Blog by Team REConnect

REC Trading Report September-2014

REC trading session of Sept-14 was conducted on 24th Sept 2014.  Below is a summary of the result:-

The Total Transaction value for Non Solar REC stood at 34 INR million and for Solar RECs at 12.7 INR million. The overall Demand stagnated to the lowest from July 2011. The Total RECs redeemed stood at 24013.The closing balance of RECs touched a 10 million mark. Overall market clearing ratio for Non Solar RECs stood at 0.24% and for Solar RECs at 0.37%.

Non Solar REC

Total Demand was 22650 RECs for Non Solar. This month had the lowest demand of the financial year. The demand dropped by 55% w.r.t August. The Total supply rose marginally by 8% w.r.t previous month. The Total Non Solar RECs issued this month were 36% higher than August. Non Solar price remained at 1500 INR (Floor Price).

Solar REC

The Total Solar RECs issued in the month of September is 17% higher than August. The Total supply grew by 15% with respect to August. Total Solar REC Traded stood at 1363 which showed a 17 % hike compared to previous month. The Solar REC price remained at floor price (9300 INR/RECs).

 Market Clearing Index

The market was expected to improve from last months results, but instead the clearing ratios fell further to new lows.

Contributed By: Cigil

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 -

For latest news and updates, please visit our blog at –

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

- Team REConnect

Reinstatement of Accelerated Depreciation benefit for wind and its impact on the Renewable Energy Industry

Earlier last month, when the Union Budget was presented, there was a mention of reinstatement of Accelerated Depreciation ( AD ) for Wind Energy generators, in the Hindi version of the budget, whereas it found no mention in the English version. This caused confusion in the RE industry circles. However, the government clarified that AD has indeed been brought back on wind investments.

Wind Power development in India started in the early 90s. As per Section 80(J) of Income Tax Act 1961, industries were allowed 80% depreciation on capital invested. Since then till 2012 (when the benefit was removed), Wind Power development and growth has always relied primarily on Accelerated Depreciation (AD).

New wind capacity additional peaked in 2011-12 at about 3,200 MW, falling sharply to 1,700 MW the next year as AD benefits were removed. The argument put forward at that time by policy makers was that wind industry had matured, and the focus needed to shift to solar. This fits well with the objectives of the National Solar Mission.

The decline in wind investment due to withdrawal of AD coincided with healthy growth of close to 60% in Solar Power in 2012-13 and 2013-14. The market momentum had definitely shifted in favor of Solar. Our analysis suggests that Wind AD market had an investing capital of close to 7300 crores. This shifted to Solar AD market which saw increase in investments worth Rs 7500 crores during 2012-13.

The new government has announced that it was reintroducing AD (80%) in 2014, much to the delight of Wind Power stakeholders. We believe that the investment momentum will shift again to wind due to more mature policies and attractive tariffs.

Wind tariff in recent years have become very attractive and are close to solar tariff in many states. In Rajasthan, Maharashtra and MP, tariff in the range of Rs. 5, whereas solar tariffs are generally in the range of Rs. 6, leaving a very small gap.

With this, there will certainly be a diversion in investments from Solar to Wind power in the times to come.

These can also be understood from the table and graph below.

The green dots represent the advantage to the sector.


REC Trading Report July-2014

REC trading session of July-14 was conducted on 30th July 2014.  Below is a summary of the result:-

The total transaction value of non-Solar RECs reached 47.7 INR million and for Solar RECs was 61.5 INR million. The closing balance of RECs showed a whopping increase of 1.3 million in Non Solar RECs and 0.05 million in Solar RECs. The demand in PXIL fared better in PXIL than IEX for Solar this month. The clearing ratio for PXIL in Solar was 5.5 % whereas for IEX it showed 0.28%.

 Non Solar REC

The demand was to the lower side as Total RECs issued were 1.38 million whereas Total Redeemed was 31809 RECs. The demand took a dive by 77% as compared to the month of June. The supply rose by a whopping margin of 235% as compared to June. Non Solar price remained at 1500 INR (Floor Price). This month showed the highest number of issuance of RECs for the financial year. More insight can be seen in the graphical chart below.



Solar REC

Total RECs issued this month was 55545 whereas the total redeemed was 6633. It rose by 301% w.r.t June whereas, supply shot up by 23%w.r.t.  June session. The solar demand tripled as compared to previous month.  More details can be seen in the graph.


Market Clearing Percentage


Credits by: Bloomberg NEF

Contributed By: Cigil

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 -

For latest news and updates, please visit our blog at –

 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.

Delhi discoms request to waive RPO of FY13

Delhi discoms have requested to DERC, to waive RPO targets of FY13. This request was put forward by discoms in their respective ARR petitions for FY15. The discoms contend that RPO regulations were introduced in Delhi only in October 2012 and as such there was little time in that year to meet the targets. The request can be read as (Petitioner – Delhi discom)-

“In this regard the Petitioner would like to submit that since the Regulations were issued in the mid of FY 2012-13 and the Renewable Energy Generation in Delhi was not fully developed, it was not possible to meet the RPO Targets during FY 2012-13. The Petitioner appreciates the fact that the energy generation through Renewable Energy Sources is required to be promoted by achieving the RPO Targets but at the same time the Renewable Energy Sector is also required to be developed in Delhi for fulfilment of RPO. The Petitioner has invited competitive bids for procurement of Renewable Power for both Solar and Non-Solar plants. The details about the bidding process and shortlisted bidders have already been submitted to the Hon’ble Commission. The Hon’ble Commission would appreciate the fact that RE Generation in Delhi is at nascent stage and will gradually develop in the coming years. The Petitioner in the meeting with the Hon’ble Commission held on October 9, 2012 also highlighted the difficulty in mobilising resources to meet the RPO announced by the Hon’ble Commission.”

Delhi discoms BYPL and BRPL mde reference to MERC’s order dated 7th August 2009, where the RPO targets from FY08 to FY10 were exempted due to shortfall in projected RE capacity addition.

While it is left on DERC to decide on this matter, any decision in favour of the request would further dent the ongoing positive enforcement efforts in other states.

The ARR petitions are available on DERC’s website.

Our recent blog-post highlighting projections by discoms for meeting RPO of Fy15 can be read here.

Relevant media article – Times of India.