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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

 

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

Buying power from Exchanges economically viable for Captive Plants

According to an article in Business Standard, captive power plants have resorted to buying power from power exchanges than generating by themselves. This behavioural change  of power procurement has been attributed to two main reasons :

1. Unavailability of domestic coal.

2. Low spot market prices discovered at exchanges owing to fall in demand.

Energy intensive industries – Cement, fertilizer etc. dependent on captive power production, have been using these low prices to their advantage.

The article has quoted a case of RSWM company of LNJ Bhilwara Group. The company generates power at an average cost of 4.2 Rs per unit (including coal cost and transmission losses). Due to present fall in spot market electricity prices, the company has been buying power at a cheaper rate of around Rs. 3 per unit. The company has also increased monthly power procurement from exchanges this fiscal.

As per IEX, the greater participation from captive consumers at exchanges has triggered higher volumes, greater competition and robust price discovery in short-term power market.

REC Trading Report – April 2013

Non Solar RECs

As April is the first month of the compliance year FY 13-14 a low demand situation was expected in this month’s trading session. Out of 18.9 lakh RECs which were put for sale only 44,459 RECs were purchased by the obligated entities.The about 93% of the total available RECs participated in the trade session.

The market clearing price was Rs.1500/REC at both IEX and PXIL which will remain the same in the coming months also as long as the oversupply situation will continue to prevail.

Solar RECs

The demand of solar RECs was higher than the supply. Buy bid was 3,522 and the sell bid was 3,077 out of which 2,217 got redeemed. The number of solar projects is continuously increasing under the REC scheme which provide a good amount solar RECs in the coming months.

The price at IEX was Rs.12, 206/REC and at PXIL it was Rs.12, 000/REC.

For information on previous months trading, please visit -March 2013 Trading Report

 

 

 

REC Trading Report – February 2013

Non-solar RECs

Demand decreased to 153,000 RECs (down 21% from Jan 2013) this trading session. The compliance period for this financial year will end in March 2013, leaving only one more trading session to go. Given that, the overall demand remains very disappointing. As we have mentioned earlier, till stronger enforcement kicks-in, demand is likely to remain lackluster.

Over 17,42,000 RECs were bid for sale (no change from last month). The significant oversupply situation continues to persist, despite the increase in demand.

3.5 lakh RECs were not bid for sale in the trading session. This represented 17% of the total available RECs.

Prices remain at the floor price (Rs 1,500/ REC) for the seventh consecutive month. Clearing ratio on IEX was 3.3% and on PXIL was 48.7%.

Solar RECs

The situation is more cheerful in the solar REC market.

Demand reduced to 6,777 from the high of 42,000+ last month. Last month saw a significant rise in demand as the compliance year comes to a close. However, given the small capacity in the solar REC market at present, demand remains significantly higher than supply.

Supply of solar RECs was at 2,700 (down 23% from January; possibly due to lower issuances in February – in January 3,300 RECs were issued while only 1,900 were issued in February).

Price remained constant at IEX at Rs 12,500 while it increased to Rs 13,000 on PXIL.

 

See these results in our dynamic market tracker (Beta version)

 

REC Trading Report – December 2012

Non-solar RECs

Volume increased significantly from the lows of November. Total traded volume was 273,644 in December (up from 132,352 in November; 108% increase).

Supply continued to increase. Total sell bids exceeded 14.5 lakh RECs (up 18% from last month). The demand-supply gap remains a significant worry, despite increase in demand this month.

Prices remained at the floor level for the fifth month. However, higher demand meant that clearing ratios improved slightly. Clearing ratios were 22% in IEX and 17.5% on PXIL (last month was 8% and 25% respectively).

 

 

Solar RECs

Demand and supply reduced from last month and prices varied slightly.

Clearing price at IEX was Rs 12,620 and on PXIL was Rs 12,100. There appears to be significant latent demand for Solar RECs (as seen in June and July), but the actual demand tracks available RECs closely.

REC trading report- November 2012

Non-solar RECs

Volumes reduced sharply and prices remained at floor price for the third month.(Rs.1500/REC at IEX and PXIL; from September). Only 1.32 lakh RECs were redeemed this month (down by 41% from last month). The total supply was more than 12.3 lakhs (up by 21% from last month).

The demand has been falling drastically due to lack of enforcement of RPO regulations by state electricity regulatory commissions. Clearing ratios were approximately 8.7 % on IEX and 25 % on PXIL.

 

Solar RECs

Demand reduced by 23.3% from last month (3,363 in October) as well as the supply (down by 10% from last month).

 

The market clearing price on IEX was Rs 12,720 and on PXIL was Rs 12,100 (last month it was Rs 12,500 on PXIL and Rs.12,680 on IEX). The total Solar RECs cleared was 1,219 ( last month it was 1,791). Supply was unusually high last month as some projects were issued RECs for several months at a 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.

 

RECs markets face uncertaininty due to lack of enforcement: Businessworld

We have highlighted the problem with enforcement regularly. A recent article in Businessworld brings the issue center-stage.

Jayant Deo, former MD and CEO of the Indian Energy Exchange (IEX) is quoted as saying:

” [obligated] entities are getting away with non-compliance because of poor enforcement of regulations and the lack of any penalties. With state discoms being allowed to renege on obligations, many expect private players to follow suit”

The recent demand-supply gap in the September 2012 trading session and the inventory that is building up is starting to worry project developers and potential investors in the renewable space. Vibhav Nuwal of REConnect Energy is also quoted in the article:

“70–80 per cent of the demand comes from the private discoms. The remaining come from captive and open-access consumers,” says Vibhav Nuwal, director at REConnect Energy, the largest trader in this market. Although, Nuwal says, the solar REC market, which began trading in May 2012, is too small and volatile to draw inferences from; he acknowledges the widening demand-supply gap in the non-solar segment.

 

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,”