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Renewable Energy Certificates trading tepid in September

According to reports, as expected the trading in renewable energy certificates (REC) today (for the month of September) was weak. Sellers offered to sell 7,11,171 (non solar) RECs, but only 2,64,446 were bought, and that too, at the floor price of Rs 1,500. The situation of supply far exceeding demand, which was evident in last month’s trading, was evident in today’s trading too.

The Indian Energy Exchange (IEX) accounted for 90.5 per cent of the traded volumes, and the rest was trade on the Power Exchange of India (PXIL).

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 purchase a certain quantum of either green power or RECs. Trading happens on the last Wednesday of each month. Within the obligation, there is a small slice carved out for solar-RECs (RECs from solar power generators.)

“Not many buyers turned up for the trade session this month. Two quarters are over and we are yet to see a larger level of participation from obligated entities,” says Vishal Pandya, Director, REConnect, a consultancy that operates in the REC area. REConnect’s clients accounted for 62.6 per cent of the traded volume today.

Further, there are over 11 lakh RECs with the generators today, but only a little over 7 lakh were put up for sale. This implies that 37 per cent of REC holders saw little merit in participating in this month’s trade, anticipating poor price.

As regards solar RECs, today’s trading saw a record volume of 1,160 certificates. These were traded at Rs 12,500 on IEX and Rs 12,900 on PXIL, much higher than the floor price of Rs 9,300.

This is better news, because the supply of solar RECs is increasing and the price is also holding up.

The big disappointment among the renewable energy producers (who are the sellers of RECs) is that no state-owned electricity distribution company comes forward to buy the certificates, although they are all ‘obligated entities’. This is due to lack of enforcement of their obligations.

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