REC Trading Drops to 9.2 Lakh in FY20-21 From 89.27 Lakh in FY19-20

The halt in trading since July 2020 has seen the REC market shrink to record the trade of just 9.2 lakh RECs in the financial year 2020-21

The halt in trading at the energy exchanges since July 2020 has seen the Renewable Energy Certificates (REC) market shrink to record the trade of just 9.2 lakh RECs in the financial year 2020-21 while 60.58 lakh RECs piled up till March-end. Consequently, distribution companies (Discoms) across the country have also struggled to meet their renewable purchase obligation (RPO) during the fiscal. Under RPO, bulk purchasers like Discoms, open access consumers and capacitive users are required to buy a certain proportion of renewable energy of RECs in lieu of that.

According to industry data, an inventory of 60.58 lakh RECs piled up till March 31, 2021, which includes 7.71 lakh solar and 52.88 lakh non-solar green certificates. The data also showed that REC trading was recorded at 89.27 lakh in 2019-20 and 126.08 lakh in 2018-19, and finally dropped to just 9.2 lakh RECs in 2020-21 largely due to the halt in trading.

The REC or green certificate trades were suspended in July 2020 after the Appellate Tribunal for Electricity (APTEL) decided to postpone the trading by four weeks while hearing three separate petitions filed by the Green Energy Association, the Indian Wind Power Association and Techno Electric and Engineering Company related to an issue of fixing floor and forbearance prices of RECs by the Central Electricity Regulatory Commission (CERC). The trading did not resume as a result of an interim order by APTEL in July. The matter is still before the APTEL.

In the recent hearing on April 19, 2021, the APTEL in its daily order has fixed the next date of hearing as on April 28, 2021. According to a CERC order in June 2020, the floor price of solar and non-solar RECs had been reduced to zero from Rs 1,000 earlier.

Prabhajit Kumar Sarkar, the Managing Director and Chief Executive Officer of PXIL, was quoted by PTI, “The suspension of REC trading has adversely affected compliance of RPO targets for obligated entities. We do feel that putting a suspension on marketplaces ought to be an action of last resort, since they affect not just a few contending parties but the entire sector adversely.”

“The REC market has been playing a key role in facilitating the achievement of renewable energy targets and serving as a key segment for obligated as well as eligible entities to meet the committed RPO targets. Considering the state of the REC market and impact on participating entities, we feel that the early reopening of the REC market would be beneficial for the participants and the sector,” he added.