popular articles

REC in Asia-Pacific: 76% Price Drop Expected by 2050

REC prices are expected to drop by 76% by 2050 in the Asia-Pacific region, falling from 46 to 11 USD/MWh, due to the massive increase in renewable energy generation in the region, according to a report by Wood Mackenzie.

Please share:

The Asia-Pacific region could experience a significant drop in REC prices by 2050. According to a new study by Wood Mackenzie, these prices are expected to drop by 76%, falling from 46 USD/MWh to just 11 USD/MWh. This trend is attributed to an oversupply of REC resulting from the strong growth in renewable energy production, which is expected to quadruple over the same period.

The study, titled “Price outlook for Renewable Energy Certificates in Asia,” analyzed the effects of this increase on REC prices in six key markets in the Asia-Pacific region: Taiwan, South Korea, Australia, India, China, and Japan. The report indicates that the share of renewable energy in the energy mix of the six markets is expected to increase from 14% in 2023 to 55% by 2050.

Impact of Energy Production on REC

In parallel, the costs of producing electricity from solar and onshore wind projects are expected to decrease by at least 40% on average over the same period. This reduction in costs will make REC cheaper, as the need to subsidize projects through these certificates will become less critical. “REC play a crucial role in supporting new investments in renewable energy by providing incentive mechanisms and enabling end-users to purchase green energy credits,” said Ken Lee, Head of Asia-Pacific Power Research at Wood Mackenzie.

Oversupply of REC

Wood Mackenzie estimates that the supply of REC will continue to exceed demand until 2050, leading to continuous pressure on prices. The report specifies that the decline in fossil fuel energy production will also slow mandatory REC demand in some regional markets, as REC requirements are often imposed on fossil fuel producers.

According to Ken Lee, the total excess REC supply in five of the six markets, excluding China, is expected to increase from 13 TWh in 2023 to 241 TWh by 2050. By comparison, China represents a unique case where state policies will increase REC purchase requirements, which could stabilize prices in the country.

REC Price Evolution by Market

Currently, Taiwan and South Korea have the highest REC prices in the region. However, these prices are expected to fall by at least 70% by 2050, due to increased REC supply and reduced renewable energy production costs. Overall, average REC prices in the six markets analyzed are expected to fall from 46 USD/MWh in 2023 to just 11 USD/MWh by 2050.

A Contrasting Situation in China and Japan

In China, Wood Mackenzie’s report anticipates an increase in REC prices starting in the late 2020s. Government measures aimed at strengthening REC purchase requirements for the energy and industrial sectors should reduce the excess supply, thereby stabilizing prices.

In Japan, REC prices (between 4 and 5 USD/MWh in 2023) are not sufficient to economically support the development of new solar or wind projects. Project developers will need to turn to other mechanisms such as feed-in tariff (FiT) or corporate power purchase agreements (PPA) to ensure the profitability of their projects.

Register free of charge for uninterrupted access.

Publicite

Recently published in

Tariff increases slow down energy projects in the United States

New US tariff measures are driving up energy sector costs, with a particularly strong impact on storage and solar, according to a study by Wood Mackenzie.
Despite the proclaimed urgency, European climate investments stagnate around €500 billion per year, far from the estimated needs of nearly €850 billion. New financial instruments are attempting to revive an indispensable momentum.
Despite the proclaimed urgency, European climate investments stagnate around €500 billion per year, far from the estimated needs of nearly €850 billion. New financial instruments are attempting to revive an indispensable momentum.
African countries now spend more on debt service than on education and healthcare, limiting essential investments despite significant energy potential. The G20, under pressure, struggles to provide an adequate response to the financial and climate challenges.
African countries now spend more on debt service than on education and healthcare, limiting essential investments despite significant energy potential. The G20, under pressure, struggles to provide an adequate response to the financial and climate challenges.
Four renewable energy producers have been authorised to sell 400 MW directly to Egyptian industrial companies without public support.
Four renewable energy producers have been authorised to sell 400 MW directly to Egyptian industrial companies without public support.

Up to 30% of ASEAN data centres could be powered without batteries by 2030

A report by Ember shows ASEAN could supply nearly one-third of its data centres with wind and solar power by 2030 without storage, provided appropriate public policies are implemented.
Spanish authorities and grid operator REE denied conducting any experiment on the national electricity network prior to the massive outage on April 28, the cause of which remains unknown.
Spanish authorities and grid operator REE denied conducting any experiment on the national electricity network prior to the massive outage on April 28, the cause of which remains unknown.
Three trade trajectories projected by Wood Mackenzie show how tariff tensions could shift demand, prices and investment in the global energy sector.
Three trade trajectories projected by Wood Mackenzie show how tariff tensions could shift demand, prices and investment in the global energy sector.
The European Commission states the Union is on track to cut emissions by 54% by 2030, following updated national plans.
The European Commission states the Union is on track to cut emissions by 54% by 2030, following updated national plans.

