REC Sales Drop to Nearly Half in August

The sales of REC in the month of August dropped by over 47 percent to 4.3 lakh units solar compared to 8.19 lakh units sold in the same month last year.

The sales of Renewable Energy Certificates (REC) in the month of August dropped by over 47 percent to 4.3 lakh units solar compared to 8.19 lakh units sold in the same month last year. The data made available by official sources cited lower supply as the reason for the drastic drop in sales.

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 the 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 2.93 lakh RECs in August as compared to 5.07 lakh in the same month last year. Similarly, PXIL recorded sale of 1.37 lakh RECs in the month as compared to 3.12 lakh in August 2018.

IEX data showed that both non-solar and solar RECs continued to see low supply situation, with buy bids exceeding sell bids due to low inventory. There were buy bids for 12.03 lakh RECs against sell bids for 3.46 lakh RECs for the month of August at IEX. Similarly, there were buy bids for 3.39 lakh RECs and sell bids for 1.66 lakh units for the month of August at PXIL.

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 had reported that the sale of RECs had declined by 61 percent to 6.29 lakh units in July as compared to 16.18 lakh in the same month a year ago.

In June, it was reported that the sales of RECs dropped by 22 percent to 6.98 lakh units as compared to 8.96 lakh in the same month a year ago due to, again, lower supply.