REC Trade Results – June 2018

Considering that this was the third trading session of the new financial year, in the month of June both Solar and Non-solar RECs saw a robust trade. Due to the shortage of Non-Solar RECs, and excessive demand, the prices for Non-Solar RECs soared 15% above floor price (Rs. 1000/REC). The Solar RECs, on the other hand, traded at the floor price of Rs. 1000/REC with a very robust demand trend. Given the shortage of Non-Solar RECs and continuously rising demand, we may soon see prices of Non-Solar RECs rallying up much faster than anticipated earlier during the beginning of the FY19.

Analysis of Trading:

Non-Solar – The Non-solar RECs inventory was not completely exhausted in the June 2018 trading session with clearing ratio for non-solar being at 100% at IEX and PXIL respectively (means all the bids below market clearing price got cleared at both power exchanges). A total of 303,828 RECs were traded, despite the demand is as high as 1,111,235 (YoY decrease of 43.56% as compared to 538,371 RECs traded April 2017). The RECs were traded at the price of Rs 1,050/REC at PXIL (5% above floor price), and at Rs 1,150/REC (15% above floor price) at IEX.

Solar – In case of solar a  total of 592,401 RECs were traded in the current month (a YoY Increase of 184% as compared to April 2017). The clearing ratio for solar stood decent at 11.40% and 15.70% in IEX and PXIL respectively.

 

The below graph depicts the Clearing ratio trend of Non-solar and Solar. In case of Non-solar, the clearance was 72.38% at IEX and 91.61% at PXIL and for solar, the clearance was at 11.4% and 15.7% in IEX and PXIL respectively.

 

MNRE announces 30 GW offshore wind energy target by 2030

MNRE recently announced 5 GW target for medium and long-term offshore wind energy target by 2022 and 30 GW by 2030. This step is initiated by the ministry to induce confidence in the industry. In continuation to the announcement, MNRE has also invited Expression of Interest (EoI) for its pilot 1GW offshore wind project in the country and it has received good response both at the national and international level, Ministry of New and Renewable Energy said in a statement.

Previously in October 2015, MNRE had notified an offshore wind policy and preliminary studies were also carried out. The result of the studies suggested that both the Southern tip of the Indian Peninsula and the Western coast, both have potential to realize India’s Wind energy. Two regions where studies have been conducted are off the coast of Gujarat (West coast) and that of Tamil Nadu (near the peninsula).

As of now the country’s wind energy installed capacity is at 34.04 GW (March 2018). MNRE in the past month also announced a hybrid wind-solar policy to capture the RE potential equally in the country.

Globally there has been an installation of approximately 17 to 18 GW of offshore wind power majorly in countries like the United Kingdom, Denmark, Netherlands, and China. 

  • Posted on June 21st, 2018
  • Posted by Team REConnect
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REC Trade Results – May 2018

In both Solar and Non-solar RECs, demand was robust, considering that this was only the second trading session of the new financial year.

Analysis of Trading:

Non-Solar – Non-solar RECs inventory was not completely exhausted in the May 2018 trading session (15,51,691 RECs were retained of 43,44,976).  A total of 401214 RECs were traded, despite demand being at 629069 (as compared to 538,371 RECs traded April 2017; an increase of 16.84%). RECs traded at the floor price of Rs 1,000/ REC at PXIL but increased to Rs 1,010/ REC at IEX.

Solar – A total of 914412  RECs were traded this month (Increase of 4.4% over April 2017). Clearing ratio for both non-solar and solar stood well.

The below graph depicts the Clearing ratio trend of Non-solar and Solar. In case of Non-solar, the clearance was 86.25% at IEX and 94.23% at PXIL and for solar, the clearance was at 14.20% and 23.38% in IEX and PXIL respectively

 

REC Trading Results – April 2018

 

April saw trading resume for Solar RECs after a gap of one year, after the ApTel pronounced judgment in the case of REC pricing. Also, after record sale of Non-solar RECs in the last 5 months, there was almost no inventory left of Non-solar RECs. In both Solar and Non-solar RECs, demand was robust, considering that this is the first month of the new financial year.

 

Analysis of Trading:

 

Non Solar – Clearing ratio in exchange stood at 72.6% and 77.2% in IEX and PXIL respectively for Non Solar REC’s.  A total of 187,543 RECswere traded, despite demand being at 1,099,426 (as compared to 538,371 RECs traded April 2017; an increase of 104%). RECs traded at the floor price of Rs 1,000/ REC at PXIL, but increased by a minuscule fraction to Rs 1,001/ REC at IEX. However, this increase in the traded price above the floor price has come after a gap of almost 6 years (last trading above the floor price was in August 2012).
Solar – Demand was robust at 8.75 lakh RECs (3.2X demand of April 2017). Clearing ratio stood good at 23.8% and 10.4% in IEX and PXIL respectively.

