REC Trade Results February 2017

The Feb trade session remained a robust one, following the record setting session in January.  Total Non-solar demand was 10.4 lakhs (vs 15.2 L demand in January), and clearing ratios on IEX and PXIL were 8.7 and 6.2% respectively. On a year-to-date basis, this year Non-solar RECs demand has been significantly higher than last year. March 2017, which will be the last trading session of FY 16-17, is also expected to result in high trading volumes.

 

Solar RECs trading, on the other hand, has remained subdued. One reason is the significantly solar capacity coming online in states (with record low tariffs) – this result in Discom’s not buying solar RECs in large volumes. Also, the expected price drop in April 2017 may be resulting in potential buyers deferring purchases.

 

Non Solar – The clearing ratio stood at 8.72% and 6.2% in both IEX and PXIL respectively.

Solar – Clearing ratio stood at 1.26% and 0.34% in IEX and PXIL respectively.

 

 

 

REC Trade Results January 2017

This month’s trading saw a remarkable turnaround with respect to the overall Non solar REC clearance. The clearance ration stood at a shooting high of 10.8% for non solar. The demand for solar REC saw marginal improvement in respect to the month of December. The total transaction value stood at 244.7Crores in comparison to 74.4 Crores last month.

Analysis of Trading:

Non Solar – The clearing ratio stood at 13.5% and 5.7% in both IEX and PXIL, with a drastic increase of 260% in the no. of REC’s traded as compared to last month.

 

 

Solar – Clearing ratio stood at 1.2% and 0.7% in IEX and PXIL respectively, with a significant increase of 49% in total demand of Solar RECs as compared to December.

 

REC Trade result December 2016

This month trading saw good results with respect to the Non solar REC clearance overall. The demand for solar REC saw marginal improvement in respect to the last month. The total transaction value stood at 74.4 Crores in comparison to 53.6 Crores last month.

This month saw fall in the total issuance where the demand decreased by 4.60Lakhs in comparison to November. Though there had been significant increase in the total REC issuance due to the impact of CERC’s 4th amendment to RECs regulations.

Analysis of Trading:

Non Solar – The clearing ratio stood at 3.19% and 2.81% in both IEX and PXIL, with a significant increase of 61% in the no. of REC’s traded as compared to last month

Solar – Clearing ratio stood at 0.85% and 0.53% in IEX and PXIL respectively, with a dip of 23% in total demand of Solar RECs as compared to November.

 

 

 

REC Trade Result November 2016

This month trading saw stagnant results in respect to the demand for Non-Solar REC’s. The demand for solar REC saw marginal improvement in respect to the last month. The total transaction value stood at 53.6 Crores in comparison to 50.6 Crores last month.

 

Analysis of Trading:

 

Non Solar – The clearing ratio stood at 1.85% and 2% in both IEX and PXIL, with a significant increase of 2.25% in the no. of REC’s traded as compared to last month

Solar – Clearing ratio stood at 1.13 % and 0.96% in IEX and PXIL respectively, with an increase of 17.5% in total demand of Solar RECs as compared to last month.

 

This month also saw significant increase in total REC issuance, where the demand increased by 9 lakh in comparison to October. This could be attributed due to the impact of CERC’s 4th amendment to RECs regulations.

REC Trade Result October 2016

Analysis of Trading:

 

Non Solar – The clearing ratio stood at 1.9% and 2.06% in both IEX and PXIL, with a significant increase of 46% in the no. of REC’s traded as compared to last month

Solar – Clearing ratio stood at 0.86 % and 1.16% in IEX and PXIL respectively, with an increase of 13% in total demand of Solar RECs as compared to last month.

This month trading saw significant improvement in the demand for both Solar and Non-Solar RECs as compared to last month. The total transaction value stood at 50.66 Crores in comparison to 37.5 Crores last month.

In contradictory to the total demand, this month saw a dip in the total REC issuance, where the demand increased by 1 lakh in comparison to September. This could be attributed due to the impact of CERC’s 4th amendment to RECs regulations.

 

REC Trade Result September 2016

The month of September trading saw significant decrease in the demand for both Solar and Non-Solar RECs as compared to last month. The total transaction value stood at 37.5 Crores in comparison to 52 Crores last month.

Analysis of Trading:

Non Solar – The clearing ratio stood at 1.36% in both IEX and PXIL for Non Solar REC’s.  A total of 1, 75,525 RECs were traded this month as compared to 2, 58,891 RECs traded in last month, a decrease of 32%.

Solar – Clearing ratio stood at 0.8 % and 0.98% in IEX and PXIL respectively, with significant decrease of 20% in total demand of Solar RECs as compared to last month.

 

 

 

In contradictory to the total demand, this month also huge rise in the total REC issuance where the issuance increased by more than 5 lakhs as compared to the past month’s total issuance. This could be attributed due to the impact of CERC’s 4th amendment to RECs regulations.

