REC Trading Report – December 2012

Non-solar RECs

Volume increased significantly from the lows of November. Total traded volume was 273,644 in December (up from 132,352 in November; 108% increase).

Supply continued to increase. Total sell bids exceeded 14.5 lakh RECs (up 18% from last month). The demand-supply gap remains a significant worry, despite increase in demand this month.

Prices remained at the floor level for the fifth month. However, higher demand meant that clearing ratios improved slightly. Clearing ratios were 22% in IEX and 17.5% on PXIL (last month was 8% and 25% respectively).



Solar RECs

Demand and supply reduced from last month and prices varied slightly.

Clearing price at IEX was Rs 12,620 and on PXIL was Rs 12,100. There appears to be significant latent demand for Solar RECs (as seen in June and July), but the actual demand tracks available RECs closely.

Gloomy weather over REC market

Last month’s REC trading session has brought the REC market on the verge of vanishing soon. With no sign of strict enforcement happening and a drop of 40% demand shows that the obligated entities have the least interest to participate in the REC market. Those who were purchasing RECs have taken a step behind and are hesitating to purchase RECs to meet rest of their obligation. This has shattered the confidence of all the investors on the REC scheme and has put forward a very big question on the Indian regulation and policy makers.

Few media coverages on the falling REC market:


Hike in GBI for wind power projects

According to Bloomberg’s article, the wind farms in India will receive a hike in their subsidy ( from 50p to 80p for per unit of the electricity generated). Under the Operational Guidelines for implementation of “Generation Based Incentive (GBI)” for Grid connected wind power projects,which was announced by Indian Renewable Energy Development Agency (IREDA) in May 2010, the GBI scheme was applicable till 31st March 2012. After Accelerated Depreciation was withdrawn REC mechanism was the only source which could provide benefits to wind farm owners. But at the present situation of the REC market, raising the GBI will enable the investors to rethink about their plans to re-enter into wind power sector.

Dilip Nigam, Director for Wind Policy,The Ministry of New and Renewable Energy said that the subsidy was previously only available to the first 4,000 megawatts of completed wind projects which will be expanded to allow as much as 15,000 megawatts of wind-farm capacity to claim the subsidy before March 31, 2018.

The new scheme is expected to be announced by the end of December. Lets see how much will it blow the wind sector.


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