India: Overproduction and regulation drive down I-REC prices

International Renewable Energy Certificate (I-REC) prices for wind and solar technologies in India reached an all-time low in 2024, due to a persistent glut and uncertainty surrounding new regulations. This situation highlights the challenges facing renewable energy producers in India, between regulatory changes and insufficient demand that fails to absorb supply.

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25€/month*

*billed annually at 99€/year for the first year then 149,00€/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2€/month*
then 14.90€ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

Since the new regulations came into force in December 2022, the REC market in India has changed significantly.
The Central Electricity Regulatory Commission (CERC) has abolished floor and ceiling prices, making the market more volatile.
In addition, the introduction of Over-the-Counter (OTC) trading aims to increase trading flexibility, but has not yet succeeded in resolving the fundamental imbalances between supply and demand.
This increased volatility has accentuated the decline in I-REC prices, which have been estimated at between $0.7/MWh and $1.7/MWh in 2023, well below local REC prices which are around ten times higher.

Imbalance between supply and demand

One of the major problems facing the I-RECs market in India is the massive surplus of untraded certificates, which exceeded 11 million by mid-2024.
Although demand for green energy attributes is on the rise, supported by voluntary sustainability targets and increased Renewable Portfolio Holder (RPO) responsibility requirements, inconsistent policies between states and the federal government are creating a gap.
Indeed, state RPO targets are often 30% lower than those set at the federal level, limiting local demand for certificates and contributing to the glut.

Comparison with international markets

I-RECs offer an alternative to local RECs in India, enabling renewable energy producers to sell their green energy attributes on the international market.
However, the significantly lower prices of I-RECs make this market less attractive to Indian producers than the local market, which offers prices around ten times higher.
This leads some producers to turn to the local market despite the competitiveness of I-RECs.
This situation could change if the I-REC market manages to develop further and introduce more sophisticated financial instruments.

Influence of the Carbon Market and Future Development

The planned introduction of a carbon market in India could also restructure the energy certificate landscape.
As carbon credit standards such as the Verified Carbon Standard and the Gold Standard gradually exit the renewable energy carbon credit market in middle-income countries, many Indian producers are turning to I-RECs as an alternative.
This transition could be accelerated by higher carbon credit emission costs and an increased perception of the value of I-RECs in a sustainability context.

Market players’ outlook

Analysts and market participants expect the I-REC market to evolve rapidly, influenced by regulatory adjustments and carbon market developments.
The Indian market could see a significant transformation of its current dynamics if incentives for local RECs and I-RECs mechanisms become more aligned, potentially offering arbitrage opportunities for producers and buyers.
The key will lie in the market’s ability to balance supply and demand while meeting corporate sustainability expectations.
The future of the I-RECs market in India remains uncertain and will depend on a number of factors, including regulatory adjustments, carbon market trends, and the ability to narrow the gap between supply and demand.
In the meantime, renewable energy producers must navigate a complex environment where trading strategy becomes essential to ensure profitability.

Rising responses to UNEP’s satellite alerts trigger measurement, reporting and verification clauses; the European Union sets import milestones, Japan strengthens liquefied natural gas traceability; operators and steelmakers adjust budgets and contracts.
The Finance Committee has adopted an amendment to overhaul electricity pricing by removing the planned redistribution mechanism and capping producers' profit margins.
The European Commission unveils a seven-point action plan aimed at lowering energy costs, targeting energy-intensive industries and households facing persistently high utility bills.
The European Commission plans to keep energy at the heart of its 2026 agenda, with several structural reforms targeting market security, governance and simplification.
The new Liberal Democratic Party (LDP)–Japan Innovation Party (Nippon Ishin no Kai) axis combines a nuclear restart, targeted fuel tax cuts and energy subsidies, with immediate effects on prices and risk reallocations for operators. —
German authorities have ruled out market abuse by major power producers during sharp price increases caused by low renewable output in late 2024.
A new International Energy Agency report urges Maputo to accelerate energy investment to ensure universal electricity access and support its emerging industry.
Increased reliance on combined-cycle plants after the April 28 blackout pushed gas use for electricity up by about 37%, bringing total demand to 267.6 TWh and strengthening flows to France.
The United States announces a tariff increase beyond the 10% base rate targeting several Colombian products. Bogotá has recalled its ambassador. The detailed list of tariff lines has not yet been published, while Colombia’s ban on coal exports to Israel remains in effect.
The president-elect outlines a pro-market agenda: gradual reform of fuel subsidies, review of Yacimientos de Litio Bolivianos (YLB) lithium contracts, and monetization of gas transit between Argentina and Brazil, prioritizing supply stabilization.
A three-year partnership has been signed between Senegal and two Quebec-based companies to develop the country’s geoscientific capacity and structure its energy sector through technological innovation.
The South African government plans 105,000 MW of additional capacity by 2039 to redefine its energy mix, support industrialisation, and strengthen supply security.
The Dutch government is initiating legislative reform to extend the Borssele nuclear plant until 2054 and has formalised the creation of a public entity to develop two new reactors.
The United Kingdom unveils a structured plan to double clean energy jobs, backed by over £50 billion ($61.04bn) in private investment and the creation of new training centres across industrial regions.
Vice President Kashim Shettima stated that Nigeria will need to invest more than $23bn to connect populations still without electricity, as part of a long-term energy objective.
EDF’s CEO said electricity prices will remain under control in 2026 as a new pricing system is set to replace the previous mechanism from January 1.
Talks on the Net-Zero Framework, which seeks to regulate greenhouse gas pricing on marine fuels, have been postponed until 2026 following a majority vote initiated by Saudi Arabia.
Enedis will progressively reorganise off-peak hour time slots from 1 November, impacting 14.5 million customers by 2027, under new rules set by the Energy Regulatory Commission.
A report highlights the financial burden of fossil imports during the energy crisis and points to electrification as key to European energy security.
Prime Minister Sébastien Lecornu announced a review of public funding for renewable energy, without changing national targets, to avoid rent-seeking effects and better regulate the use of public funds.

All the latest energy news, all the time

Annual subscription

8.25€/month*

*billed annually at 99€/year for the first year then 149,00€/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2€/month*
then 14.90€ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.