REC Trading Report – June 2013

“Precarious” is the word which best defines the REC trading sessions in India hitherto. June 2013 trading session continued its genealogy. Weak enforcement of RPO and falling demand for solar RECs has resulted in trading of both credits i.e Non Solar and Solar at floor price (Solar – Rs. 9300, Non-Solar  – 1500). Worth-mentioning that Solar RECs too have touched floor just over a period of one year ,which started trading in May 2012.

Non Solar RECs – 

Non Solar RECs continued its sedated mode of operation, where clearing ratios at both exchanges were very low. Although as compared to May 2013 trade session the cleared volume increased by 36.8 % governed by upside in buy bids with the same percentage. Rise in demand can be partly attributed to the fact that June’13 marks the end of first quarter of FY14. Detailed analysis can be found in the self explanatory charts as below –

 Fig 1 : Non-Solar REC Trading Stats – June 2013

REC trading for Q1 (FY 2013-14) contributed clearance of about 1,75,000 RECs (solar & non-solar). This number may look abysmal especially when the REC inventory stands at about 24,00,000 RECs (solar & non-solar) and many more RECs are expected to get issued with wind and hydro generation season already knocking the door.

 Fig 2 : Non-Solar REC Market Clearing Price – June 2013

Solar RECs – 

Solar REC market nose dived directly to floor price for the first time since the trade began in May’12. Like non-solar RECs, even at floor price there were not enough demand to meet Solar REC supply available at floor price. This resulted into pro-rata clearance at both the power exchanges. To achieve clarity on price and volume trends in the previous months refer charts as under:

 Fig 3 : Solar REC Trading Stats – June 2013

Fig 4: Solar REC Market Clearing Price – June 2013

The new compliance year has just began and we may expect better demand emerging in Q3/Q4 of FY14. Better late than never.

For previous months trading report click here.

Bloomberg’s article on REC Trading can be assessed here.