REC Trade Result August 2016

This month trading saw marginal increase in the demand for both Solar and Non-Solar RECs as compared to last month. Compared to August 2015, demand was almost double this month.  The total transaction value stood at 52 Crores in comparison to 40 Crores last month.

This month also saw significant fall in the total REC issuance with 40% reduction as compared to the past month’s total issuance. However, this is likely to be a temporary blip as RECs issuances are yet to catch up after the impact of CERC’s 4th amendment to RECs regulations.

 

Analysis of Trading:

 

Non Solar – Clearing ratio in exchange stood at 1.86% and 2.27%in IEX and PXIL respectively for Non Solar REC’s.  A total of 2, 58,891 RECs were traded as compared to 2, 35,007 RECs traded in July, an increase of 10%.

 

 

Solar – Clearing ratio stood good at 0.99% and 1.4% in IEX and PXIL respectively, with a marginal increase of 5% in total demand of Solar RECs as compared to last month.

REC Trade Result July 2016

In contrast to June 2016, which saw huge demand for both Non-solar and Solar RECs, this month trading did not fare that well.  This month trading saw a dip in the demand for both Solar and Non-Solar RECs. The demand though increased twice the amount in comparison to July 2015.  The total transaction value stood at roughly half as compared to previous month, i.e. 40 Crores as compared to 80 Crores last month.

Analysis of Trading:

Non Solar – Clearing ratio in exchange stood at 1.91% and 1.69 % in IEX and PXIL respectively for Non Solar REC’s.

Solar – Clearing ratio stood good at 1.17% and 0.97% in IEX and PXIL respectively.

The graphs are given below:

 

 

Analysis of CERC’s 4th Amendment to REC Regulations

CERC published the 4th Amendment to REC regulations in end-March. These regulations will have a significant impact on the RECs markets going forward, as a large portion of the existing capacity under the mechanism will become in-eligible for RECs.

In summary, the following projects will no longer be eligible for RECs:

  • Open access projects that avail concessional wheeling or banking benefit
  • Captive or self-consumption projects commissioned before 29 Sept 2010 or after 31 March 2016 (ie, before the RECs regulations first amendment when captive projects were made eligible and after this amendment)
  • Captive or self-consumption projects commissioned between 29 Sept 2010 or after 31 March 2016 but avail concessional wheeling or banking benefit

Our analysis suggests that several projects will become ineligible for RECs. The largest impact will on bio-fuel co-gen projects and biomass projects, as a large portion of these projects are captive or self-consumption projects commissioned prior to 29 Sept 2010. Older wind projects under group-captive mechanism (predominantly in TN and Maharashtra), and captive small hydro projects will also be impacted.

Solar projects are likely to have minimal impact as most projects are commissioned after 2010.

Source: REC Registry website; REConnect Analysis

 

This will lead to significant reduction in RECs issued. Our estimate suggests that the reduction could be as high as 40-50% of existing RECs issuance (in FY 15-16, total non-solar RECs issued were 73.6 lakh).

As a result, it is likely that demand for RECs will outstrip supply on an annualized basis during FY 16-17. However, large existing inventory of RECs will ensure that for FY 16-17 trading prices remain at floor-price and clearance remains low.

Note: The above issuance and demand are cumulative for the year (it does not include existing inventory of RECs)

Source: REC Registry website; REConnect Analysis

 

The regulation can be accessed here.

 

 

 

REC Trade Result March 2016

March, being the last month of the Financial Year to fulfil the yearly RPO obligations, saw significant rise in demand in both the Solar and Non-Solar segments, as compared to the last three months. Non-Solar RECs demand almost doubled and Solar RECs demand rose by 68.45%, as compared to February. This was the result of stricter compliance and can also be attributed to the recent Ad by MNRE asking all entities to fulfil their obligation. The total transaction value stood at 213.3 Crores as compared to 119.5 Crores last month.

Analysis of Trading:

Non Solar – Clearing ratio in exchange stood at 7.65% and 8.93% in IEX and PXIL respectively for Non Solar REC’s. A total of 11, 14,319 RECs were traded as compared to 586,501 RECs traded in February. Overall, it was a good recovery in this segment, which also saw the closing Inventory come down marginally.

Solar – Clearing ratio stood good at 5.07% and 3.35% in IEX and PXIL respectively, with total clearing volume of 152,006, as compared to 90,236 last month. The recovery was good, but contrary to the Non-Solar inventory, the solar inventory showed no reduction.

 

As compared to March-2015, where the Non-Solar and Solar demand stood at 654985 and 68982 respectively, it was 70% and 120% higher for Non-Solar and solar respectively, in March-2016. However, the closing inventory for the FY stands at 13.28 million and 3.31 million for Non-Solar and Solar respectively, worth close to Rs. 3151 Crores. April-2015 trading saw huge clearance due to late fulfillment of obligations, and the same can be expected next month as well.

We are hopeful that the FY 2016-17 will bring good fortune to the REC market, considering the proposed regulatory changes and more stricter enforcement by states, which will bring back stakeholders confidence.

Go to top