REC Trading Jumps 31% with Clearing Price of ₹1,000 Under New Regulations

New regulations have done away with the floor and ceiling prices


The Renewable Energy Certificates (RECs) trading on Wednesday saw a clearing price of ₹1,000 (~$12.08)/REC being discovered in the first session at the Indian Energy Exchange (IEX) after the implementation of the new REC regulations issued by the Central Electricity Regulatory Commission (CERC).

A total of 487,356 RECs were traded during the session, a 31.01% increase from last month’s 372,000 traded at the same clearing price.

CERC issued ‘Terms and Conditions for Renewable Energy Certificates for Renewable Energy Generation Regulations, 2022,’ effectively removing the floor and ceiling prices for RECs for the first time.

The exchange is yet to provide the non-solar and solar bifurcation for the RECs traded during the session.

In a recent order, the Delhi High Court suspended the trading of RECs issued before October 31, 2022, for six weeks.

The order came in response to Indian Wind Power Association Northern Region Council’s petition challenging the new regulations.

As per the order, only RECs issued in November were traded during this session, which meant the demand would be short-supplied.

The rise in trading numbers, regardless of the shortage in supply due to the suspension, shows the increase in demand as distribution companies and other exchange entities strive to meet their RPO targets for the current financial year ending in March 2023.

The suspension is expected to be lifted by the second week of February, closer to the end of the financial year, when most trading entities have set their renewable purchase obligation targets for.

While the court said it would reconsider the petitions on January 31, 2023, it refused to stay the regulations.

On the new trading platform, Hindustan Power Exchange, the trading was limited to primarily non-solar RECs traded at a clearing price of ₹1,000 (~$12.08)/REC, with 85,805 RECs traded during the session.

Just this month, the CERC also announced massive surges in the applicable charges for various services involved in REC trading to help fund the agencies to upgrade infrastructure.

Industry experts suggest the decision would impact both buyers and sellers in the market, especially the small entities with cash-flow issues.

The REC trading was recently reinstated in November last year.