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RECs clearing price declines 61.5% in a month

BS Reporter  |  Mumbai 

The second session of renewable energy trading on April 27 witnessed several surprising moves.

In a span of one month of trading of non-solar Renewable Energy Receipts (RECs), the clearing price has dropped from Rs 3,900 per REC to Rs 1,500 per REC.

Secondly, market share of two exchanges just reversed. Trading took place only on Indian Energy Exchange (IEX) which transacted 150 RECs at a clearing price of Rs 1,500 per REC while receiving 4,046 sell bids in non-solar category as against 260 buy bids. No trading took place on Power Exchange of India Ltd (PXIL), which did not receive any buy bids but only two sell bids for solar category. In March, while 274 non-solar RECs got traded on PXIL at a clearing price of Rs 2,225 per certificate, 150 non-solar RECs were transacted on IEX at a price of Rs 3,900 per REC.

Thus, in the first trading session of renewable energy receipts (REC) on March 30, PXIL got 70 per cent of market share after trading 150 RECs at Rs 3,900 per REC, the second trading session witnessed cornering of cent per cent market share by IEX.

Neither bids nor any trading took place in solar REC category in April 2011 trading session.

Incidentally, the price range is what the Central Electricity Regulatory Commission (CERC) has recommended as the floor price (Rs 1,500 per REC) and ceiling of Rs 3,900 per REC in the non-solar category of RECs.

Till date, the National Load Despatch Centre has issued a total of 4,503 non-solar RECs. Combined with 108 non-solar RECs waiting to be redeemed in March session, a total of 4,611 non-solar RECs were available for trading in April session. The next trading session will be on May 25, officials said.

The reasons as explained by exchange officials is that demand for RECs have gone down. State utilities, which are major buyers of REC to meet five per cent of the renewable energy purchase obligation (RPO) out of the total power purchase were absent in both exchanges. “Being the beginning of the financial year, state utilities are relaxed as the entire financial year is there to meet RPO. As against this, March was hectic since it was end of the financial year and the only month when states could meet their RPO obligations, officials said.

Therefore there was literally one buyer — Punjab-based industry with two sellers — Yash Agro Ltd and Vishu Wind, while the trading was facilitated on IEX by three members — Reliance Energy Trading Ltd, Manikaran Power and Instinct Infra and Power, an IEX press statement stated.

Consequently, as against 70,377 purchase bids in non-solar category placed on IEX in March 2011, this month witnessed only 260 bids. Similarly on PXIL, as against 3,600 purchase bids on PXIL in March, April saw no bids.

REC is a tradable receipt, representing a value of one megawatt hour (MwH) of power injected into the grid through renewable resources. This would be issued to a generator of RE upon complying with conditions.

First Published: Wed, May 04 2011. 00:12 IST
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