New Delhi: The Indian Energy Exchange (IEX) has announced the resumption in the trading of Renewable Energy Certificates (RECs) with effect from November 24, after a gap of almost 16 months. The last REC trade session took place in June 2020. This information has been shared by IEX in a regulatory filing to the stock exchanges on Monday.
“The trade has been resumed in line with APTEL's recent order dated November 11, 2021, and CERC order dated November 18, 2021,” IEX further informed.
Commenting on the development Indian Energy Exchange Limited’s Head- Business Development and Senior Vice President Rohit Bajaj said, "We are pleased to re-commence trade in the REC Market. REC has been a vital market-based instrument for obligated entities such as distribution utilities, open access consumers, and captive power plants for meeting their RPO in the most competitive and efficient manner. IEX pioneered the trade-in REC market in the year 2010. The Exchange has cumulatively traded 390 lacs renewable energy certificates since the commencement of the market in the year 2010, and has been playing a significant role in supporting the transition to a sustainable energy economy."
What is the REC trading framework?
The Renewable Energy Certificate framework seeks to create a national level market for renewable generators to recover their cost. One REC represents 1 MWh of energy generated from renewable sources.
Under the REC mechanism, a generator can generate electricity through renewable resources in any part of the country. For the electricity part, the generator receives the cost equivalent to that from any conventional source while the environment attribute is sold through the exchanges at the market-determined price. The obligated entity from any part of the country can purchase these RECs to meet its RPO compliance.
CERC had introduced the REC mechanism to ease the purchase of renewable energy by the state utilities and obligated entities, including the states which are not well endowed with RE sources.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)