Record trade in renewable energy certificates

M RAMESH Chennai | Updated on January 27, 2018


In Wednesday’s trading, 15.20 lakh non-solar RECs and 47,900 solar RECs exchanged hands at ₹1,500 and ₹3,500 a certificate respectively.

A record 15.68 lakh renewable energy certificates (RECs) were traded on the country’s two energy exchanges on Wednesday, giving life to hope for a pick-up in the REC market.

RECs are instruments awarded (electronically, in demat form) to renewable energy companies who opt to sell the electricity they produce to the distribution companies at non-preferential tariffs.

They are tradeable on the energy exchanges on the last Wednesday of every month.

In today’s trading, 15.20 lakh non-solar RECs and 47,900 solar RECs exchanged hands at their respective floor prices of ₹1,500 and ₹3,500 a certificate. Today’s trading bettered the previous record of 12.66 lakh RECs seen in March 2016 by 24 per cent.

According to market sources, the demand came from large such as Reliance and a few State-owned electricity distribution companies (discoms).

The pick-up in demand for the instruments is seen to be a consequence of better enforcement of the law that requires certain ‘obligated entities’ — typically energy-guzzling factories and electricity selling companies — to purchase the RECs.

Renewable energy companies that chose to go in for the ‘REC route’ instead of the ‘preferential tariff route’ in the hope that they would make more money by selling the certificates have been disappointed, as the obligated entities that are mandated by law to buy the certificates simply refused to so do.

Ray of hope

As a result, companies such as Orient Green Power are sitting on a pile of RECs without a way to cash them. Today’s trade gives them hope.

Vishal Pandya, an expert in the area and Founder-Director of REConnect Energy, a consultancy that helps companies trade RECs, says he expects that the current financial year to end with more RECs in demand than offered for sale — something unprecedented since REC trading began in February 2011.

Published on January 25, 2017

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