REC Trading Report – March 2012

Today’s was the last trading session for the year before the end of the compliance period. The market expected significant demand and high prices as this was the last opportunity to comply. However, contrary to expectation demand fell sharply this month. Total demand fell by 17% over the previous month – from 389,000 to 323,700. From its peak in January demand was down 25%. Supply of RECs was down marginally (by 1%). Overall market value was Rs 58 Crores, down about 8% from February.
The market clearing price (MCP) at IEX was Rs. 2900 (February’s price was Rs.3066; a fall of 5%), whereas the MCP at PXIL the price increased to Rs 3,100 (February – Rs 3,051; increase of 1.6%).

This month a total of 2, 01,064 Non-Solar RECs were issued. 98% of these participated in the trading session today.
The demand side deserves a deeper analysis. The significant fall this month was contrary to expectations, and indicates that perhaps the market is expecting weak enforcement of RPO regulations. The focus will now shift to the regulators, who will have to determine the best way to enforce the regulations.
Overall the final trading session of this financial year was disappointing as demand fell significantly.
No Solar RECs were traded this month.
Coverage: The Hindu Business Line covered March REC trading in the article that can be accessed here. The article quotes Mr Vishal Pandya of REConnect Energy:

“The results are certainly disappointing for all the sellers and reflects the need for stronger enforcement signals,”