The reason in drop in trading volume are two fold – a) Previous month trading volumes were higher than normal driven by a specific order of RERC for compliance and b) the Republic Day holiday?on Tuesday?(also a banking holiday) presented a logistics hurdle for some obligated entities to trade.
Trading?volumes are expected to increase significantly going forward, as most obligated entities are now gearing up to fulfill their obligation considering that only 2 trading sessions are remaining in the current FY. Last quarter of previous FY saw RECs trading volume of 20.85L. We should expect a significant increase over that this FY – this means we will see significant volumes in February and March.
Analysis of?Trading:
Non Solar –?Clearing ratio in exchange were at?2.16%?and?3.12%?in IEX and PXIL respectively for Non Solar?REC’s. A total of?344,519?were traded as compared to?898,439?RECs were traded in?December.?Clearing ratio at PXIL saw a jump, but IEX results showed huge dip in demand. Overall Non-Solar demand was below expectation
Solar –?Clearing ratio stood good at?1.65%?and?2.34%?in IEX and PXIL respectively. However, the total clearing volume fell to?57,420, as compared to?61,602?last month. This was a marginal fall, but since we are approaching FY end, much better results were awaited.
Trading?volumes are expected to increase significantly going forward, as most obligated entities are now gearing up to fulfill their obligation considering that only 2 trading sessions are remaining in the current FY . Further, this year we have seen regulatory action in the form of compliance orders and/ or proceedings in several states like Orissa, Kerala, UP, MP and Maharashtra, to name a few. This trading session result calls for stricter enforcement by states, since the next two months will be very crucial for the future of the REC Market.
The December’s trade result can be accessed here. ]]>
Analysis of Trading:
Non Solar –?The clearing ratio stood at?0.94%?and?2.24%?in IEX and PXIL respectively for Non Solar REC’s. A total of?211442 RECs were redeemed in this trading session which was 13.16% higher than the REC’s sold in the previous month i.e 183599 Non Solar REC’s.?Demand at PXIL picked up significantly compared to previous months.? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
Solar –?The clearing ratio for Solar stood at?0.54%?and?0.33%?in IEX and PXIL respectively. A total of?13851?REC’s were sold in this session which was 27.65 % higher than the REC’s sold in September ?i.e 10020 Solar REC’s.
The surge in the REC’s demand clearly indicates the increase of focus on the RPO regulations from both the obligators and the regulators. ?As many states in the recent past, via orders, have strictly stated that the obligated entities will have to comply with the RPO targets, it is expected that the REC demand will pick up pace in the near future.
The September’s trade result can be accessed here.
]]>The total transactional value of non-solar RECs was INR 208.8 million and for solar RECs it was INR 15.4 million. The closing balance of REC inventory for non solar RECs breached the 7 million mark this ?month whereas solar RECs crossed 0.23 million mark.
Non Solar RECs –
In case of non- solar RECs demand almost quadrupled (up by 376%) as compared to last trade session (refer ?– May 2014 trade report) and Supply grew by 5.23 %. Non Solar price continued to remain at floor (INR 1,500 per REC). More insights provided in graphical charts below :
Solar RECs –
Total solar RECs issued this month was 27,787 and redeemed were 1654 only. In contrast to non-solar RECs, the demand for solar RECs took a beating as it went down by 22%. Supply rose by 11% w.r.t May 2014. ?More details can be found in the graphs below –
Solar RECs finished trading at floor for consecutive 12 months.
Relevant media article can be read here.
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Non-solar RECs:
Demand in May was 29,255, compared to 79,354 in April (down 63% over April) and down 45% from May of last year. The last time demand was this low was in August 2011. Clearing ratios at both exchanges were approximately 0.45%. Closing inventory of RECs is in excess of 69.5 lakh.
Solar RECs: Demand improved marginally from 989 RECs last month to 2,120 RECs. As a result, clearing ratios improved as well – 0.26% in IEX and 4.8% on PXIL, albeit on very low demand compared to existing inventory. Inventory currently stands at over 2.1 lakh RECs.
The low demand is continuing despite penalty orders in Uttarakhand and Union Territories. It will be interesting to watch the approach that the regulators take in the next few months if the non-compliance continues despite orders from them.
To get details about previous months trading session – Click Here.
Our online market tracker tool can be accessed?here.
]]>Following is a brief of the analysis:
April 2014 was the first month of compliance year FY 2014-15. As expected, the volumes in non-solar and solar REC markets nosedived as compared to last months trading session (Refer –?Blog – post on ?March 2014 REC Trade).? The REC inventory’s closing balance stood at a mammoth 6.6 million RECs. The total RECs redeemed in April 14 were 80,343 RECs only. The RECs issued this month was again a 7digit number – about 1.1 million RECs. Cumulatively, March’14 ?and April’14 alone added over 3 million RECs, which is 23% of the total RECs issued till date. ?This escalation in supply side and almost no demand side participation sums the state of current Indian REC market place.
