REC Trade Results Feb 2015

We are pleased to share the Result of REC trading for the month of FEB-15.

  • Solar RECs – Overall market clearance remained optimistic this time, with steep rise in demand at PXIL and overall good clearance at both the exchanges. Demand rose from close to 30000 last month to 44,869 this time, albeit the huge inventory waiting to be cleared.
  • Non Solar REC market also showed good signs of improvement with total of 747,487 Non-Solar RECs getting cleared in today’s trade session, compared to 537,009 in the last trading session.

Detailed trade results are tabled below for your kind reference.

Non-Solar RECs

Solar RECs

REConnect Energy is the market leader in the REC Market in India, with 36% market share and a portfolio of over 3 GW RE. We have been recently acknowledged with the REC Trader of the Year 2014.

Team REConnect

 

 

CERC: REC Regulation 3rd Amendment

We are pleased to inform that Hon’ble CERC has finalized a much awaited 3rd Amendment on REC Mechanism. The Central Commission has laid out following changes through this legislation/order:

REC Regulation (3rd Amendment) | Order on Vintage Multipler |  Statement of Objects & Reasons

DISCOMs to get RECs for surplus green power they would have procured. However, this is applicable only if such DISCOM has procured green power over and above RPO target set under NAPCC or National Tariff Policy or by Appropriate Commission WHICHEVER IS HIGHER. Further, before granting RECs for surplus green power, any shortfall in RPO or any carry forward in RPO granted by Commission in PREVIOUS THREE YEARs would be adjusted first before issuance of RECs to such DISCOM. Provided further, such DISCOM would need permission from appropriate commission to procure such green power.

Implications: This provision clearly brings clear incentives for DISCOM having procured higher amount of green power beyond their RPO targets. However, since the proviso brings forth conditionality of “higher of NAPCC, Tariff Policy or State Commission mandated RPO target”, DISCOM would have to align themselves first with all the three RPO targets. We can say that the Center would now have a greater say in directing RPO trajectory which was missing so far.

Pre-Term reduction in Solar Floor/Forbearance Price. The new Floor price now stands at Rs.3500/MWh and Forbearance Price at Rs.5800/MWh.

Vintage Multiplier for Solar RECs has been introduced. Solar projects registered under REC Mechanism after 1st Jan, 2015 would get 1 REC for every MWh of generation. Projects registered before that would get 2.66 RECs for every MWh of energy.

Implications: This proviso brings clear divide between projects that are already registered and projects which would get registered under REC mechanism from today onwards. Since the reduction of REC price would bring additional demand, the sudden spike in supply of REC would again result into subdued/depressed clearance ratio of Solar RECs.

With the current inventory of 5.8 Lac RECs available, we can expect the inventory to shoot to about 15.5 Lac Solar RECs immediately. Further, with 538 MW Solar PV capacity already registered under REC, the inventory pile up can increase rapidly given the multiplier effect.

Differential treatment of Captive/CGP and OA based REC generator has been kept in abeyance.  Hon’ble commission has kept the decision to grant reduced number of RECs to OA/Captive based REC Generator in ABEYANCE and has directed staff to come up with a fresh discussion paper to accommodate the same.

The Hindu Business Line quoted – “ The CERC notification lowering the price band is significant because the previous band did not serve any purpose. Even the floor price (Rs 9,300 per REC) was very high. Since one REC is issued for every megawatt-hour of electricity generated, the floor price translated to Rs 9.30 per unit of solar power. Nobody would buy an REC at this price because any obligated entity would find it cheaper to buy solar energy, which is now available at between Rs 6 and Rs 7 a unit, rather than buy a solar REC paying Rs 9.30. The solar industry had been clamoring for a downward revision of the band”. The same can be read in the media article here.

Regulation (Suo Motu Order), Notification and Statement of Reasons can be accessed.

The same has been mentioned in a media article here.

 

CERC: 3rd Amendment (Draft) to REC Mechanism

We are pleased to convey that hon’ble CERC has issued 3rd amendment on REC Mechanism. Key highlights of the same are summarized below:

  1. Eligibility Criteria

A)      DISCOMs having met their previous year RPO can also claim RECs for surplus green power purchased.

  • IMPACT: We can expect additional non-solar RECs from TN, HP and possibly from Karnataka. Gujarat is expected to benefit by the way of getting Solar RECs as installed capacity in Solar exceeds solar RPO targets.
  • Open Access route for RE project may become tougher as DISCOMs now have an additional incentive to procure green power and claim certificates.