South Korea Launches Tenders for 2.25 GW of Renewable Energy

South Korea announces two major tenders totaling 2.25 GW, split between offshore wind and solar, introducing new economic and technical criteria designed to strengthen energy security and attract international investors.
Ember anticipates that a third of ASEAN data centre electricity demand could be met by wind and solar by 2030, without batteries, if appropriate political measures are implemented.
Ember anticipates that a third of ASEAN data centre electricity demand could be met by wind and solar by 2030, without batteries, if appropriate political measures are implemented.
A Rocky Mountain Institute report reveals India’s energy ambition, with electricity demand potentially tripling by 2050, backed by an industrial policy focused on renewable energy.
A Rocky Mountain Institute report reveals India’s energy ambition, with electricity demand potentially tripling by 2050, backed by an industrial policy focused on renewable energy.
The Indonesian government targets a mixed energy expansion involving coal, gas, renewables, and nuclear, requiring IDR2,967.4tn ($235bn) in investment by the end of 2034.
The Indonesian government targets a mixed energy expansion involving coal, gas, renewables, and nuclear, requiring IDR2,967.4tn ($235bn) in investment by the end of 2034.

Tim Hodgson aims to accelerate permitting to revitalize Canada’s energy sector

Canadian Natural Resources Minister Tim Hodgson announces reforms to the energy permitting process, aiming to stimulate investments and strengthen relations between the government and industry.
The U.S. Environmental Protection Agency is finalising a proposal to lift emissions caps for thermal power plants, amid a broader shift toward national energy security.
The U.S. Environmental Protection Agency is finalising a proposal to lift emissions caps for thermal power plants, amid a broader shift toward national energy security.
The Pakistani government is releasing 2,000 megawatts of power to support the development of data centres focused on artificial intelligence and Bitcoin mining, as part of a strategy to attract foreign investment.
The Pakistani government is releasing 2,000 megawatts of power to support the development of data centres focused on artificial intelligence and Bitcoin mining, as part of a strategy to attract foreign investment.
In April, China generated 26% of its electricity from wind and solar, according to Ember, marking a historic first that reflects a rapid rebalancing of its energy mix.
In April, China generated 26% of its electricity from wind and solar, according to Ember, marking a historic first that reflects a rapid rebalancing of its energy mix.

Belgium legalises extension of two nuclear reactors until 2045

Belgium’s federal parliament has adopted a law authorising the extension of Doel-4 and Tihange-3 reactors and allowing new nuclear construction, ending the nuclear phase-out policy established in 2003.
The re-elected Australian government is investing heavily in storage, critical minerals and domestic production to meet its target of 82% renewable electricity by 2030.
The re-elected Australian government is investing heavily in storage, critical minerals and domestic production to meet its target of 82% renewable electricity by 2030.
The US House budget bill outlines a gradual phaseout of tax credits, affecting financing for solar, wind, storage, and clean hydrogen initiatives.
The US House budget bill outlines a gradual phaseout of tax credits, affecting financing for solar, wind, storage, and clean hydrogen initiatives.
China's gas, oil and coal volumes remain above last year’s levels, despite a decline in April compared to the record highs of March.
China's gas, oil and coal volumes remain above last year’s levels, despite a decline in April compared to the record highs of March.

European Union cuts Russian gas imports by 98 bcm since 2021

The European Commission releases data on the REPowerEU plan, confirming a sharp drop in Russian fossil fuel purchases and announcing new legislative measures by June.
A partnership between the Indian government and GEAPP provides financial and operational support to early-stage climate-tech firms as part of a national energy strategy.
A partnership between the Indian government and GEAPP provides financial and operational support to early-stage climate-tech firms as part of a national energy strategy.
A $150mn financing package, including $100mn from the World Bank, will support the modernisation of Uzbekistan’s power grid and integration of renewable energy in key regions.
A $150mn financing package, including $100mn from the World Bank, will support the modernisation of Uzbekistan’s power grid and integration of renewable energy in key regions.
A report from the Public Policy Forum calls for accelerating over 500 energy, critical minerals and infrastructure projects to generate CAD1 100bn in Canadian GDP growth.
A report from the Public Policy Forum calls for accelerating over 500 energy, critical minerals and infrastructure projects to generate CAD1 100bn in Canadian GDP growth.

Advertising