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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.

REC Trade Report – February 2014

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

February 2014 was the second last trade session of Q4 for FY14. Clearing Ratios improved for both exchanges  (IEX and PXIL) and was recorded just over 8% in terms of non-solar RECs.. As per REC Registry, the market redeemed a total of 3.87 lakh RECs (up by 6 % as compared to last month).

Non-Solar RECs:

Buy bids for non-solar credits rose by 5.5 percent in comparison to last month’s stats. Clearing percentages at both exchanges were at parity. The total transactional value of non-solar RECs was 568 million INR, with price of each non-solar REC remaining at floor (Rs. 1500 per Non Solar REC). REC registry noted a total non-solar RECs redeemed to be around 3.78 lac.

Solar RECs:

Demand of solar RECs jumped by an encouraging 30.58 percent compared to January 2014 trade session. Solar RECs continued to trade at floor price (Rs. 9300 per solar REC). Evidently total solar REC transactional value was also recorded low at about 77.2 million INR. As per REC registry,  8308 solar RECs were redeemed.

For a similar blogpost covering analysis on previous months trade session – click here.

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 Trade Report – January 2014

January 2014 marks first month of Q4 for FY14. Overall the clearing volumes for both type of RECs were marginally less than previous month. As per REC Registry, the market redeemed a total of 3.65 lakh RECs.

Non-Solar RECs :

Buy bids for non-solar credits went down by 11 percent in comparison to last month’s stats.. Clearing percentages at both exchanges largely varied. The total transactional value of non-solar RECs was 538 million INR, with price of each non-solar REC remaining at floor (Rs. 1500 per Non Solar REC).

Solar RECs:

Demand of solar RECs tumbled by 19 percent compared to December 2013 trade session. Solar RECs continued to trade at floor price (Rs. 9300 per solar REC). Evidently total solar REC transactional value was also recorded low at about 59.2 million INR. As per REC registry, only 6361 solar RECs were redeemed. With only two months remaining in current financial year, market rebounding to encouraging figures seems far from reality.

For a similar blogpost covering analysis on previous months trade session – click here

 

REC Trade Report – December 2013

December 2013 marks the end of Q3 for FY14. Overall the results have sustained optimism as compared to the preceding trading month. With last three months still remaining in this year and chances of higher buyer-side participation in the subsequent sessions, we expect REC markets to reverse its fading lustre considerably. As per REC Registry, the market crossed 0.4 million mark in terms of REC redeemed. This volume (4,11,744 RECs) traded in a single session is the highest redeemed volume of this fiscal and more importantly marginally matches the volume of March 2013 (last month of FY13). A more detailed analysis for each kind of RECs can be read as under:

Non-Solar RECs :

Buy bids for non-solar credits increased by 30.73 percent in comparison to last month’s stats. The most encouraging fact, considering a holistic view of FY14, was the cleared volume crossing the 0.4 million mark. Clearing percentages at both exchanges (IEX and PXIL) were recorded at parity (over 9%). With a total transactional value of non-solar RECs of 605.8 million INR, price of each non-solar REC remained at floor price of Rs. 1500 per REC.

Solar RECs:

The change in demand and supply as compared to previous month was up this month by 7.18 percent and 47.37 percent respectively. Although, the prices here also remained at floor we can still expect a jump in demand as we slip in the last quarter.

For previous months trade results – Click Here.

REC Trade Report – November 2013

Non-solar RECs:
November 2013 REC trading witnessed an increase in volumes. The spike in demand is a sign that RPO enforcement is taking its gradual effect and some states are ensuring buyers participation, thereby keeping the market upbeat. For non-solar RECs, the demand increased by 105% w.r.t last month. This indicates, there is increased momentum towards complying with RPO by end of FY 2013-14. With stricter RPO compliance regimes mandated in states like Punjab, Uttarakhand, Maharashtra and Union Territories (recently), clearing ratios can be expected to go up in forthcoming trading session. More insights can be drawn from fig.1.
Fig1: Non-Solar trade stats – November 2013 
Non-solar RECs – The supply this month had a flip side. It was reduced to 6.5 % (almost half) as compared last trading session. The inventory at the registry was at 45 Lac RECs owing to reduced issuance (less by 1 lac RECs as compared to last month).
Fig 2: Non-Solar Market Clearing Price – November 2013
Solar RECs:
33rd trading session offered an alarming signal to the solar REC market space. As compared to previous trading sessions, all the parameters namely demand, supply and cleared volumes plummeted. Demand for solar RECs fell by 20.56 % and at the same time, supply was down by 9.71 %. As per a recent report by CEA, as on 31.07.2013, solar generation capacity (above 1 MW) was only 6.79%  (1650 MW) in RE rich states of Rajasthan, Gujarat, Maharashtra, Karnataka, and Tamil Nadu out of total RE capacity of 24265 MW in these states. This shows the lacklustre performance of solar industry in the country which in-turn has resulted into poor supply REC market. Only 2936 solar RECs were issued between 31.10.2013 and 28.11.2013 (Source: REC Registry).
Fig 3: Solar market trade stats – November 2013
Needless to say, the price remained at floor yet again with meagre expectations of an upside.
Fig 4: Solar Market clearing price  - November 2013
More data can be found in the table below:
 Link to October 2013 trade report – Click Here.

REC Trading Report – October 2013

Non-Solar RECs

Overall, Non-solar demand increased more than three-fold compared to last month (150,640 vs 49,831 in September 2013). As a result, clearing ratios on both exchanges improved. The uptick in demand is likely a factor of timing (most compliance takes places in the second half of the year), and ongoing enforcement efforts at ApTel and at state ERCs. Due to both these factors, demand is expected to improve in the coming months.

Fig 1: Non-Solar REC Trade Stats – October 2013

Fig 2 : Non-Solar Market Clearing Plant – October 2013

Close to 42 lakh RECs were available in the market. Of this, approx.. 39 lakh RECs were bid for trading. Clearing rations at IEX and PXIL were 4.2% and 3.64% respectively (previous month – 1.65% and 1.03%)

Clearing price remained at floor price (Rs 1,500/ REC)

Solar RECs

Solar REC demand improved marginally from 6,712 in Sept to 9,275 this month (38% increase). Solar RECs demand has been steadily rising over the last several months, and is expected to continue to do so.

Total available RECs were in excess of 67,000 RECs. This is also expected to increase in the coming months as several projects were commissioned towards the end of September.

Fig 3 : Solar REC Trade Stats – October 2013

Fig 4 : Solar Market Clearing Price – October 2013

Clearing price remained at floor price (Rs 9,300/ REC)

 

IEX

PXIL

Total

Buy – Non Solar

98,921

51,719

150,640

Sell – Non Solar

24,47,648

14,38,712

38,86,360

Cleared volume – Non solar

98,921

51,719

150,640

Clearing Ratio – Non Solar

4.2%

3.64%

 
Buy – Solar

6,548

2,709

9,257

Sell – Solar

48,515

19,439

67,954

Cleared volume –  Solar

6,548

2,709

9,257

Clearing Ratio – Solar

13.5%

14%

Market Clearing Price

Rs 9,300 – Solar

Rs 1,500 – Non Solar

Rs 9,300 – Solar

Rs 1,500 – Non Solar

Coverage of the trading session – Bloomberg

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 – 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.