The I-REC Standard, according to S&P Global Platts, is fast spreading over the world, with a presence in more than 30 countries, indicating increased demand for sustainable products in emerging markets.
I-REC standards are used by several renewable energy generating countries, including Brazil, China, Turkey, Russia, and India, to check and certify certain characteristics of renewable energy produced by local power plants.
China leads the I-REC market, with about 18 million certificates issued in 2021, followed by Brazil. These countries have large volume of installed hydro and wind power capacity, and they have the ability to grow I-REC certification even more. Besides, other countries participating in the market include Turkey, Russia, and India, which are among the top five I-REC issuers around the world.
While the market is still in its early stages, demand is mostly driven by firms' commitments to 100% renewable energy consumption, which is accounted for in Scope 2 emissions under the GHG Protocol. The CDP for climate disclosure and the RE100 for renewable energy usage are two of the most common programs spurring demand.
Among Fortune 500 companies, several corporations have pledged to transition completely to renewable energy sources. Nevertheless, companies that are finding it difficult to obtain power from renewable energy sources for a variety of reasons are considering I-RECs as an alternative.
According to I-REC Standard Foundation statistics published in January, most I-REC markets around the world are oversupplied. Average prices in China and Brazil are around 30-50 cents per MWh, significantly lower than the prices in existing European energy certification markets.
However, as the rules in the competing voluntary carbon market have tightened, many renewable energy companies have converted to the I-REC market as a means of earning money and profit, implying a potential growth in the market.
According to an I-REC originator in India, demand for RECs is gradually increasing, as seen by the prices of these certificates. REC prices in India are now over $1/MWh, up from 50-60 cents/MWh last year.
