Sales of Renewable Energy Certificates (RECs) Dropped To 30 Per Cent in February

Renewable Energy

Power distribution companies as well as open access and captive consumers are under obligation to buy RECs from renewable energy producers under renewable purchase obligations (RPOs) as mandated by central and state regulatory commissions.

Sales of renewable energy certificates (RECs) dropped 30 per cent to 10.93 lakh this month against 15.68 lakh in January this year.

Power distribution companies as well as open access and captive consumers are under obligation to buy RECs from renewable energy producers under renewable purchase obligations (RPOs) as mandated by central and state regulatory commissions.

RECs are aimed at providing an easier avenue for various entities, including power distribution companies, to meet their green energy obligations.

Two power exchanges — Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL) — approved by the Central Electricity Regulatory Commission (CERC) hold auction of RECs last Wednesday of every month.

As per available data, the sale volume of RECs at the two exchanges in February was 10,93,779 as against 15,68,192 in January this year.

As many as 8,60,970 RECs were sold at IEX in monthly auction today while 2,32,809 RECs were sold at PXIL.

“A total of 8.61 RECs were traded in the REC trading session held on February 22, 2017 at IEX. This quarter IEX has already traded 21.49 REC, 20 per cent more than the trade done in first three quarters of this fiscal. A few DISCOMS participated in this session for the first time,” IEX said in statement.

“Further, this fiscal the RPO compliance by DISCOMS has been far better than compliance in the previous years. Improvement in RPO compliance by DISCOM has been key reason for trade of 39 Lakh RECs this fiscal (year to date) compared to 31.39 Lakh RECs traded in fiscal 2016, an increase of about 24 per cent,” IEX said.

PXIL said, “The total cleared volume on the exchange was 2,32,809 RECs that resulted in PXIL gaining a market share of 21 per cent. Prior to today’s auction more than 1.91 crore RECs were available in the market for trade.”

“The traded volume and clearance ratio is expected to increase further in the next monthly session of March 2017 when large obligated entities make use of the last opportunity of the year to purchase RECs and meet their RPO targets for the financial year,” the exchange added.

One REC is equivalent to 1 MWh of electricity generated from renewable sources.

Under the REC mechanism, an entity can generate power through renewable resources in any part of the country. The generator receives the cost equivalent of electricity produced from any source while the environment attribute is sold through the exchanges at market-determined price.

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