Review of REC Trading-October 2011

The highlight of this trading session was the increase in volumes (95,504 RECs sold versus 46,362 last month) and price (Rs 2710/ REC*).

The increase in cleared volume of 106% is significant, particularly as increase in volume offered for sale increased only by 62%. This is a clear indication that sellers are expecting a higher price in the future, and are willing to hold RECs for that. Since the price jump was significant this month (~18%, on the back of a 29% jump last month), a lot of the RECs which were held back to be sold only at higher prices were cleared this month.

The price increase was also noteworthy. IEX price was Rs 2,700/ REC while PXIL was Rs 3,000/REC. If we consider the last few months (see past trading reviews here), prices have risen from the floor price to the current level – an increase of 80%.

This is despite that fact the demand volume grew very slowly (only 4% this month, vs 24% in September and 90% in August). This may be due to lower participation during the Diwali holiday season, and also dampening of demand due to the high prices of last month.

No Solar RECs were traded this month, though trading can be expected to begin as the first solar project got accredited recently.

See press coverage on October trading here:

In Business Line. We are also quoted in the article ““The very marginal increase in demand reflects lack of fresh demand being generated for RECs,” notes Mr Vishal Pandya of REConnect Energy Solutions

In Economic Times. The article mentions REConnect Energy as one of the major traders.

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