REC Trading on IEX Surges 640% YoY as Price Drops to Record Low

A volume of 622.2 MU of green energy was traded during the month

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The Indian Energy Exchange (IEX) reported a total traded volume of 10,633 million units (MU) in May 2024, a 28.9% increase from the previous year. A volume of 622.2 MU of green energy was traded on the exchange during the month.

Electricity volumes reached 9,568 MU, up 21% year-over-year (YoY).

Renewable energy certificates (REC) hit 1,055 MU, a 640.3% increase YoY. The REC market recorded an all-time low price of ₹165 (~$1.97) per certificate in the trading session on May 29.

These low prices allow obligated entities (DISCOMS and captive power producers) to meet their renewable purchase obligations and voluntary customers to fulfill their sustainability goals.

Rohit Bajaj, Executive Director of Business Development, Strategy, and Regulatory Affairs at IEX, told Mercom, “IEX witnessed remarkable growth in trading volumes during May, which was led by the increase in the country’s electricity consumption. Proactive measures undertaken by the government and regulatory authorities ensured ample supply to meet this heightened demand.”

Bajaj explained that a significant increase in wind and hydropower generation led to a surge in the supply of green electricity. As a result, the IEX green market achieved a volume of 622 MU in May, a 74% YoY increase.

“With the IMD predicting higher-than-normal rainfall this year, hydropower generation is expected to increase, potentially bringing more green power onto the exchanges. The influx of renewable energy sources aligns with the nation’s commitment to sustainable development and reducing its carbon footprint,” he said.

Government and regulatory measures, such as selling surplus unrequisitioned power on power exchanges, increasing fuel supply, and ensuring higher availability of generating units, increased sell liquidity on the exchanges, helping to keep prices stable.

Consequently, despite higher electricity consumption, the market clearing price in the Day Ahead Market during the month was ₹5.3 (~$0.06)/unit, over 20% lower than prices under bilateral contracts.

According to government data, the country’s energy consumption reached 156.3 BUs, a 15% YoY increase in May. On May 30, the country experienced an all-time high peak demand of 250 GW and the highest-ever single-day energy consumption of 5,466 MU.

Green Market: Green Day-Ahead & Green Term-Ahead Market

During May, the IEX Green Market, which includes the Green Day-Ahead and Green Term-Ahead Market segments, recorded a volume of 622.2 MU against 357.7 MU in the same month last year.

The Green Day-Ahead Market (G-DAM) achieved a volume of 574.7 MU during the month, with a weighted average price of ₹3.86 (~$0.04) per unit.

The Green Term-Ahead Market (G-TAM) saw a volume of 47.5 MU, with an average monthly price for non-solar at ₹8.06 (~$0.09) per unit.

Electricity Market: Day- Ahead, Term- Ahead & Real-Time Market

The Day-Ahead Market (DAM) volume rose to 4,371 MU in May 2024, up from 4,066 MU last year.

May 2024 also saw the Real-Time Electricity Market (RTM) achieve its highest monthly traded volume. RTM volume reached 3,352 MU, up from 2,424 MU in May 2023, marking a 38.3% YoY increase.

On average, more than 100 MUs were traded daily in the RTM segment during May 2024. This consistent growth in the RTM segment demonstrates the efficient management of power demand and supply by distribution utilities and industries on a real-time basis.

The Day-Ahead Contingency and Term-Ahead Market (TAM), which includes contingency, daily, weekly, and monthly contracts up to three months, traded 1,221 MU, a 15.4% increase from the previous year.

Renewable Energy Certificate Market (REC) Market

A total of 1.05 million renewable energy certificates (REC), equivalent to 1,055 MU, were traded in the trading sessions held on May 8 and 29 at clearing prices of ₹185 (~$2.21) per REC and ₹165 (~$1.97) per REC, respectively.

The price of ₹165 (~$1.97) per REC marks the lowest-ever price discovered for REC in a trading session since its inception.

The next REC trading sessions at the exchange are scheduled for June 12 and June 26, 2024.

Energy Saving Certificates (ESCerts)

In May 2024, 9,994 Energy Savings Certificates (ESCerts), equivalent to approximately 10 MU, were traded on IEX at a floor price of ₹2,165 (~$25.92) per ESCert.

The exchange traded 402 MU of green energy in April 2024, a 44% YoY increase from 280 MU.

IEX reported a total income of ₹1.49 billion (~$17.85 million), an increase of 15% year-on-year (YoY) in the fourth quarter of the financial year 2024.

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