Important updates from I-RECs market: I-RECs scheme exit from Chinese market

Important updates on Chinese I-RECs and GECs

Asia-Pacific ranks as the second-largest market in terms of I-REC issuance and redemption, with China being the largest player in the region.  In 2023, more than 47 TWh IRECs were redeemed in Chinese market.

On September 13, the I-RECs foundation has decided that the I-REC scheme will exit the Chinese market. According to the organization:

• 2024 will be the last vintage of Chinese I-RECs.

• The final issuance date for those certificates will be 31st March 2025.

Please find below link regarding the transition phase operating principle announced by IRECs foundation:  https://www.trackingstandard.org/china-introduces-new-eac-policy/

This decision follows the “Renewable Energy Green Electricity Certificate (GEC) Issuance and Trading Rules” announced by China’s National Energy Administration on GECs policy:

• Issuance Scope: Applies to renewable sources such as wind, solar, biomass, and geothermal energy. 
• Trading: Certificates can only be traded once. 
• Validity: GECs issued for electricity generated from January 1, 2023, are valid for two years.
• Policy Duration: The policy will be in effect for the next five years.  

The prices of GECs vary depending on factors such as the project type, technology, and vintage year, ranging from over 1 EUR to below 0.1 EUR per MWh. In Sep. Daily settlement prices show GECs are priced around 0.7-0.8 EUR per MWh.  

Below graph shows the daily avg. prices of GECs in Sep.

GECs Daily Average Transaction Price (Yuan). Dates ranging from 2024-09-06 to 2024-09-13 

I-RECs Market Statistics and Prices (2024) 

In the first half of 2024, a total of 188 million certificates representing 188 TWh of electricity were issued across all I-REC(E) markets, marking a 17% growth compared to the volumes issued in Q1 and Q2 of 2023. Brazil, China, and Chile emerged as the largest markets for I-RECs in 2024. Additionally, redemptions surged by an impressive 58%, growing from 102 million in the first six months of 2023 to 162 million in 2024. 

Global I-REC Prices

There are significant discrepancies across various I-REC markets, ranging from highly oversupplied countries to high-priced markets. For example, observed from GreenPowerHub recent trades, India trades at 0.6 USD and Thailand at 0.85 USD, while countries with more balanced supply-demand dynamics, such as Mexico, trade at around 4 EUR and Sri Lanka at approximately 2.45 USD. 

 Below graph shows top countries by I-RECs redemption.