Demand for International Renewable Energy Certificates (I-RECs) rose by nearly two-thirds year on year in January-March, with Brazil overtaking China as the largest market.
Global I-REC demand rose to 60TWh in January-March this year, up from 36TWh in the same period last year and compared with just under 100TWh throughout 2022. Total issuance went up by more than 30pc year on year to 73TWh in the first quarter. The pace of redemptions more than doubled as global corporate carbon disclosure continues to rise, in particular using I-RECs to cover scope 2 emissions.
Brazil, helped by its vast hydropower capacity, has overtaken China as the largest consumer in the quarter. Brazilian demand rose to 13.96TWh in January-March this year from 8.5TWh a year earlier, while China redeemed 13.91TWh, up from 8.6TWh a year earlier. Turkey remains the third-largest market, with demand rising to 4.7TWh in the first quarter compared with 2.5TWh a year earlier.
Chinese power consumption fell by more than 25pc year on year in January-March, in part as strict Covid-19 measures pressured economic activity. Chinese power consumption totalled 1,421TWh in January-March 2023, down from 2,077TWh a year earlier. In comparison, Brazilian power demand fell to 104TWh in January-March this year compared with 159TWh a year earlier.
Chinese wind certificates for 2022 vintage were trading at about $0.70/MWh in March 2023 compared with Turkish wind at $0.45/MWh and Brazil at $0.40/MWh. I-REC prices remain sharply higher in some markets — prices in Taiwan have surpassed $100/MWh this year, while I-RECs in Australia have traded above $30/MWh. Brazil expects to have 285GW of installed solar and wind power capacity during the next 27 years, according to its national energy plan. But most of that could be ready 20 years earlier if the country manages to complete 217GW of projects earmarked for 2030, which would be added to 26.9GW of combined wind and solar capacity currently installed.
China's wind and solar generation capacity grew at the fastest rate among renewable sources last year. Installed wind power capacity rose by 11.2pc on the year to 365.4GW in 2022 and installed solar power capacity grew by 28pc on the year to 392.6GW last year, NDRC data show.
Turkey aims to install nearly 62GW of wind and solar capacity by 2035, according to the country's energy plan. Turkish renewable additions totalled 2.77GW in 2022, at a 865MW deficit compared with a year earlier.
Ireland and Curacao redeemed I-RECs for the first time, while I-RECs were cancelled in Aruba for the first time since 2020.
Brazil also emerged as the largest supplier of I-RECs, with 16.9TWh issued compared with 22TWh throughout 2022. China issued just over 14TWh compared with 88TWh throughout 2022, while Turkish issuances rose to just over 8TWh, about half the total 2022 level. Pakistan issued I-RECs for the first time, totalling 45GWh in January-March.
