Blog by Team REConnect

Delhi discoms likely to comply with RPO by purchase of RECs

Delhi discoms – BRPL, BYPL and TPDDL have all filed a petition to Delhi electricity regulatory commission (DERC) for approval of annual revenue requirement (ARR) of FY 2014-15.

In terms of renewable energy resource capacity, Delhi is indeed poor as compared to other states. Therefore, to comply with RPO targets obligated entities in the state have lesser options than to buying RECs from the markets.

Following are the cost estimates for purchase of RECs submitted by discoms (for FY2014-15)-

BRPL – Rs 28.3 cr (Solar RPO) & Rs 90.7 cr (Non-Solar RPO)

BYPL – Rs 15.4 cr (Solar RPO) & Rs 56.2 cr (Non-Solar RPO)

TPDDL – Rs 17.54 cr (Solar RPO) & Rs 74.71 cr (Non-Solar RPO)


The petitions can be downloaded from DERC’s website.

REC Trade Report – March 2014

We are pleased to bring the REC trade results and our analysis on REC trade session conducted on 26th March 2014. Following is a brief of the analysis:

With this trade session, a 12-month long financial year FY 2013-14 comes to an end. The prices for both credits (solar as well as non-solar) remained at floor for most part of the year.  Poor enforcement measures of RPO across states saw a continuous lack of demand in the market.

Close to 17.5 lac RECs were issued in March’14 itself, which is a huge 15 % (approx.) of the total RECs issued till date in India (since March 2011) . This can be attributed to issuances of RECs w.r.t sugar co-gen units in Uttar Pradesh.

A strong policy review is the need of the hour. It is likely and should be expected, that the forum of regulators (FOR) takes up this issue for discussions during the forthcoming 40th meeting scheduled on 2nd April 2014.

Non Solar RECs -

Non Solar REC Supply grew by around 22%. Demand also went up by a massive 74%, owing to March being last month of FY14 (and not due to strong RPO enforcement). Evidently, clearing volume also touched a new high of around 6.5 lac RECs.

Non-Solar REC Price continued to trade at floor price of Rs. 1500 per REC.

Solar RECs -

In case of solar RECs also all volumes had an uptick. Supply was up by 13.22.6 % and demand by 32.63 %. The total clearing volume of solar RECs at both exchanges was 11,019 RECs.

As per REC registry, 24370 solar RECs were issued in March 2014.

Unlike in non-solar REC markets, the solar RECs started trading at floor, only from June 2013. The discovered price of solar RECs remained at floor – Rs. 9300 per REC.

Keeping in view the overall market performance, it can be said that the time ahead for investors in solar REC markets remains grim.

For a similar blog-post covering analysis on previous months trade session – click here.

A quick glimpse of trade stats can be had on our Market Tracker.

REConnect Newsletter Volume 37 – OPEN ACCESS

We are pleased to present the 37th Volume of “OPEN ACCESS” - our monthly newsletter on REC Mechanism. 

The present volume covers analysis on following main topics:
  • Recent steps taken by Tamil Nadu, Maharashtra & Delhi towards small scale solar projects. 
  • MERC order on solar RPO for Tata Power Company – Distribution.
  • ApTel’s judgment on fossil fuel based co-gen plants..
  • CERC’s order on REC issuance of UP’s co-gen plants. 
  • REC Trade Analysis – November 2013 & December 2013. 

To access the current volume (OPEN ACCESS Vol. 37) please Click Here.

To read past volumes of our newsletter please follow this link

We hope you will find this volume of OPEN-ACCESS an insightful read. As always, look forward to your feedback and continued support. 


Team REConnect

REC Trading Report – May 2013

The second REC trade session of FY 2013-14 (May-13) continued to remain dry in terms of buy side participation. Clearance ratios for Non-Solar RECs remained in single digit and prices softened in Solar RECs. Following are the highlights:

Non Solar RECs

  • Market clearing prices at both exchanges remained at Floor i.e. Rs. 1500 per REC.
  • Total buy bids of 52968 (up by 19.1 % as compared to April’13 trade session) reflects small increment in buy side participation.
  • However, it may be worth to mention that this is the beginning of the compliance year and many serious buyers would ideally want to meet their compliance at the closure of the compliance year (near Q4-FY13/14).


 Fig 1 : REC Trading Stats – May 2013

  • High number of participants at IEX but low buy side demand reflects absence of DISCOMs and large CPPs.

