REC Trading Report – January 2012

As we approach the end of the compliance period i.e in March 2012, REC market reached its peak both in traded volume and prices. Total traded volume increased to over 170,000 ( an increase of 54% over previous month), while the prices at both the exchanges increased to Rs. 3,051/REC ( vs. Rs. 2,950/REC in the previous month; increase of 3%). Overall, the market crossed Rs 50 crore in value, a sharp increase from last month (December 2011 value was close to Rs 33 crore).

Total demand increased by about 50% over the previous month (from 285,000 to 432,500 ) whereas RECs offered for sale increased marginally by 7% (last month REC offered for sale decreased by 3%). The jump in demand was expected as we near the end of the first effective compliance period in March 2012.

The ratio of RECs traded to that available for sale has also increased. This shows clear willing to sell off available RECs at the current prices. Despite the sharp increase in demand and RECs offered for sale, price increased only marginally, signalling that prices have peaked. We can only expect another jump perhaps in March, when there will be a rush to meet compliance requirements.
Vishal Pandya was quoted in the Hindu Businessline in an article that reviewed the Jan 2012 trading session:

“RECs that are available for sale next month have reduced to about 26,000 only. Considering low number of issuance happening due to non-availability of wind generation, market may offer good opportunities for sellers for next few months as all the existing RECs have been exhausted now,”

No Solar RECs were traded this month.
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