Sales of renewable energy certificates dropped over 55 per cent to 3.33 lakh units in May compared to 7.5 lakh in the same month a year ago, according to official data.
Renewable energy certificate (REC) is a type of market-based instrument. One REC is created when one megawatt hour of electricity is generated from an eligible renewable energy source.
According to official data, a total of 2.78 lakh RECs were traded on the Indian Energy Exchange (IEX) in May, compared to 5.5 lakh in the same month of 2019.
Power Exchange of India (PXIL) recorded sales of 0.55 lakh RECs in May as against around 2 lakh earlier.
IEX and PXIL are engaged in trading of RECs and electricity. REC trading is conducted on the last Wednesday of every month.
The IEX data showed that both non-solar and solar RECs witnessed higher supply, with sell bids exceeding buy bids. There were buy bids for over 2.8 lakh RECs against sell bids for over 31 lakh RECs in May this year.
Similarly, the supply was high at PXIL. There were buy bids for over 0.55 lakh RECs and sell bids for over 16 lakh units for the month under review.
Overall supply for RECs was high as the total buy bids at both power exchanges was over 3.33 lakh units against sell bids of over 47 lakh units in May this year.
Under the renewable purchase obligation (RPO), bulk purchasers like discoms, open access consumers and capacitive users are required to buy certain proportion of RECs. They can buy RECs from renewable energy producers to meet the RPO norms.
The proportion of renewable energy for utilities is fixed by the central and state electricity regulatory commissions.
The REC mechanism is a market-based instrument to promote renewable sources of energy and development of market in electricity.
It provides an alternative voluntary route to a generator to sell its electricity from renewable sources just like conventional electricity and offer the green attribute (RECs) separately to obligated entities to fulfil their RPO.