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.

REC TRADE RESULTS MARCH 2018

For the first time after 2012, the total demand in REC (Non-Solar Segment) market exceeded the supply available. The trade session in March 2018 also ended the dry run that REC Market has been under since 2012 with 100% clearance on both the Power Exchanges!

Non-solar demand was significantly higher than in March 2017, and also last month. In total 27.69 lakh RECs were traded (211.63% higher than March 2017, and 17.43% higher than in February 2018), and clearing ratios on IEX and PXIL were 100% and 100% respectively. Total traded value was Rs 415 crores (This value is calculated considering the rate of Rs 1500 per REC out of which Rs 1000 go to the generator and Rs 500 goes to CERC).

Trading of solar RECs continues to be suspended due to the stay imposed by the Supreme Court.

 

This value is calculated considering the rate of Rs 1500 per REC out of which Rs 1000 go to the generator and Rs 500 goes to CERC

REC TRADE RESULTS FEBRUARY 2018

Non-solar demand was significantly higher than inFebruary 2017, and also last month. In total 23.58 lakh RECs were traded (125.85% higher than February 2017, and 91.61% higher than in January 2018), and clearing ratios on IEX and PXIL were 19.84% and 69.80% respectively. Total traded value was Rs 353 crores*.

REConnect shifted its major volume on PXIL in a timely manner this trade session due to higher demand as compared to IEX.

The written submission for the case on stay of trading of solar RECs has been done and the judgment is reserved.

*This value is calculated considering the rate of Rs 1500 per REC out of which Rs 1000 go to the generator and Rs 500 goes to CERC

Trading of solar RECs continues to be suspended due to the stay imposed by the Supreme Court.

REC TRADE RESULTS JANUARY 2018

Non-solar demand was marginally lower than in January 2017, and also significantly than last month. However, it must be kept in mind that last month traded volumes were at a record high, and overall, this year has seen significantly higher demand.

In total 12.30 lakh RECs were traded (19.04% lower than January 2017, and 76.41% lower than in December 2017), and clearing ratios on IEX and PXIL were 7.83% and 30.55% respectively. Total traded value was Rs 184 crores*.
REConnect shifted its major volume on PXIL in a timely manner this trade session due to higher demand, resulting in higher clearing.
Trading of solar RECs continues to be suspended due to the stay imposed by the Supreme Court.
*This value is calculated considering the rate of Rs 1500 per REC out of which Rs 1000 go to the generator and Rs 500 is retained by CERC

REC TRADE RESULTS DECEMBER 2017

This month’s trading session saw highest ever trade in the REC markets – 2nd time in a row after the record trading session last month. Non-solar demand was significantly higher than in December 2016, and also last month. In total 52.17 lakh RECs were traded (1,136% higher than December 2016, and 136% higher than in November 2017), and clearing ratios on IEX and PXIL were 46.09% and 58.15% respectively.  Total traded value was Rs 782 crores.

The increase in traded volumes have been driven by demand from both Discom’s and captive generators. Several regulatory commissions have issued orders and notices in the recent past. This trend is expected to continue into the last quarter of the financial year.

Trading of solar RECs continues to be suspended due to the stay imposed by the Supreme Court.

REC TRADE RESULTS SEPTEMBER 2017

Non-solar demand was significantly higher than in September 2016, and also higher than last month. In total 3.82 lakh RECs were traded (47.56% higher than September 2016, and 32% higher than in August 2017), and clearing ratios on IEX and PXIL were 3.56% and 2.36% respectively.

Overall, for the six months ended September, Non-solar demand is up by 11% compared to the same period last year. Solar demand is up by 27% despite reading only in April this year. Since then, trading has been suspended due to the stay imposed by the Supreme Court.

 

REC TRADE RESULTS MARCH 2017:

March trading results were far better than anticipated considering the recent CERC order on revised floor and forbearance prices. The March trade session remained a robust one. Total Non-solar demand was 8.88 lakhs (vs 10.4 L demand in February), and clearing ratios on IEX and PXIL were 6.11% and 9.6% respectively. For the full year FY 16-17, total RECs sold were 59.3 lakh as compared to 43 lakhs last year – an increase of almost 37.7%. This was the last trading session of FY 16-17.

