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The REC trading for the month of January 2012, concluded yesterday. Keeping up with the trend last, the opening month of this year has posted strong gains in both price and volume. The total non-solar REC volume traded surged to 1,71,524 RECs, showcasing an impressive 53% growth over last month’s trading session.

In total 1,71,524 RECs were sold. IEX extended their dominance in the REC trading market with 1,65,460 (96.5%) RECs traded while PXIL saw trading of only 6,064 (3.5%) certificates. As pointed out earlier, the growing dominance could very likely make IEX the sole exchange in the REC market.

Both IEX and PXIL cleared non-solar RECs at a price of Rs. 3,051 per certificate. The prices have seen a 3.4% rise over those paid last month where the trading price was Rs. 2,950 per REC (at the IEX). This gain is almost double the gain posted last month which stood at 1.7%.

December Non-Solar Solar
Buy Bids Trade Volume Sale Price Buy Bids Trade Volume Sale Price
IEX 4,14,387 1,65,460 3,051 2,635
PXIL 18,113 6,064 3,051 0
Total 4,32,500 1,71,524 3,051 2,635

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 500 solar REC buy bids last month, but January 2012 saw this number grow by 427% to 2635 all of which were at IEX. PXIL which saw 5 solar REC buy bids last month did not register any interest this month.

The number of projects as well as the total capacity registered under REC registered a modest increase as opposed to the growth seen last month. January 2012, saw the total number of projects registered under REC increase by 8.6% to 301 while the aggregated capacity grew by 7.8% reaching a total of 2017.42 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

The total buy bids offered (non-solar) this month has grown by a staggering 44.35% over the last month. This is a clear indication that companies, now more than ever are trying to fulfil their RPO as the window to do so is starting to close (March 2012 being the final month to fulfil current obligations). The clearance price of the non-solar RECs are slowly inching towards the current forbearance price of Rs. 3,900 – which is set to come down to Rs. 3,300 from April 2012 onwards.

The growth in the solar REC buy bids shows the growing appetite for these specific RECs while there is virtually no supply for these certificates at this time. Power producers looking to setup a solar PV plant under the REC route can virtually command any price that they want.

Interestingly, though the number of non-solar buy bids dipped at the PXIL (-48.9%), the number of non-solar RECs cleared rose by 6.8% while the price was the same as that offered at the IEX. Thus obligated entities looking for a higher chance of procuring a certificate can opt to trade at the PXIL where the competition is lower.

January 2012 had a supply deficit of close to 45%. It is unlikely that project developers are going to face difficulties in getting their RECs sold in the near term as the demand continues to soar while the supply is unable to keep up, especially in the solar REC segment which has not seen any sale bids.