Trading of renewable energy certificates (REC) at the Indian Energy Exchange (IEX) touched an all-time high in the November session, with 18.9 lakh RECs being traded under the non-solar category. The number represents a 452% rise month-on-month and more than 12 times the volume traded in November, 2016. One REC, priced at `1,500, is treated as equivalent to 1,000 units of green electricity.
REC trade is a market based instrument designed to facilitate compliance with renewable purchase obligations (RPO). It aims to address the mismatch between availability of renewable energy resources in the states and the requirement of the obligated entities to meet their RPOs. Power distribution companies (discoms) were the major buyers to purchase REC in the November trade session. According to sources, Bihar, Uttarakhand, Maharashtra and Delhi discoms purchased the largest number of RECs.
The development comes after the power minister said in late October in an ASSOCHAM event that he plans to make amendments in the Electricity Act, 2003, to introduce a penalty provision for utilities who do not meet their RPO targets — a segment where the state utilities were significantly lagging behind. Compliance to RPO targets was less than 100% across a majority of larger states except Andhra Pradesh, Himachal Pradesh and Karnataka in FY16. To achieve the target of achieving 175 GW renewable energy capacity by FY22, the power ministry, in July last year, had issued guidelines for long-term RPO trajectory for a three-year period from FY17 to FY19. The minimum RPO target was set at 11.50% for FY17, 14.25% in FY18 and 17% in FY19. RPO is the share of the total energy that is to be procured from renewable energy sources.
Trading of solar RECs are suspended since April due to an ongoing case at the Supreme Court. Average spot electricity prices for November in IEX was `3.5/unit. Total volume traded was 3,527 million units, an annual rise of 3.7% but dipping by 13.6% on a monthly basis. Spot prices of power went up higher than normal levels with rise in demand, following a significant decline in wind, nuclear and hydro power generation.