Indian Energy Exchange (IEX) continues to show its strong market position, as evidenced by its impressive performance in August 2024. The firm reported a significant 35.8% year-on-year (YoY) increase in volumes, reaching a substantial 12,040 million units (MU). This positive development has sparked investor interest, with shares of the firm rising by 0.63% on Wednesday following the announcement.
August performance highlights
IEX's overall electricity volume surged by 17.1% YoY to 9,914 MU. This growth was supported by a remarkable 737.4% YoY increase in renewable energy certificates (REC), amounting to 2,116 MU. The firm revealed that the REC market experienced an all-time low price of ₹115 per certificate during the trading session on 28th August 2024. This presents a unique opportunity for entities like DISCOMS and captive power producers to fulfil their renewable purchase obligations, making IEX a potential share to buy for those focusing on the sustainability sector.
Impact of monsoon on renewable energy
The monsoon season played a crucial role in boosting renewable energy production, particularly hydro and wind power. This increase in renewable energy availability led to a notable decline in day-ahead market (DAM) prices and real-time market (RTM) prices on the exchange. In August 2024, the market clearing price in the day-ahead market stood at ₹4.28/unit, down by approximately 38% YoY, while the real-time market price dropped 44.8% YoY to ₹3.59/unit. The consistent growth and favourable pricing environment make IEX a strong share to buy for investors looking to capitalise on the energy market.
Strategic expansion into the carbon market
Earlier this week, IEX announced that its wholly-owned subsidiary, International Carbon Exchange (ICX), has entered into an issuer agreement with the International Tracking Standard Foundation. This agreement authorises ICX to act as a local issuer of International Renewable Energy Certificates (I-REC) in the Indian market. ICX will oversee the registration of production facilities and the issuance of I-RECs on the registry managed by Evident, a registry providing a fully auditable chain of custody for energy attribute certificates.
Stock performance and future outlook
IEX shares have seen substantial gains, rising over 21% since the beginning of the year and more than 49% in the last year. The firm's consistent growth and expansion into new markets, coupled with favourable market conditions, position it as a top share to buy for investors. With the increasing focus on renewable energy and sustainability, IEX is well-placed to continue its upward trajectory.
Wrapping up
In summary, IEX's impressive performance in August 2024, coupled with its strategic expansion into the carbon market, makes it a compelling share to buy. As the firm continues to capitalise on the growing demand for renewable energy, investors could benefit from adding IEX to their portfolios.
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