Comments
Amid concerns over compliance with the Renewable Purchase Obligations and muted fresh demand for Renewable Energy Certificates from the ‘obligated entities', January's trading in RECs, which happened on Wednesday, threw a pleasant surprise to all stakeholders.
Cleared volumes jumped to 171,524 RECs compared with 1,11,621 in December. The price also went up for the first time beyond the Rs 3,000-mark, RECs were traded at Rs 3,051 a certificate on the two exchanges, the Indian Energy Exchange and Power Exchange of India Ltd.
Significantly, the RECs in demand (or, offer for purchase) jumped 51 per cent to 4,32,500 over the previous month. Similarly, RECs on offer for sale also rose to 1,92,682. This accounted for 97.6 per cent of the available RECs (1,97,457).
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 tradeable on the exchanges and are bought by ‘obligated entities', who are either specified consumers or electricity distribution companies. These obligated entities may either be required to purchase a certain quantum of either green power or RECs.
Trading in RECs happen on the last Wednesday of each month, and if that day happens to be a holiday, the next working day.
“RECs that are available for sale next month have reduced to about 26,000 only. Considering low number of issuance happening due to non-availability of wind generation, market may offer good opportunities for sellers for next few months as all the existing RECs have been exhausted now,” says Mr Vishal Pandya, Director, REConnect, a consultancy that mainly helps companies get into REC trading.
In peril
The trading of the next two months will be considered significant because if the ‘obligated entities' do not discharge their obligations and yet are not taken to task by the respective state electricity regulatory commission, the REC regime will be in peril. Consequently, investments into green energy capacity will suffer.
RECs are incentives for entrepreneurs to produce green energy, as they get extra money per unit through the sale of the energy certificates.
Trading in January, which got the sellers over Rs 3 a unit, will be heart warming to them. The big demand suggests that the obligated entities are under pressure to meet their obligations.
From April, a new floor and ceiling price system for REC trading will come into force. For 2012-2017, the floor and ceiling prices per REC, as notified by the Central Electricity Regulatory Commission are Rs 1,500 and Rs 3,300 for non-solar certificates, compared with Rs 1,500 and Rs 3,900 today.
Till now, no solar REC has come into the market. But slowly some solar power producers are coming into the REC regime (which means they opt to sell their power at (a non-preferential) average pooled cost to the distribution companies and get trade-able RECs, rather than sell their power at a higher, preferential tariff). The floor and ceiling prices for solar REC have been fixed as Rs 9,300 and Rs 13,400 for 2012-17.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.