REC Trading Report – August 2012

Prices crashed to Rs 1,500 on IEX and Rs 1,555 on PXIL; a fall of 25% and 29% respectively over last month. This price fall was driven by a significant over-supply situation – close to 6.27 lakh RECs (33% increase from July) were bid for sale while demand was 2.83 lakh (76% increase; but there’s more to the story – see below).

Demand increased this month compared to July 2012. July had witnessed a steep fall (July demand was 161,000 while in June it was 350,000). The increase this month can be attributed to renewed interest by buyers due to expectation of a price drop as the oversupply situation developed.

Despite a comeback by buyers, there as a large demand-supply gap. Supply has been robust due to multiple factors – increasing capacity in the REC mechanism (since March 2012, over 1,000 MW capacity has been added), high-wind season resulting in good generation and cumulative issuance of Maharashtra wind RECs.

At the same time, demand has remained weak due to enforcement concerns. Till date, no state has taken any concrete action towards enforcement.

Cleared volume at IEX was 248,168 (July – 147,369; up 68%) and at PXIL was 25,725 (July – 10,851; up 137%)

We expect this oversupply situation to persist, and worsen, till enforcement actions spur buyers to act.

Solar RECs

Demand decreased from last month (from 8,754 to 2,331; down 73%). RECs bid for sale remained flat (550 vs 549). The market clearing price on both power exchanges was Rs. 12,850 (Its rose from Rs.12800 last month; up 0.4%). Only 379 Solar RECs were sold (last month it was 200).

Total market value exceeded Rs 43 crore, of which Rs 48 lakhs were from Solar RECs. This is up 34% in aggregate from previous month.

For news coverage of August trading session, see here:

  • Coverage in the Hindu Business Line states: “The biggest disappointment among the renewable energy producers (who are the sellers of RECs) is that no state owned electricity distribution company has come forward to buy the certificates, although they are all ‘obligated entities’. This is due to lack of enforcement of their obligations. “Lack of participation from public Discoms and large captive power plants is the main reason behind the price crash,” said Vishal Pandya, Director, REConnect”

 

2 Responses to REC Trading Report – August 2012

  1. Lowest price for the first time when highest accomplished demand for the first time
    (although there was earlier higher unaccomplished demand ).
    Issuance will increase whereas the RPO of state discoms are not being enforced .
    Some one has to initiate action against the state Discoms – perhaps it can be those private producers who have been fulfilling there obligation may file a petition with the CERC and respective SERC for either enforce the state discoms or else release the private power producers from the RPO obligations as per the principles of natural justice.

    Thanks REC connect and team for the excellent support and knowledge sharing .
    We are enjoying the REC connect platform . keep it up and may god bless REC connect with higher Market share .

    thanks and regards
    s christopher muthiah

  2. Dear Mr Vishal,

    How come the number of participants in PXIL is not applicable whereas there is a market clearing volume and market clearing price

    that means its a dummy trade or trade by itself to itself.

    request kindly clarify

    regards
    s christopher muthiah

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