A glut of renewable-energy credits in India surged to a record in October as state electricity utilities failed to comply with clean-energy targets.
The number of credits available for sale topped 1 million, exceeding the number of buy bids by more than four times, according to data from REConnect Energy Solutions Pvt., a trader based in the central Indian city of Indore. The oversupply drove the price of a credit down to 1,500 rupees ($28), the minimum set by the country’s Central Electricity Regulatory Commission.
The government requires power distributors, steelmakers, miners and others to buy as much as 10 per cent of their electricity every year from renewable sources. State-run distribution companies, the main intended buyers, are failing to meet those targets because they are cash-strapped and count on government leniency, according to Bharat Bhushan, a New Delhi- based analyst with Bloomberg New Energy Finance.
“The inventory has grown so much that even if demand improves, the market can keep clearing at the floor price for the next few sessions,” said Bhushan.
Each credit represents one megawatt-hour of clean electricity fed into the grid. Companies that can’t secure enough renewable power locally to meet their target can opt to buy credits sold by wind farms, hydropower and biomass plants over the country’s two power exchanges.