 

Total solar demand was 1.43 lakhs, and the clearing ratio in IEX and PXIL were 2.90% and 2.74% respectively (Feb 2017 demand was 49,544). For the full year FY 16-17, total RECs sold were 5.5 lakh as compared to 6.4 lakhs last year – a decrease of almost 14.06%.

Non Solar – The clearing ratio stood at 6.11% and 9.6% in both IEX and PXIL respectively.

Solar – Clearing ratio stood at 2.90% and 2.74% in IEX and PXIL respectively.

 

CERC DECLARES NEW REC FLOOR AND FORBEARANCE PRICE

CERC came up with draft regulations in which they have reduced the prices of their Renewable Energy Certificates to a historic low. The new floor and forbearance prices from the same have been covered in our previous blog which also contains a link of the draft regulation.

REConnect Energy’s co-founder and director, Vibhav Nuwal made the following observations about the scenario in Business Standard “This change rewards non-compliant companies, which can now comply at a much lower cost. It will exert further pressure on distressed projects”.

 

CERC DECLARES NEW REC FLOOR AND FORBEARANCE PRICE

Honorable Central Electricity Regulatory Commission has determined floor and forbearance prices for REC (solar and non-solar)  which will be valid from April 1, 2017 onwards. The prices have reduced significantly and the solar prices are set to reduce from Rs 3,500 to Rs 1,000 and the non-solar REC prices are set to reduce from Rs 1,500 to Rs 1,000.

 

No Vintage Multiplier has been proposed for any technology and existing vintage multiplier for Solar generating technologies registered in REC mechanism prior to 1st January 2015 and shall expire after 31st March 2017.

 

The proposed floor and forbearance prices are given below:

 

The following is the REC price trend:

 

The impact of this price reduction on different aspects is as follows:

Impact on existing REC projects:

  • Reduction in floor price will aggravate the financial duress of RECs based projects: Already the newly established REC projects are under distress. Reduction in the floor price will only aggravate the situation as the number of unsold RECs will increase.

  • No Vintage Multiplier: The draft does not clearly state the position on multiplier to be provided on existing inventory of RECs.

Impact on obligated entities:

  • Perverse gain for defaulting Obligated Entity: Obligated entities which are non-compliant will benefit from reduction in prices since they will have an option to purchase RECs and fulfill their RPO compliance at a lower rate. This has never been addressed by the CERC or the state ERC’s,

 

  • Potential higher demand going forward: Most captive and open access based customers will find it easier to buy RECs than to buy green power. Therefore, the low prices may lead to an increase in the REC demand.

 

Impact on the market:

  • Low Demand in March 2017: Since the new prices will be applicable from 1st April, 2017, March will see minimum demand as the Obligated entities will have an option to comply with RPO compliance in the next FY.

 

  • Higher Inventory and therefore lower clearing ratios: If the appropriate multiplier is provided to the existing inventory, the inventory of unsold RECs will jump to 3.6 crore RECS as compared to 1.7 crore RECs as present. Even lower clearing ratios will be experienced at exchanges if the demand does not increase in proportion.

Other issues:

  • Calculation of floor price

  • Validity of RECs

 

The previous analysis of CERCs floor and forbearance for financial year 2012 to 2017 can be found here.

REC Trade Results February 2017

The Feb trade session remained a robust one, following the record setting session in January.  Total Non-solar demand was 10.4 lakhs (vs 15.2 L demand in January), and clearing ratios on IEX and PXIL were 8.7 and 6.2% respectively. On a year-to-date basis, this year Non-solar RECs demand has been significantly higher than last year. March 2017, which will be the last trading session of FY 16-17, is also expected to result in high trading volumes.

 

Solar RECs trading, on the other hand, has remained subdued. One reason is the significantly solar capacity coming online in states (with record low tariffs) – this result in Discom’s not buying solar RECs in large volumes. Also, the expected price drop in April 2017 may be resulting in potential buyers deferring purchases.

 

Non Solar – The clearing ratio stood at 8.72% and 6.2% in both IEX and PXIL respectively.

Solar – Clearing ratio stood at 1.26% and 0.34% in IEX and PXIL respectively.

 

 

 

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