Green certificates trading shrinks to 9.2 lakh in 2020-21, 60.58 lakh inventory piles up

New Delhi: The renewable energy certificates market shrank to 9.2 lakh RECs in 2020-21 while 60.58 lakh RECs piled up till March-end due to a halt in trading, which also impacted the ability of distribution companies to meet their renewable purchase obligation (RPO).

According to industry data, an inventory of 60.58 lakh RECs piled up till March 31, 2021, which includes 7.71 lakh solar and 52.88 lakh non-solar green certificates.

The data also showed that trading of just 9.2 lakh RECs was done in 2020-21 as the trading was suspended since July last year. REC trading was recorded at 89.27 lakh in 2019-20 and 126.08 lakh in 2018-19.

The REC or green certificate trades were suspended in July 2020 after the Appellate Tribunal for Electricity (APTEL) decided to postpone the trading by four weeks while hearing three separate petitions related to an issue of fixing floor and forbearance prices of RECs by the Central Electricity Regulatory Commission (CERC).

The trading did not resume as a result of an interim order by APTEL in July. The matter is still before the APTEL.

The suspension of REC trade has significantly affected the discoms' ability to meet their RPO.

Under RPO, bulk purchasers like discoms, open access consumers and capacitive users are required to buy a certain proportion of renewable energy of RECs in lieu of that.

They can buy RECs from renewable energy producers to meet RPO norms. One REC is created when 1 megawatt hour of electricity is generated from an eligible renewable energy source.

REC trading is conducted on the last Wednesday of every month on the Indian Energy Exchange (IEX) and the Power Exchange India (PXIL).

Talking to PTI on the issue, Prabhajit Kumar Sarkar, the Managing Director and Chief Executive Officer of PXIL, said, "The suspension of REC trading has adversely affected compliance of RPO targets for obligated entities. We do feel that putting a suspension on marketplaces ought to be an action of last resort, since they affect not just a few contending parties but the entire sector adversely."

"The REC market has been playing a key role in facilitating the achievement of renewable energy targets and serving as a key segment for obligated as well as eligible entities to meet the committed RPO targets. Considering the state of the REC market and impact on participating entities, we feel that the early reopening of the REC market would be beneficial for the participants and the sector," he added.