6.
Movement
of Solar REC market from season 1
30 May 2012
Solar RECs were traded for the very first time in the Indian
history in the May trading session at market clearing prices of Rs.13,000. Total demand of Solar RECs was 1642, whereas the
supply was only 249 and only 5 REC were sold out on both exchange platforms. It
was amazing start with very high demand in the market.
"PXIL
has made a history by concluding the first successful solar REC trade. The
first certificate was traded on the exchange, which helped the participants to
meet their obligations. They were traded at Rs 13,000 per
certificate," PXIL chief executive Rupa Singh to The
Economic Times
On the next month in June season demand increased
drastically from 1,642 to 9,619. This was pleasant surprise for both the side
though it wouldn’t affect that much on the price.
August
In august season demand
decreased by almost 72 % to the 2331.where as supply side was bit constant in
the 550 - 560 range. Overall august was remembered due to increasing concern
about the enforcements of the RPOS by state distribution companies.
“The
biggest disappointment among the renewable energy producers (who are the
sellers of RECs) is that no state owned electricity distribution company has
come forward to buy the certificates, although they are all ‘obligated
entities’. This is due to lack of enforcement of their obligations. “Lack of
participation from public Discoms and large captive power plants is the main
reason behind the price crash,” said Vishal Pandya, Director, REConnect in
the Hindu business lines.
From Aug 2012 non solar RPOs has started to face very
harsh conditions. In this whole period it never gets picked up above its
floored price.
In solar REC from August to December both demand side and
supply side were register very little movement.
November
"The
policy framework is already there. What is lacking is compliance, and if
regulators, like Punjab did recently, enforce policies, demand will come back
and REC prices will go up," says Shiv Nimbargi, MD & CEO of Green
Infra Limited, a renewable energy company
“With existing set of buyers completing major part of
their requirements, and no new buyers appearing in near term horizon, the
market condition looks very gloomy. The confidence of all the investors on the
mechanism completely looks shattered and probably every investor would be
thinking on how much they should trust Indian regulatory framework,” said
Vishal Pandya, Director, REConnect in the Hindu business lines.
January
New Year came up with significantly high demand of the solar
REC. demand increased beyond 42000 + whereas supply side increased up to the
4000.market clearing price at both the platform were marked at 12500 rs.
"There is a contrasting trend in solar and
non-solar RECs. There is huge demand for solar power but the projects have not
come up, as developers are not getting bank loans on ground of RECs. On the
other hand, in non-solar the demand is yet to pick up, hence hindering the
returns of already established projects," said Rajesh Mediratta, business
development director at India Energy Exchange.
March
At the end of the FY 12-13 both demand and supply side
registered bit rise. March was the last trading session for
the compliance period 12-13, and hence it showed some up thrust. It was also
recorded as the highest volume clearance session in the past 11 months. Price
reached up to 13400 in IEX and 1300 in PXIL.
Market clearing price of solar REC
Demand vs. supply volume of Solar REC
(Source: http://reconnectenergy.com/blog/)
7.
Loopholes
·
Enforcement
of RPO
From the very beginning this issue is
getting attenuation from all the project developers which are interested in the
REC scheme. CERC is falling short to convince SERC to comply with the
regulations.
·
Banks
are going Blackfoot to promote REC projects.
“More
than the uncertainty over the Kyoto Protocol, it is the uncertainty over the
renewal energy certificate (REC) programmer that is denting the sentiments. The
government had started the REC regime under which power distribution companies
were mandated to buy the certificates. But there are no buyers for REC now.
Lack of strict imposition of the regime is another reason for the lack of
interest”. Abhay
Anand, business director (infrastructure, energy) of Cipher Capital Advisers said
·
Poor
financial conditions of the DISCOMS may lead to the extensions of the RPO ( as
happen with Punjab )
·
fulfillment
of RPO
Due to annually fulfillment of RPO cash flow is remaining as
a major concern. it is leading to the variation of demand at the end of the
financial year.
8.
Conclusion
Conclusion is very clear, until and unless strict
restriction won’t be applied on the SERC and other obligated entities REC will
remain under the shadow of doom.
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