REC Trading Update – August 2011

In August’s REC trade, both prices and demand volume increased significantly from last month.
REC demand last month was about 96,000, while it almost doubled to over 183,000 in August. This is perhaps the most significant indicator for the REC markets, as it points to a strong expectation of RPO enforcement by market participants this year. Another important thing to note is that the demand in this month alone was more than the total RECs issued till date, which is approximately 124,000.With demand expected to increase significantly as we approach March 2012, the demand-supply gap is only expected to widen, particularly as more captive and open access generators join the market.

 
 
REC prices also increased sharply, mainly as a result of the large demand-supply gap (demand this month was 183,000, supply was 58,000). The clearing price at IEX was Rs 1,800/ REC, up from Rs 1,555/ REC in July. This represents an increase of about 16%. This upward trend can be expected to continue.