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The market for renewable energy certificates plunged today, in terms of value, upon poor demand for the certificates. Today, 273,893 certificates were traded on the two power exchanges of the country, at floor prices.
Though the volumes were higher — July trade saw only 158,320 RECs — the industry is disappointed to see certificates changing hands at the minimum prices fixed by the government.
On the Indian Energy Exchange Ltd, which accounted for 90.6 per cent of the trade, the average price was Rs 1,500 a REC, or the floor price. On the Power Exchange of India Ltd, the average price was Rs 1,555.
According to market sources, the volume increase is also not heartening because the major buyers were the same as last month —Tata Power, Reliance Infra and Torrent. These entities have by now met most of their obligations and may not turn up in the market next month, said a source.
The biggest disappointment among the renewable energy producers (who are the sellers of RECs) is that no state owned electricity distribution company has come forward to buy the certificates, although they are all ‘obligated entities’. This is due to lack of enforcement of their obligations. “Lack of participation from public Discoms and large captive power plants is the main reason behind the price crash,” said Vishal Pandya, Director, REConnect, a consultancy that operates in the REC market, whose clients accounted for 63 per cent of the trading today.
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.
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