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The REC trading for the month of December concluded yesterday. The results of the trading session are hearting. Non-solar REC reached record trading volumes at IEX with the traded volume peaking at 1,05,942 RECs

In total 1,11,621 RECs were sold. IEX extended their dominance in the REC trading market with 1,05,952 (95%) RECs traded while PXIL saw trading of only 5,679 (5%) certificates. A 5% gain in the REC market share for IEX is pointing toward a grim future for REC trading at PXIL which has been steadily losing its grip on the market. If this trend continues, IEX might end up being the only place where REC is traded.

Both IEX and PXIL cleared non-solar RECs at a price of Rs. 2,950 per certificate. The prices have seen a 1.7% rise over those paid last month where the trading price was Rs. 2,900 per REC (at the IEX).

December Non-Solar Solar
Buy Bids Trade Volume Sale Price Buy Bids Trade Volume Sale Price
IEX 2,64,093 1,05,942 2,950 495
PXIL 35,515 5,679 2,950 5
Total 2,99,608 1,11,621 2,950 500

Keeping with the trend of growing interest in the solar REC market, this month saw an astonishing increase in buy bids for solar REC certificates. There were only 43 solar REC buy bids last month, but December 2011 saw this number grow by1062% to 500 (495 at IEX, 5 at PXIL).

The number of projects as well as the total capacity registered under REC also grew significantly. December 2011, saw the total number of projects registered under REC increase by 13.5% to 277 while the aggregated capacity grew by 20.5% reaching a total of 1869.87 MW.

The number of solar projects registered under REC continues to remain at 1 – the 8.5 MW project by Jain Irrigation in Maharashtra suggesting that the developers are still apprehensive about investing in solar projects under the REC mechanism.

Conclusion

As I had mentioned in the November 2011, REC blog, the price of the certificates have started to plateau. While there has been an increase in the clearance price, it is still not as high as it was in the months past. The ever growing number of projects being registered under REC suggests that the mechanism has found significant favour amongst investors who are now more confident to finance projects under REC.

The second batch of bidding under JNNSM saw solar tariffs drop to an average of Rs. 8.88 per kWh. With the floor price of solar RECs guaranteed at Rs. 9.3 per kWh (for the next 5 years) and APPC prices being projected to only go upward, the solar REC route seems very attractive for investors. This would however immensely depend on what the plans for the REC market beyond 2017 are. CERC should make haste and announce the policy plans beyond 2017 so that more solar projects can be registered which would help the solar poor states fulfill their RPO.