RRECL SUSPENDS APPROVAL OF PROJECTS UNDER REC MECHANISM IN THE STATE

The approval of all renewable energy projects under the REC mechanism has been suspended by the Rajasthan Renewable Energy Corporation Ltd (RRECL) in an order dated 4/09/2017. The order also states that no new RE projects under REC mechanism will be approved by the state level screening committee (SLSC) until further orders. As per an RRECL official, after the lowest solar tariff was quoted in the state, the DISCOMs which are purchasing power through the REC mechanism at a higher rate and even then, are unable to fulfill their RPO obligations. Due to these reasons, RRECL has taken this step until further notice.

 

The article covering the same can be accessed here.

  • Posted on September 5th, 2017
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INSOLVENCY PETITION FILED AGAINST TANGEDCO

Ind Bharath Group has filed an insolvency petition against TANGEDCO under the Insolvency and Bankruptcy code, 2016. This is due to the delay by TANGEDCO in the payment of dues of more than Rs 700 Cr. They claim that their funds are stuck in with TANGEDCO  due to which the they are unable to clear dues with their own creditors.  Chennai’s National Company Law Tribunal has been approached for the same and TANGEDCO has been given a week to file its counter.

 

The article about the same can be accessed here.

UDAY SCHEME BRINGS BENEFITS TO DISCOMS

The Ujwal DISCOM Assurance Yojna (UDAY) scheme was launched in November 2015 by the Ministry of Power (MoP) and the Government of India (GoI). Since then, there has been significant improvement in the debts of the DISCOMs.

 

The participating states have taken over Rs 2.09 lakh crores of debt of their DISCOMs. The remaining debt is mostly in the form of CAPEX debt or scheme based debt which usually either pays itself off or which converts into grants. Therefore, the process of the states taking over the debts of DISCOMs and issuing them as SDL bonds has now been completed. Now the remainder of the action which includes bond issuance by the DISCOMs has to be completed.

 

Due to these actions, till March 2017, the participating DISCOMs had achieved net savings of Rs 15,000 Cr. The gap between Average Cost of Supply (ACS) and Average Revenue Realized (ARR) had also come down by 14 paisa per unit along with a reduction of 1% in the AT&C losses.

Details about the UDAY scheme and its implementation on our blog can be accessed here.

FINANCIAL LOSSES FOR DISCOMS FALLING UNDER UDAY SCHEME DECREASE

In a recent analysis in the Financial Express, those discoms which are a part of the Ujjwal Discom Assurance Yojna (UDAY) scheme have seen a reduction in their financial losses by 21.5%.  This amounts to a saving of Rs 40,295 Cr for FY 2017. Even the states which were earlier burdened due to huge financial losses have witnessed a drop in the losses by a significant percentage. For example, Tamil Nadu saw a decrease of Rs 3,783 Cr in its losses which is a decrease of about 35%. The liquidity profile of the discoms has also improved, as per the ICRA.

 

The power ministry opined on this matter saying that “with more projects being awarded, there should be a palpable difference on the metering front – a vital area which helps to reduce technical losses and minimize outages”.  As of now, the number of distribution transformers being metered are just 45% of the target to be met by December 2017. Therefore, they are hoping that the situation will improve further.

 

Our previous analysis on the completion of one year of the UDAY scheme can be accessed here.

RECONNECT RECEIVES AWARD IN DIGITAL INDIA SUMMIT 2017

REConnect was awarded in the Digital India Summit 2017 in the energy and utility space by Times Now. A short program covering our flagship analytics product GridConnect was aired on Times Now on 17th June on ET Now and Times Now. To watch the telecast, please follow the links:

 

ET Now: https://www.youtube.com/watch?v=gmg9JPTIfDU

Times Now: https://www.youtube.com/watch?v=FI2VaV2nOnY&t=644s

AS PER STUDIES, EXPERTS ARE BAD AT PREDICTING SOLAR INSTALLATIONS

As per an article published by Visual Capitalist, organisations such as IEA (International Energy Agency) and EIA (Energy Information Administration), which have been predicting data on energy supply and demand as well as their forecast have been facing a number of challenges. Also, it can be said that these organisations are conservative with their forecast.

 

Source: Visual Capitalist

 

As per the graph, there is a huge gap between the historic data and the predictions by the IEA. None of the models have been able to rightly predict the growth in solar installations.

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