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Renewable Energy Certificate trading witnesses record prices on surging volumes in first trade of the year

According to reports, 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 REC 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 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.

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.

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