REC Trading Will Commence From October 28, Confirmed IEX and PXIL

By Angel Broking | Published on 5th October 2020 | 83

REC Trading Will Commence From October 28, Confirmed IEX and PXIL

Good news for the traders. After a pause of nearly three months, energy exchanges IEX and PXIL will begin trading renewable energy certificates on October 28.  The green certificate trading stopped in July after the Appellate Tribunal for Electricity (APTEL) decided to suspend REC trading for four weeks over a pricing dispute with Central Electricity Regulatory Commission. Renewable energy certificate (REC) trading occurs on the last Wednesday of the month and will start again on the last Wednesday of October.

Commenting on the issue to PTI, PXIL (Power Exchange India) MD and CEO, Prabhajit Kr Sarkar said that he hopes that APTEL will soon pass an order to resume REC trading without any further delay.

In July, APTEL suspended REC trading over a pricing dispute between the renewable energy associations and the CERC regarding fixing floor and forbearance RECs prices. The tribune postponed trading till August 26 after hearing three separate appeals from Green Energy Association, the Indian Wind Power Association, and Techno Electric and Engineering Company Ltd. against CERC over the pricing issue.  REC Trading didn’t take place in August and also in September since the judgement was pending. However, the latest update on the APTEL portal reads the decision as ‘judgement reserved.’

The fallout followed CERC’s decision to reduce REC’s floor price from Rs 1000 to zero and revise the forbearance or ceiling price of solar and non-solar RECs to Rs 1000 from Rs 2000 and Rs 3000 respectively. The new price became effective from July 1, 2020. Industry experts cited that the higher floor price of RECs creates a burden on consumers. So, keeping it low will allow the bulk purchasers like Discoms, open access consumers, and capacitive users to easily meet their RPO norms.

In June, the Supreme Court rejected the Green Energy Association’s (GEA) plea on preventing CERC price reversal.

Under the RPO norms, bulk purchasers need to buy a certain proportion of RECs to meet their energy requirements, which they could buy directly from renewable energy producers.

The term, green certificates is predominantly used in Europe, but increasingly becoming popular worldwide, a financial instrument with electricity produced using renewable energy sources as underlier. One REC represents one megawatt-hour of electricity.  REC trading happens in IEX and PXIL exchanges in India. Since last year, REC trading has contracted significantly. According to official data, in April this year, only 1.88 lakh RECs were traded in IEX, compared to 2.24 lakhs last year.  Renewable energy sales declined over 29 percent in 2019 to 89.27 lakh from 1.26 crore units during the previous year.

Conclusion

In August, Indian Energy Exchange (IEX) received approval from CERC for REC trading on its platform, a first in India. It received a nod to introduce the ‘green-term-ahead market’ with four contracts. After the judgement from APTEL, the exchanges can resume REC trading from October 2020.