017, was traded in May 2019. This was 21,000 RECs fewer than that traded in April 2019.

A total of 563,613 non-solar RECs issued after April 01, 2017 were traded on the IEX and PXIL combined. This is 277,689 more non-solar RECs than the 285,924 non-solar RECs traded in April 2019.

On the IEX, 416,264 non-solar RECs issued after April 1, 2017, were traded at ₹1,500 (~$21.15). There was an increase of ₹200 (~$2.86071)/REC in the price when compared to the last month in which the price of a non-solar REC was valued at ₹1,300 (~$18.5967) at the IEX.

On PXIL, a total of 147,349 non-solar ERCs issued after April 1, 2017, were traded for ₹1,450 (~$20.7425)/REC. There was a decline of ₹50 (~$0.7156)/REC in the price when compared to the last month.

Strict implementation of RPO compliance has led to a situation where sellers are reaping benefits as the trading prices of RECs have gone way above the floor prices.

When contacted, a market source informed Mercom, “The inventories are tightening, and this is a matter of concern. More renewable energy projects need to be brought into the ambit of REC mechanism for the sector to flourish.”

When asked about how this could be done, the source said, “Green Term Ahead Market (GTAM) needs to be brought in as it will provide the flexibility to transmit and evacuate power at multiple locations simultaneously. Few policies and regulations need to be tweaked, but it is required. GTAM will also allow the sector to do away with two prices for the same renewable energy (one price is the tariff at which it is sold and the other being the floor price or REC price). This, in turn, will lead to entities’ involvement in the sector.”

Recently, the  Central Electricity Regulatory Commission (CERC)ordered the IEX to give wide publicity to GTAM contracts by uploading it on its website and invite comments from all stakeholders and the public.

Image credit: Bajaj Electricals