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The IREC Market

Photo of Kumara Rathnam

Written by

Kumara Rathnam

Power Analyst

MSc Energy, Natural Resources and the Environment from Norwegian School of Economics (NHH). UK and EU market specialist for green certificates.

Summary

  • An International Renewable Energy Certificate (I-REC) is a type of Energy Attribute Certificate (EAC).
  • I-RECs enable consumers worldwide to choose and track the origin of the electricity consumed.
  • Each I-REC represents one-megawatt hour (MWh) of electricity produced by Renewable Energy Sources (RES).
  • The I-REC Standard is a uniform system that governs I-REC operations.
  • Globally the use of I-RECs continues to increase with many new countries adopting the I-REC standard.

What is an I-REC?

An International Renewable Energy Certificate (I-REC) is a type of Energy Attribute Certificate (EAC), it enables consumers worldwide to choose and track the origin of the electricity consumed.

I-RECs are an efficient, uniform and recognised tool to document reduced greenhouse gas (GHG) emissions and improve sustainability ratings. They provide evidence of the quantity produced from renewable energy (RE), provide a methodology that allows the trade of RE and thus creates a market promoting further development of new RE capacity globally.

Similar to RECs and Guarantees of Origin (GOs), each I-REC represents one-megawatt hour (MWh) of electricity produced by Renewable Energy Sources (RES) and provides the environmental benefits of the generated RE.

Where are I-RECs available?

While GOs originate in Europe and RECs originate in North America, not all countries have electricity attribute tracking systems like RECs or GOs, this is especially so in developing countries. I-RECs fill this missing gap for countries in Asia, Africa, the Middle East and Latin America where no similar standards exist (Figure 1) so that consumers all over the world can have access to internationally recognised tradable and efficient electricity attribute tracking certificates.

As of March 2020, I-REC issuers are now authorised in 32 countries and the current registered global I-REC electricity capacity is over 27,000 MW as of April 2020.

The international REC Market
Figure 1. I-RECs and other EACs available worldwideI-REC Standard

What is the I-REC standard?

Launched in 2014, the International Renewable Energy Certificate standard (I-REC standard) is a uniform system/registry that governs I-REC operations. It is a non-profit foundation based in the Netherlands and built on the extensive experience from the European GO system to empower electricity consumers with the freedom to choose RE consumption globally.

The I-REC standard facilitates I-REC trades between consumers, brokers, electricity producers and suppliers as well as governments. It is designed to facilitate reliable Scope 2 carbon accounting consistent with various international accounting standards.

How the I-REC standard works and similarities to GOs?

Since the I-REC standard was built on the experiences from the European GO system it shares many similarities with slight differences (Table 1). Like the AIB registry issues electronic GO certificates, the I-REC registry electronically issues I-RECs based on RE generator output.

I-RECs are traded commodities. Like GOs, an I-REC cannot be issued where another I-REC currently exists for the same MWh of RE electricity produced. When a company buys I-RECs to prove RE electricity consumption, the I-RECs are cancelled in the registry to avoid double counting.

Video with more details on how the I-REC system works can be found here.

Table 1 Similarities and differences between GOs and I-RECs

Growth of I-RECs

Per members/participants

I-RECs being the youngest green certificate scheme has seen rapid growth since its establishment in 2014. Globally the use of EACs continues to increase with many new countries adopting the I-REC standard. As of 19 March 2020, there are 32 countries globally with authorised I-REC issuers, the list of authorised issuance countries can be found here. At the beginning of 2020 the I-REC standard foundation board announced the beginning of I-REC issuance in Russia and Thailand.

The number of organisations registered as Participants in the I-REC market as of 31 March 2020 is 111 an increase from the 86 participants registered as of 31 August 2019.

Growth per technology and installed capacity

As of 31 March 2020 there is a registered installed capacity of a little over 27,000 MW, an increase of 21.3% compared to 2019. Globally, among I-REC registered installations, hydropower counts for the majority of installed capacity (11,241.71 MW, 41.6%), followed by wind power installations (10,101.94MW, 37.4%).

Global I-REC installed capacity by Energy source (MW) (March 2020)

Global I-REC installed capacity (March 2020)I-REC standard

Growth per region

Africa

In Africa, Nigeria, Uganda, Morocco and South Africa are the pioneers of I-RECs. Currently the 4 countries have a total registered capacity of 1,324 MW with Nigeria providing the largest share at 45%.

Asia

Asia has a total registered capacity of over 13,000 MW. Mainland China has the largest I-REC installed capacity not only in Asia and but all global regions standing at 6,845 MW. In Asia, the second-largest in India at over 1,400 MW.

Latin America

Latin America has a total I-REC installed capacity of 10,860 MW. Brazil has the largest installed capacity in Latin America and the second-largest installed capacity globally at over 5,000 MW. Chile has the second-largest installed capacity in Latin America at over 1,700 MW and the third-largest globally.

I-REC legislation and regulation

The I-REC code governs/regulates the principles and descriptions of how the I-REC system works and the detailed descriptions of the procedures are contained in the I-REC Code Subsidiary Documents. The registration and participation fees are determined on an annual basis by the I-REC Standard and associated stakeholders.

There are cases where there are country-specific restrictions on I-RECs for example based on the approved technology. Certain countries can have their own regulations and restrictions that slightly differ from the I-REC standards.

The impact of I-RECs

As governments around the world put in more efforts to expand investments in RE and the energy transition, I-RECs play an important role as an efficient tool for consumers to reliably track the origin of electricity consumed, they also prove to be a vital part in the promotion of green electricity.

I-RECs allow for companies to green their electricity based on their country of consumption. Through purchasing I-RECs, companies can demonstrate to the market their commitment to supporting the energy transition and place themselves as an environmental leader.

Greenfact is a leading provider of consultancy services to companies on how best to green their electricity/carbon emissions. If you wish to learn about the I-REC market and more please get in touch with us here.

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