REC Sales Down 61 Percent in July

Sale of REC declined by 61 percent to 6.29 lakh units in July as compared to 16.18 lakh in the same month a year ago due to lower supply

Sale of renewable energy certificates (REC) declined by 61 percent to 6.29 lakh units in July as compared to 16.18 lakh in the same month a year ago due to lower supply, according to official data.

Indian Energy Exchange (IEX) and Power Exchange of India (PXIL) are the two power bourses in the country which are engaged in the trading of renewable energy certificates (RECs) and electricity.

The trading of RECs is conducted on the last Wednesday of every month.

According to official data, IEX saw total trade of 4.92 lakh RECs in July as compared to 10 lakh in the same month last year. Similarly, PXIL recorded sale of 1.37 lakh RECs in the month as compared to 6.18 lakh in July 2018.

IEX data showed that the decline in the volume and increase in prices has mainly been due to continuing crunch on the inventory/supply-side since March 2019.

Under the renewable purchase obligation (RPO), bulk purchasers like discoms, open access consumers and capacitive users are required to buy a certain proportion of RECs. They can buy RECs from renewable energy producers to meet the RPO norms.

The proportion of renewable energy for utilities is fixed by the central and state electricity regulatory commissions.

The REC mechanism is a market-based instrument to promote renewable sources of energy and development of the market in electricity. It provides an alternative voluntary route to a generator to sell its electricity from renewable sources just like conventional electricity and offer the green attribute (RECs) separately to obligated entities to fulfill their RPO.

Last month we reported that the sales of renewable energy certificates (REC) dropped by 22 percent to 6.98 lakh units in June as compared to 8.96 lakh in the same month a year ago due to lower supply, according to official data.

In April, we reported that the sales of REC dropped by about 65 percent to 3.68 lakh units in April as compared to 10.62 lakh in the same month last year.