IEX Announces Resumption of REC Trading From Nov 24

The Indian Energy Exchange (IEX) has announce the resumption in the trading of Renewable Energy Certificates (REC) with effect from Wednesday 24 November 2021, after a gap of almost 16 months. The last REC trade session took place in June 2020.

The trade has been resumed in line with APTEL’s recent order dated 09.11.2021 and CERC order dated 18.11.2021

Commenting on the development Rohit Bajaj, Head- Business Development and Senior Vice President, Indian Energy Exchange Limited said, “We are pleased to re-commence trade in the REC Market. REC has been a vital market-based instrument for obligated entities such as distribution utilities, open access consumers, and captive power plants for meeting their RPO in the most competitive and efficient manner. IEX pioneered trade in REC market in the year 2010. The Exchange has cumulatively traded  390 lacs renewable energy certificates since commencement of the market in the year 2010,and has been playing a significant role in supporting the transition to a sustainable energy economy.”

Key APTEL Order Overturns CERC On REC Pricing

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The resumption of trading will be good news for many market participants, besides IEX itself as a key trading line opens up for the exchange.

Trading has effectively ground to a halt after the Central Electricity Regulatory Commission (CERC) set the floor price for certificates at zero, based on its interpretation of the rules. That viewpoint turned out to be counterproductive, and led to an appeal to APTEL, which has finally set aside the CERC order, and added quite a few observations that do not reflect well on the process and approach the CERC followed to arrive at its decision.

Before the APTEL order last week, the Power and MNRE Minister R.K. Singh had also announced revised rules that supported the return to trading in REC’s and ensured that the certificates stuck with buyers before trading stopped would not be worthless. These include a decision to make REC certificates perpetual, till they are sold.

Power Ministry Makes Key Changes in REC mechanism To Boost Demand

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However, one of the biggest possible boosts to REC’s remains, in the form of non-passage of the Electricity Amendment Bill (2020). The dropping of the bill has now been added on to the demand from squatting farmers to move away from the many points around the national capital that they have occupied. Capitulation to this demand will effectively place most of the power reforms at risk, including Renewable purchase obligations where the cost of non-compliance remains too low under current rules.