Trading Renewable Energy Certificates (I-RECs): Great potential for renewable energy projects

Renewable Energy Certificates (I-RECs) are becoming increasingly important in the global context of rising demands for energy transparency and commitment to greenhouse gas reduction. For renewable energy projects, I-RECs serve as proof of clean energy production and unlock new financial potential. This article explores the significance of I-RECs, how they support Scope 2 greenhouse gas reductions, their financial benefits, and the role of VP Carbon, a subsidiary of Vu Phong Energy Group, in providing solutions for project registration and acquisition of the right to use I-RECs that support sustainable development projects.

The importance of I-RECs in renewable energy transparency

Renewable Energy Certificates (I-RECs) certify the amount of electricity produced from renewable sources such as solar, wind, and hydropower. Each MWh of renewable electricity generated corresponds to one I-REC, providing a transparent and verifiable way to confirm renewable energy output. For a detailed explanation of I-RECs, click here. I-RECs are essential for businesses and organizations to track and report greenhouse gas emissions accurately.

In practice, I-RECs help reduce Scope 2 greenhouse gas emissions—indirect emissions from electricity consumption. When a business purchases I-RECs, it acknowledges renewable energy consumption and reduces its greenhouse gas emissions according to the Carbon Disclosure Project (CDP) standards. This means businesses can affirm their use of renewable electricity and contribute to green transition efforts and environmental responsibility.

List of green energy certificates being implemented in countries and recognized by CPD in the scope 2 emission reduction sustainability report

Financial potential of I-RECs

Renewable energy projects (solar, wind) often need help with financial challenges, especially during the initial stages, which involve high investment costs and long payback periods. In this context, I-RECs provide a transparent tool for tracking energy output and creating opportunities for sustainable income.

Revenue from selling I-RECs can become an additional income stream for renewable energy producers. Businesses and organizations purchase I-RECs to meet environmental protection goals, which creates a growing market for I-RECs. This offers a stable and additional financial resource, improving the financial viability of projects and alleviating initial investment pressures.

For example, the I-REC market in India demonstrates this potential. According to S&P Global Commodity Insights, in 2023, India issued 7.8 million I-RECs, with an issuance-to-redemption ratio of 2.4:1. The value of traditional hydro I-RECs dropped to around $0.70/MWh by the end of January 2024. Despite a slowdown in I-REC trading due to oversupply, the market still shows significant financial potential with increasing demand.

As of early August 2023, over 512.33 million I-RECs have been issued, corresponding to 195.2 GW of renewable energy capacity. More than 4,200 projects in 48 countries have been certified with I-RECs. In Vietnam, as of October 25, 2023, there are 492 operational projects with a total capacity of over 8,000 MW certified with I-RECs, including 353 solar projects, 124 hydro projects, and 15 wind projects.

The role of VP Carbon in registering to buy and sell the right to use I-RECs

As a certified Participant by GCC (Issuer) for the Southeast Asia region, VP Carbon (a member company of Vu Phong Energy Group) plays a key role in facilitating the buying and selling of I-RECs. VP Carbon offers comprehensive solutions for stakeholders and renewable energy projects, including solar, wind, and hydropower. This includes registering I-RECs for projects and purchasing I-RECs from renewable energy projects that wish to sell their green energy certificates. This helps increase revenue and ensures sustainable development.

Additionally, VP Carbon is committed to raising awareness and understanding of I-RECs within the business community. The company helps businesses seize opportunities in the I-REC market through training programs and workshops and develop sustainable strategies.

Partners and solutions by VP Carbon related to I-RECs

 Renewable Energy Certificates (I-RECs) are crucial for transparent reporting of renewable energy output and reducing greenhouse gas emissions, but they also present attractive financial opportunities for renewable energy projects. With the accompany of VP Carbon, these projects can fully leverage the potential of I-RECs, ensuring sustainable income and future growth. This represents a significant step towards a greener and more sustainable future.

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