Fig 2: Non Solar Market clearing Price  - May 2013

Solar RECs

  • Solar REC markets saw a dip in demand by 43.2 % as compared to last trading session and evidently solar REC prices came down to Rs. 10990 (PXIL) and Rs. 11490 (IEX).
  • Supply of solar RECs increased by 57% from 3077 RECs in April 2013 to 4833 RECs this month

 Fig 3: Solar REC Trade Stats – May 2013

Fig 4: Solar Market clearing price – May 2013

  • With about 150 MW Solar PV capacity already accredited, we may expect supply position to strengthen significantly going forward.

For previous months (April 2013) trade statistics click here and for relevant media articles follow the links :

Proposal for benchmark capital cost of Solar PV projects for FY13-14

Central Electricity Regulatory Commission(CERC) recently announced the new benchmark prices for the Solar Projects (PV & Thermal) for the year 2013-14. For Solar PV projects it will be Rs.8 crore/MW (-20% from 2012-13) and for Solar Thermal projects it will be Rs.12 crore/MW (-8% from 2012-13).

The new benchmark prices will have impact on the REC prices as the Solar REC price has already been discovered till 2017. Currently the Floor & Forbearance Prices per certificate are INR 9300 & 13400 respectively. With the new benchmark price the above prices will be slashed by 15 to 20 percent which will reduce the bankers as well as developer’s confidence in the REC mechanism and thus will hamper the growth of the market.

In order to protect the investors/ developers confidence, CERC has to come up with the vintage/ multipliers concept where the existing developers or developers setting up their project at certain point of time will be saved by the higher weightage given to them than the other projects coming at later point of time.

REC Trading Report – October 2012

Non-solar RECs

The prices remained at floor price this month (Rs.1500/REC at IEX and PXIL; this is the same in September) as supply has remained far in excess of demand. The total RECs available this month was 15 lakh out of which only 2.22 lakh RECs were redeemed leaving an inventory of 12.8 lakh RECs .

10 lakh RECs were bid for sale ( up by 42 % from last month) while demand was for only 2.22 lakh RECs (down 16 %).

Demand has remained low in the last couple of months. The major reason slow progress on enforcement by SERCs. Clearing ratios were approximately 30% on IEX and 70% on PXIL.

Solar RECs

Demand went up by 82% from last month whereas the supply also went up by 15%. The market clearing price on IEX was Rs 12,680 and on PXIL was Rs 12,500 (last month it was Rs 12,900 on PXIL and Rs.12,500 on IEX). In total, 1,791 Solar RECs were sold (last month it was 1,160)

Coverage of October trading session in the Hindu can be accessed here, at Bloomberg here and in Business Standard here.


REC Trading Report – September 2012

Non-solar RECs

Prices remained at floor price this month as supply has remained far in excess of demand. The over-supply situation has persisted for the last few months – this month 7.11 lakh RECs were bid for sale (up 13% from August), while demand was for 2.64 lakh RECs (down 6.7%).

Demand has remained depressed due to enforcement concerns. As a result, the demand-supply is continuing to widen. RECs issuances have been robust but demand has been growing slowly.

Demand is a function of RPO enforcement expectations. Recent court rulings in this will help but we do not expect its effects to be visible in the market for a few months.

Cleared volume at IEX was 239,364 (Aug – 248,168; down 3.5%) and at PXIL was 25,082 (Aug – 25,725; down 2.5%)

Solar RECs

Demand decreased from last month (from 2,331 to 1,852; down 21%). On the other hand, RECs bid for sale increased significantly as more solar capacity was commissioned (1621 vs 550; up 194%). The market clearing price on IEX was Rs 12,500 and on PXIL was Rs 12,900 (last month it was Rs 12,850 on both exchanges). In total, 1,160 Solar RECs were sold (last month it was 379).

Total market value exceeded Rs 41 crore, of which Rs 1.46 crore were from Solar RECs.

The Hindu Business Line’s coverage on the REC trading quoted Vishal Pandya , Director, REConnect Energy Solutions “Not many buyers turned up for the trade session this month. Two quarters are over and we are yet to see a larger level of participation from obligated entities,”

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”


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

First Solar RECs Issued to M&B Switchgear; Expected to Trade in May

M&B Switchgear Ltd, which owns and operates a 2 MW solar PV plant in MP was issued 249 Solar RECs today. This is the very first issuance of Solar RECs in India. These Solar RECs are expected to be traded in this month’s trading session on May 30.

M&B Switchgear is listed on NSE and BSE.

When traded, these Solar RECs will be the very first trades in India. Over the last year Non-solar RECs have traded in large volumes. Solar RECs are priced differently than Non-solar ones due to very different investment requirements. While the floor price of Non-solar RECs is Rs 1.5/kwh, that of Solar RECs is Rs 9.3/kwh.