Oversupply of renewable energy certificates resulted in low volume of sales and depressed prices in the REC trading for the month of October, which took place today.
Against a total of 10,12,660 non-solar RECs offered for sale, only 2,22,700 got sold, and that too, at the floor price of Rs 1,500 a certificate on both the power exchanges—IEX and PXIL. The traded volume was lower than September’s 2,64,446.
(RECs are generation-based ‘certificates’ awarded (electronically, in demat form) to those who generate electricity from renewable sources such as wind, biomass, hydro and solar, if they opt not to sell the electricity at a preferentially higher tariff. These certificates are trade-able on the exchanges and are bought by ‘obligated entities’, who are either specified consumers or electricity distribution companies. These obligated entities may either required to purchase a certain quantum of either green power or RECs. Trading happens on the last Wednesday of each month. Within the obligation, there is a small slice carved out for solar-RECs, or RECs from solar power generators.)
When the trading began, 15,06,233 RECs had been issued and were available for sale. Since 2,22,700 were traded, the market today has around 13 lakh RECs. “Unless significant demand gets generated over last few quarter, the prices may remain subdued,” says Vishal Pandya, Director, REConnect, a consultancy that operates in the REC area.
The ‘solar RECs’ story was somewhat better. As many as 2,964 solar RECs were put up for sale, of which 1,971 got cleared. On IEX, 820 solar RECs were sold for Rs 12,680 apiece. On PXIL, 971 were sold for Rs 12,500. The floor price for solar RECs is Rs 9,300.
The firm price in Solar RECs is an indication that even with low-enforcement scenario, market is high on price due to supply side constrained, says Vishal Pandya.
For the first time in the 18-odd months of trading, PXIL has gained some market share. Till last month, IEX’s share used to be well over 90 per cent. In today’s trading, IEX got 59.4 per cent of the market, and PXIL the other 40.6 per cent.