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Steep fall in Renewable Energy Certificate demand, prices in July trading

According to reports, only 1,58,320 non-solar renewable energy certificates were traded on the country’s two energy exchanges on July 25 compared with 2,36,485 in the trading session of last month.

The prices also sank — to Rs 2,000 a REC on the Indian Energy Exchange Ltd, and Rs 2,202 on the Power Exchange of India. Comparatively, the prices were Rs 2,402 and Rs 2,460 last month.

(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 required to purchase a certain quantum of either green power or RECs. Trading happens on the last Wednesday of each month.)

Demand for RECs also fell steeply. Demand fell to 1,61,028 RECs against a supply of over 5 lakh RECS. Buy bids June were for 3,60,691, which means that the demand has fallen to less than half.

The Indian Energy Exchange accounted for 93 per cent of the traded volume today.

“With the market starting high during initial months of the financial year itself, we were actually expecting this. However, with prices declining in REC, we can expect new buyers emerging and, hence, prices getting stabilised after few months,” Mr Vishal Pandya, Director, REConnect, , a consultancy that operates in the REC market, told Business Line.

“The whole market is designed based on the assumption of Renewable Purchase Obligation enforcement and the current measures on the enforcement side seem not sufficient,” Mr Pandya said.

The only silver lining was the demand for solar RECs. Buy bids totalled to 8,754 solar RECs. However, due to non availability of solar RECs, only 179 were trade—at a price of Rs 12,800.

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