Trading in renewable energy certificates takes baby steps, awaits booster

Richa Mishra Vishwanath Kulkarni New Delhi | Updated on June 10, 2011


Power and distribution entities are yet to warm up to trading in renewable energy certificates (REC).

The trading, which was kicked off in February, in its third session (April 27), saw muted response from buyers as it did not see any participation from the State utilities. Though the sell bids saw a drastic increase from the previous trading session, officials of the Indian Energy Exchange (IEX) attribute the poor response from the buyers to April being the first month of the current fiscal.

New concept

Industry feels that the REC is a new concept and still requires a lot of promotion. In the latest trade, total purchase bids of 260 non-solar RECs were received against the total sale bid of 4,046 RECs. The 260 RECs were sold at Rs 1,500 each.

This is a significant drop from the last session when the RECs were sold for Rs 3,900 each. The first trading session on February 23 saw only buy bids and there were no sell bids.

Greening power

REC trading was introduced as part of the National Action Plan on Climate Change. The concept allows entities such as power distribution companies and State Governments that do not have sufficient green component in their energy mix to buy these certificates and meet their renewable energy purchase obligations as prescribed by the State power regulators.

Mr Anmol Jaggi, Director, Gensol Consultants, termed this fluctuation in trades as a teething trouble faced by the market mechanism. “Things will stabilise once large distribution companies start participating over the next one-two quarters.” Companies such as Reliance Energy Trading Ltd (RETL) and Manikaran Power Ltd participated in the latest trade.

“It is felt that the entities will actively participate in the days to come once they have a clear picture of their actual renewable energy obligation. Also, the open access consumers and captive users in States need to be made aware of their obligation and the criticality,” the IEX official said.

The REC trade happens on the last Wednesday of every month. “Stringent monthly or quarterly compliance is felt essential to ensure critical mass for REC market,” the official said, adding “We can think of an index for REC markets only after achieving liquidity in the market. Let us wait for some time.”

Published on May 08, 2011

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