B)      OA and CGP route to get reduced number of RECs:

  • It’s proposed in the amendment that OA and CGP based RE generator to be given 0.5 REC for every 1 MWh of generation.
  • IMPACT: The analysis in the draft paper suggests that as much as 65% of installed RE capacity under REC represents OA/CGP route. The % share in net REC number would be even higher as biomass and bagasse based REC project would operate at higher PLF. Hence, this would reduce the REC inventory at least by 40% w.r.t current issuance mark.
  • A much awaited step to bring back buyers confidence in procuring Solar RECs. 
  • The new floor price that would be applicable to ALL SOLAR projects has been reduced to Rs.3500/REC and forbearance price to Rs.5800/REC.
  • The order suggests that solar projects commissioned during year 2013 would get 1.47 Solar RECs, 2014 would get 1.19 Solar RECs and 2015 onwards to get 1 REC for every 1 MWh of Generation.
  • Likewise, OA and CGP based REC projects to get 0.74, 0.6 and 0.5 Solar RECs (2013, 2014 and 2015 respectively) for every 1 Mwh.
  1. Vintage Multiplier for Solar Projects:

According to our understanding, there are three main issues in the current REC market.

  1. Over supply of RECs
  2. Skewed pricing of RECs especially in case of Solar
  3. Laid-back enforcement.

The summary of REC Floor and Forbearance price is shown in the graph below:

The current regulation seems to tackle first two issues as the third part is largely in the hands of state regulators. Overall it’s a welcome step and would reinstate faith of stakeholders in REC market. 

The comments are invited by hon’ble CERC not later than 30.10.2014 and hearing is scheduled on 04.11.2014. We request all the stakeholders to submit their comments and express their views to hon’ble Commission. 

The relevant document can be accessed here.

Press Coverage Link.

Contributed By: Vibhav Nuwal

REC Trading Report August-2014

REC trading session of August-14 was conducted on 27th August 2014.  Below is a summary of the result:-

Demand continues to be lack-lusture. Overall demand was 50681 for non-solar RECs, and 1163 solar RECs. Overall market clearing ratio for Non-solar RECs was 0.58%, and for Solar RECs was 0.35%. Summary is given below in the table below.

 

  • Non Solar REC:

Though the Total RECs redeemed this month increased over previous month, it was due to poor demand in July. The demand picked up by 60% from the month of July. The supply rose marginally by 5% w.r.t July. Non Solar price remained at 1500 INR (Floor Price).

Clearing ratios at IEX were 0.40% and PXIL were 0.73%.

 

 

  • Solar REC:

Demand fell significantly over previous month. However, demand was exceptional last month due to purchase by a Discom.. The Total supply grew by 15% with respect to July. Only 1163 RECs were traded this month which was next to lowest as of in this year.

Clearing ratios at IEX were 0.24% and PXIL were 0.43%.

 

Contributed By: Cigil & Vibhav Nuwal

 

REConnect Newsletter Volume 43 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 43 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

The main article covers:

The government announced the re-introduction of Accelerated Deprecaition for wind projects. This was a major announcement for the Renewable energy industry. Our main article provides a detailed analysis of the impact of this change, and the relative merits and de-merits of investing in wind or solar projects.

This issue also covers:

- Details of the next batch of bidding for solar projects announced in JNNSM

- Details of the FOR meeting that took up the need for strong RPO enforcement

- Various other regulatory developments in Maharashtra, Rajasthan, Chattisgarh, Karnataka, and other states

Past newsletters can be accessed here - http://www.reconnectenergy.com/newsletter/past-newsletters/

For latest news and updates, please visit our blog at – http://reconnectenergy.com/blog/

 As always, we will love to hear your feedback on the newsletter.

- Team REConnect

Forum of Regulators discusses Issues of RPO

Forum of Regulators (FOR) held its 41st meeting on 27th June 2014, in Delhi. The Ministry of New and Renewable Energy (MNRE), through a presentation, raised several issues concerning Renewable Purchase Obligation (RPO).

