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Review of REC Trading-June 2011

Compared to REC Trading for last month, this month saw a larger level of participation from buyers in REC market. For example, in this trade session, IEX witnessed 72,002 RECs* from buy side whereas, PXIL saw demand of 10,000 RECs. There are few interesting cues that this trade session has revealed. These are summarized below.

  1. Out of 41,005 RECs issued, only 24,514 (60%) RECs participated in this trade session (IEX+PXIL). Poor price realization in last two trade session could have been the reason for this.
  2. Of 24,514 RECs that were available for sale (IEX+PXIL), only 16,385 (67%) RECs got sold that too in a situation when total buy bids for RECs were 82,002 (almost 3.5 times)!! This clearly reflects that REC sellers are now expecting better revenue realization from RECs and want to experiment the power of banking facility in REC.



Possibilities for next trade session?

  • Market has started gaining momentum.
  • With regulatory talks on quarterly compliance and stricter enforcements of RPOs across India, seller’s expectation
    may rise and would naturally try to bank RECs if good REC prices are not realized.
  • On the other hand, the current REC prices are still running at the bottom. This would attract more and more buyers who would like avail the this opportunity to meet their compliance at reasonably lower costs.
  • These counter forces would eventually drive the market to a more ‘perfect market’ with higher liquidity and efficient price discovery.
  • All said and done, if market continues to progress this way along with constant regulatory ‘push’, we could see REC market soon coming out this phase of incubation

    • * – At present only Non-Solar RECs are available in the market. No Solar RECs have been issued so far. Hence, word REC shall be understood as Non-Solar REC unless explicitly specified.

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