REC Trading Report – July 2012

Demand fell off the cliff this month, mainly driven by enforcement concerns and expectations of price fall in the future (due to increasing supply). Aggregate demand reduced to 161,000 RECs from 350,000 last month (-54%). On the other hand, supply of RECs increased from 360,000 to 467,000 (increase of 30%). Of these, 158,000 RECs were sold (last month – 236,000; down by 33%).

Detailed analysis of Non-solar REC trading:

The market clearing price on IEX and PXIL was Rs. 2,000 and Rs.2,202 respectively. (Last month it was Rs. 2,402 at IEX and Rs. 2,460 at PXIL; down 17% and 10% respectively).

The price fall is not surprising, given the steep fall in demand. The low demand and cleared volume leaves an overhang of close to 350,000 RECs this month. Next month this is likely to result in significant oversupply, putting further pressure on prices.

Detailed analysis of Solar REC trading:

In the third session of Solar REC trading demand fell marginally from last month (from 9,619 to 8,754; down 9%). RECs bid for sale also reduced marginally to 549 from 563 last month (-2%). The market clearing price on both power exchanges was Rs. 12,800 (Its rose from Rs.12750 on IEX and Rs.12506 on PXIL). Only 179 Solar RECs were sold (last month it was 342).

Total market value exceeded Rs 32 crore, of which Rs 22 lakhs were from Solar RECs. This is down 44% in aggregate.

 

The Hindu quoted Vishal Pandya of REConnect which covered the July trading news:

“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

RPO targets to be met at minimal cost: FOR

In a recent Bloomberg article, the Forum of Regulators (FOR) said that the Renewable Power Purchase target can be easily achieved by DISCOMs at a minimal cost. The study of top electricity regulators says that there will be enough capacity addition from wind and solar farms that it will easily allow private distribution companies to buy as much as 11.4 percent of their electricity from renewable sources by 2017. Their study says that the average cost of power will rise by 1 paisa per unit and gradually drop by 2017.

Around 40,000 MW green power can be added in the country in the next five years if the power transmission and distribution infrastructure is upgraded . It amounts to half of the power capacity that our country needs by 2017, according to a Planning Commission report.

The forecasted facts and figures can be easily achieved only if the government takes strict action on timely enforcement across states and announce attractive schemes for investors and developers.

REConnect’s journey so far

A recent article of The Hindu Business Line covered the story how REConnect was formed and their entrepreneurial journey till now . Vishal Pandya and Vibhav Nuwal , Directors, REConnect Energy Solutions met through Linkedin, shared their ideas of running their own business and formed REConnect to provide services to Renewable Energy Generators to receive certificates for their green power and trading of those at the power exchanges.The Renewable Energy Certificate(REC) market and REConnect,which has its sole focus only in providing life cycle services in REC domain are growing together.

Vishal Pandya, Director, REConnect Energy Solutions was quoted,“People started seeing that since we are focussed only on REC, we bring a lot of intensity and execution capability. We have the expertise.”

 

 

Subsidy of 1 rupee per unit on consuming less power in Delhi

With the power prices going up in the capital regularly and a 26% tariff hike which made by the Delhi Electricity Regulatory Commission (DERC) last week, Delhi Chief Minister Sheila Dikshit announced a subsidy of Re 1 per unit for those who consume less than 200 units in a month . In yesterday’s article of Tehelka.com she said that, “The DERC has hiked the tariff. We have nothing to do with it. There is no alternative but to increase the rate as cost of power purchase has gone up significantly. We will continue to provide Rs 1 subsidy per unit to those who limit their consumption up to 200 unit per month”.

This facility was available earlier also but it was discontinued in March 2012. It is estimated that around 20 lakh domestic consumers (59 % of total domestic consumers) will benefit from the scheme . The government will release an amount of Rs 222.40 crore for this purpose.

If the consumption if less than 200 units in a month one would pay Rs 2.70 per unit. But if it goes beyond 200 units it will be charged as Rs 4.80 per unit for the entire consumption.

With increasing demand such steps will attract consumers to save power.

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