The Key issues highlighted in the presentations are as below:

  • MNRE suggested that the validity REC’s should be extended by 6 months, arguing that a total of 50059 REC’s will expire in next six months.
  • It was suggested that MNRE could consider purchasing the unsold REC’s by using National Clean Energy Fund.
  • The Floor price of Solar REC’s can be reduced due to drastic change (reduction) in Solar PV tariffs over last three years.
  • Giving “MUST RUN” status to RE generation, so that total RE generation could be evacuated, and  have a provision of “Deemed Generation” in case SLDC asked RE generators to back down.
  • Due to poor RPO compliance in all states, the members agreed upon the need of strong RPO enforcement.
  • RPO compliance cost should be allowed in ARR (Average Revenue requirement).
  • The issue of allowing DISCOM’s to purchase REC’s for procuring Renewable Energy beyond their RPO targets was also discussed.
  • The forum suggested that a concept of Renewable Generation Obligation (RGO) for conventional Thermal power plants need to be introduced.
  • Suggestions were given on considering power generated from Large Hydro Projects as Renewable Energy.
  • The Forum also suggested that the concept of Hydro Power Obligation should be introduced.

 From the issues discussed in the meeting it can be deduced that the regulators may come up with strong steps towards RPO compliance. Also, the regulators are set to promote RE generation by making provision for providing proper transmission network for RE generation.

 More information can be accessed here.

 Contributed by Dheeraj Babariya.

 

REConnect Newsletter Volume 42 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol 42 – our monthly newsletter covering RECs and regulatory and market developments in the renewable energy space.

 Key points covered in this newsletter are:

 1) Analysis of Karnataka’s solar policy

 2) Regulatory updates including important changes in RPO regualtions in Rajasthan, Order of JERC for enforecemnt of RPO including    imposition of penalty, and other regulatory updates

 3) Analysis of the most recent trading session of RECs and capacities in the REC mechanism

 Past newsletters can be accessd here - http://www.reconnectenergy.com/newsletter/past-newsletters/

For latest news and updates, please visit our blog at – http://reconnectenergy.com/blog/

 As always, we will love to hear your feedback on the newsletter.

- Team REConnect

REC Trading Report – June 2014

REC trade session for June 2014 was conducted on 25th June 2014. The following is a summary of results -

The total transactional value of non-solar RECs was INR 208.8 million and for solar RECs it was INR 15.4 million. The closing balance of REC inventory for non solar RECs breached the 7 million mark this  month whereas solar RECs crossed 0.23 million mark.

 

 

Non Solar RECs -

In case of non- solar RECs demand almost quadrupled (up by 376%) as compared to last trade session (refer  - May 2014 trade report) and Supply grew by 5.23 %. Non Solar price continued to remain at floor (INR 1,500 per REC). More insights provided in graphical charts below :

Solar RECs -

Total solar RECs issued this month was 27,787 and redeemed were 1654 only. In contrast to non-solar RECs, the demand for solar RECs took a beating as it went down by 22%. Supply rose by 11% w.r.t May 2014.  More details can be found in the graphs below -

Solar RECs finished trading at floor for consecutive 12 months.

Relevant media article can be read here.

REC Trading Report – May 2014

Demand and clearing ratios touched one of the lowest points in three years.

Non-solar RECs:

Demand in May was 29,255, compared to 79,354 in April (down 63% over April) and down 45% from May of last year. The last time demand was this low was in August 2011. Clearing ratios at both exchanges were approximately 0.45%. Closing inventory of RECs is in excess of 69.5 lakh.

Solar RECs: Demand improved marginally from 989 RECs last month to 2,120 RECs. As a result, clearing ratios improved as well – 0.26% in IEX and 4.8% on PXIL, albeit on very low demand compared to existing inventory. Inventory currently stands at over 2.1 lakh RECs.

The low demand is continuing despite penalty orders in Uttarakhand and Union Territories. It will be interesting to watch the approach that the regulators take in the next few months if the non-compliance continues despite orders from them.

To get details about previous months trading session – Click Here.

Our online market tracker tool can be accessed here.

REConnect Newsletter Volume 41 – OPEN ACCESS

Dear Reader,

We are pleased to present Open Access Vol. 41 – our monthly newsletter covering RECs and regulatory – market developments in the renewable energy space.

Key points covered in this newsletter are:

1) Our analysis on the likelihood of RPO enforcement in FY 2014-15.

2) Regulatory updates including KERC’s final APPC for FY14 & FY15 (interim) & JSERC order on declaration of Bokaro Steel Plant’s CPP as Cogeneration unit.

3) Analysis of the most recent trading session of RECs and capacities in the REC mechanism.

The newsletter is attached with this email and also can be found on our webpage - http://www.reconnectenergy.com/newsletter/past-newsletters/

We hope that you find the newsletter a useful read. Do provide us feedback.

Regards,

- Team REConnect

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