Non-Solar RECs –
Demand dropped by 88% and supply was up by 3.2% w.r.t March’ 14. Price of non-solar RECs remained at floor price – INR 1,500 per REC. Total non-solar redeemed were 79,354 (as per REC registry).
Solar RECs –
Price of solar REC continued to trade at floor (INR 9,300 per REC) for a consecutive 11th month. Demand fell to less than 1,000 and supply rose by 22%. Clearing ratios at both exchanges were close to half percent (0.5%) only. As per registry, solar RECs redeemed in April14 was 989.
For more details please refer table below – Our online market tracker tool can be accessed here.
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With this trade session, a 12-month long financial year FY 2013-14 comes to an end. The prices for both credits (solar as well as non-solar) remained at floor for most part of the year. ?Poor enforcement measures of RPO across states saw a continuous lack of demand in the market.
Close to 17.5 lac RECs were issued in March’14 itself, which is a huge 15 % (approx.) of the total RECs issued till date in India (since March 2011) . This can be attributed to issuances of RECs w.r.t sugar co-gen units in Uttar Pradesh.
A strong policy review is the need of the hour. It is likely and should be expected, that the forum of regulators (FOR) takes up this issue for discussions during the forthcoming 40th meeting scheduled on 2nd April 2014.
Non Solar RECs?–
Non Solar REC Supply grew by around 22%. Demand also went up by a massive 74%, owing to March being last month of FY14 (and not due to strong RPO enforcement). Evidently, clearing volume also touched a new high of around 6.5 lac RECs.
Non-Solar REC Price continued to trade at floor price of Rs. 1500 per REC.
Solar RECs –
In case of solar RECs also all volumes had an uptick. Supply was up by 13.22.6 % and demand by 32.63 %. The total clearing volume of solar RECs at both exchanges was 11,019 RECs.
As per REC registry, 24370 solar RECs were issued in March 2014.
Unlike in non-solar REC markets, the solar RECs started trading at floor, only from June 2013. The discovered price of solar RECs remained at floor – Rs. 9300 per REC.
Keeping in view the overall market performance, it can be said that the time ahead for investors in solar REC markets remains grim.
For a similar blog-post covering analysis on previous months trade session –?click here.
A quick glimpse of trade stats can be had on our Market Tracker.
]]>February 2014?was the second last trade session of Q4 for FY14. Clearing Ratios improved for both exchanges ?(IEX and PXIL) and was recorded just over 8% in terms of non-solar RECs.. As per REC Registry, the market redeemed a total of 3.87 lakh RECs (up by 6 % as compared to last month).
Non-Solar RECs:
Buy bids for non-solar credits rose by 5.5 percent in comparison to last month’s stats. Clearing percentages at both exchanges were at parity. The total transactional value of non-solar RECs was 568 million INR, with price of each non-solar REC remaining at floor (Rs. 1500 per Non Solar REC). REC registry noted a total non-solar RECs redeemed to be around 3.78 lac.
Solar RECs:
Demand of solar RECs jumped by an encouraging?30.58 percent compared to January 2014 trade session. Solar RECs continued to trade at floor price (Rs. 9300 per solar REC). Evidently total solar REC transactional value was also recorded low at about 77.2 million INR. As per REC registry, ?8308 solar RECs were redeemed.
For a similar blogpost covering analysis on previous months trade session –?click here.
]]>Non-Solar RECs :
Buy bids for non-solar credits went down by 11 percent in comparison to last month’s stats.. Clearing percentages at both exchanges largely varied. The total transactional value of non-solar RECs was 538 million INR, with price of each non-solar REC remaining at floor (Rs. 1500 per Non Solar REC).
Solar RECs:
Demand of solar RECs tumbled by 19 percent compared to December 2013 trade session. Solar RECs continued to trade at floor price (Rs. 9300 per solar REC). Evidently total solar REC transactional value was also recorded low at about 59.2 million INR. As per REC registry, only 6361 solar RECs were redeemed. With only two months remaining in current financial year, market rebounding to encouraging figures seems far from reality.
For a similar blogpost covering analysis on previous months trade session – click here
Non-Solar RECs :
Buy bids for non-solar credits increased by 30.73 percent in comparison to last month’s stats. The most encouraging fact, considering a holistic view of FY14, was the cleared volume crossing the 0.4 million mark. Clearing percentages at both exchanges (IEX and PXIL) were recorded at parity (over 9%). With a total transactional value of non-solar RECs of 605.8 million INR, price of each non-solar REC remained at floor price of Rs. 1500 per REC.
Solar RECs:
The change in demand and supply as compared to previous month was up this month by 7.18 percent and 47.37 percent respectively. Although, the prices here also remained at floor we can still expect a jump in demand as we slip in the last quarter.
For previous months trade results – Click Here.
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