REC Trading Report – December 2011
REC markets continue to grow, albeit more slowly than in the earlier months. Total treaded volume increased to approximately 120,000 (an increase of 14%), while price increased marginally to Rs 2,950/ REC (vs. Rs 2,900 last month; IEX prices). Prices at PXIL increased to Rs 2,950 from Rs 2,800 last month.
Total demand volume grew marginally from 278,000 to 285,000 (an increase of 2.5%), while RECs bid for sale decreased by 3% to 180,000. This was on the back of significantly lower level of issuance this month – only 87,000 RECs were issued, as compared to 136,000 last month (a decrease of 36%). This is due to low generation (this is a seasonal phenomenon) in wind and small hydro generation. Issuance volumes are expected to grow from next month, once RECs are issued to sugar mills (the crushing season started in early November). Seller participation remained high at 82% of the total RECs available for sale.
Flat demand is a likely indicator that early buyers have met a significant portion of their RPO requirement and are price sensitive (a barrier seems to exist at Rs 3,000/ REC price point). Short of strong enforcement signals, we can expect demand to only spurt in February and March now, when a lot of fence sitters today get into the market for purchases before the end of the compliance period.
High seller participation in the previous month and this, flat demand and expectation of higher issuances next month are pointers that demand and prices have peaked for the meantime.
No Solar RECs were traded this month.
The December trading session was a milestone one for REConnect – we became the largest REC trader in the country.
Press coverage:
Hindu Businessline quoted Vishal Pandya below:
“The price hike has been very marginal, which reflects that the prices are very near to their maturity,” says Mr Vishal Pandya, Director, REConnect Energy Solutions, a consultancy that specialises in facilitating REC trading.
“The future market movement will depend heavily upon how the new demand shapes up as next month onwards we can expect additional supply of RECs coming into the market,” Mr Pandya told Business Line today.
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