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February 2013 REC Update

Highlights:

Monthly Issuance of 3,17,677 RECs, up by 3%

Buyers demand down by 21%, Supply more than 13 times the demand

IEX cleared near 3% and PXIL cleared near 49% of sell volume of Non Solar

Total both exchanges traded 1,55,186 RECs with 19,43,208 RECs (i.e. 91% of bid

volume) carried forward to next session

Market value came down to INR 25.7 Cr from 31.88 Cr

Analysis of Non-Solar REC trading:

The February month REC trade session started with new issuance of 3, 15,795 RECs.

Non Solar

Buy Qty 152,952 IEX 48,093

PXIL 104,859

Sell Qty 1,742,421 IEX 1,526,114

PXIL 216,307

Traded Price (Wt) 1,500.00 IEX 1,500

PXIL 1,500

Traded Qty 152,952 IEX 48,093

PXIL 104,859

Volume

IEX – Buy demand reduced from 1,90,875 to 48,093 RECs from last session, 72% down

from last time

PXIL – Buy demand rocketed to 1,04,859 RECs from 2,462 in last session, its highest

demand so far.

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The total demand of RECs came down to 1,52,952 from 1,93,337 RECs in last session, a

21% decrease

The total supply shot up to 17,42,421 RECs, a miniscule increase from last month

At the end of session, 15,89,469 RECs remained untraded on exchanges

Total of 3,52,840 RECs did not participate in the trade, showing 50% increase in non

participation, possibly an effect of validity extension by CERC

Price

Price on IEX and PXIL remained same as last time, i.e. INR 1,500

Analysis of Solar REC trading:

Solar

Buy Qty 6,777 IEX 4,574

PXIL 2,203

Sell Qty 2,726 IEX 2,416

PXIL 310

Traded Price (Wt) 12,569 IEX 12,500

PXIL 13,000

Traded Qty 2,234 IEX 1,924

PXIL 310

Buy demand in February session decreased from 42,245 to 6,777 Solar RECs showing

84% decrease

The untraded 15,89,961 RECs plus non participant 3,53,247 will serve as the opening balance

for the next month (trade session on 28th March 2013).

PXIL led the market with 68% share of the trade. The waiver of transaction fees to buyers could

have been a motivator for the shift to PXIL. While due to poor demand in last session on PXIL,

many sellers shifted their participation to IEX, which has resulted in almost 49% clearing ratio of

Non-Solar RECs on PXIL. However the Solar REC market has been majorly captured by IEX,

though price at PXIL almost touched forbearance.

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Market Updates:

REC Validity: 730 days

CERC orders on extension of REC validity as the market is piled up with RECs without many

buyers. This step tough a breather for the RE generators, the immediate cash flow need not be

guaranteed as the clearing ratio is expected to reduce significantly

CERC expresses inability to enforce RPO

A much anticipated clarification for many in the industry on enforcement on RPO has come as

CERC clearly conveyed that the enforcement of RPO lies purely under the jurisdiction of

respective SERCs. While REC mechanism is regulated by CERC, the RPO cause can be taken

forward by the state commissions only.

Wind power association’s runs to APTEL for RPO enforcements

APTEL admitted to hear petition of two of the largest wind power associations to enforce the

RPO on the obligated entities to revive REC buy market. Almost 56% of the projects in REC

market are wind power projects

Cogeneration based power to fulfill RPO says APTEL

APTEL decreed that consumption from co-generation (irrespective of its nature of fuel) could be

used to fulfill the RPO obligation. This judgment sets aside the Orissa State Commission’s order

which imposed RPO on cogeneration based CPPs.

New Checklist process causing delays in Registration at NLDC

Further to the CERC order on CPP criteria and UP Sugar Cogen, NLDC has issued a checklist to

stringently review the power off-take & promotional benefits status of applicants from the

State Agencies. This new procedure is causing further operational delays in the registration

process.

Obligated Entities in Rajasthan receive Compliance letters

Rajasthan state nodal agency (RRECL) sent letters to the open access & captive consumers

asking to furnish the data on consumption and compliance of RPO as mandated by the

Commission and further confirmed by the High Court. The letter refers to penalties in case of

non-compliance.

APTEL Suo-motu tariff revision - stringent monitoring

APTEL took forward Power Ministry initiative by making clear that the SERCs must carry out

tariff revisions every year and publish by 1st April. Meanwhile, many ERCs including Gujarat,

Andhra Pradesh, Karnataka and Haryana have initiated activities for tariff revision proceedings

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Solar shines, though prices eclipse

AP had floated for 1000 MW solar power projects bid, while it received over 1350 MW bids

(180 bids) under the state solar policy. TN solar tender recently went undersubscribed, the bid

capacity was still one of the largest in solar segment (about 500 MW compared to 1000 MW

sought). Up north Rajasthan saw lowest ever bid of INR 6.45/kWh for solar power delivery in

India.