The REC trading session for the month – March 2014 concluded yesterday. Since March marks the end of the financial year, there has been a significant spike in volume traded in the month. The solar REC trade volume saw a growth of 33% compared to the numbers seen last month while the non-Solar RECs’ traded volume also spiked – with trade volume increasing by about 74% compared to the previous month.
The trade volume in the solar REC market – 11019 total RECs traded is the highest this financial year and in fact the largest volume traded since solar REC trading began in May 2012. The story holds true in the non-solar REC segment too with the volume traded standing at 658727 which is about 1.5 times greater than the volume traded in March 2013 and is also the highest volume of non-solar RECs to be cleared in a single month since trading began.
Though there was a significant growth in the traded volume, both Solar and non-solar RECs traded at their floor price of Rs. 9,300 and Rs.1,500 per REC respectively.
Solar REC
Non-Solar REC
REC Inventory
The REC market was envisioned to be a great driver for the development of solar power projects in India. However the REC market has not really taken off!
There is a huge gap in the demand and supply of RECs, and the inventory of unsold RECs ha been constantly increasing. If this situation continues, the REC market will finally die down, and developers will not opt for building REC projects going forward.
The reason for the lack of buyers for RECs is due to the non enforcement of RPOs. Currently there are few private buyers for RECs on the two operating exchanges in our country. The main buyers which are supposed to the big DISCOMS are staying way from the market as the RPOs are not legally enforced. Unless the penalties for non compliance are enforced legally, the obligated entities will not be forced to buy RECs.
The state and central governments have to take this matter seriously and look at slapping penalties on the entities who do not comply. Unless this happens quickly the REC market will die its natural death.
Rightly said, the main culprit of junked/jinxed market condition of REC market is non-strict compliance of the RPO obligation by the obligated entities despite the Power Regulator, like CERC, at the helm. It is most opportune time to see that the RPO obligation as envisaged in the legislation is complied with so that the investment sentiment in the Renewable Energy Industry can get a boost and can become viable and profitable.
It is further unfortunate that only the private entities are forced to comply with the obligations and the Govt owned DISCOMs are free at their will.