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25 Oct 2023

Econ Digest

KResearch views that Renewable Energy Certificates – a green power alternative – will continue to grow amid demand outpacing supply


        Presently, Renewable Energy Certificates (RECs) are one of the alternative mechanisms, in addition to carbon credits, which play a significant role in driving the Thai business sector’s transition to clean electricity utilization. The focus is to pursue environmentally and socially responsible business practices and to align with changes in international trade rules. Key factors supporting the REC trade include ease of operations, global recognition, competitive prices as compared to carbon credits, and the renewable power scheme introduced by the government authorities.
        Over the next four years, the Thai REC market is expected to continue growing, to the extent that the demand for RECs is likely to outpace supply. This is especially true as the outstanding number of non-redeemed RECs remains high, currently accounting for around 53% of total accumulated RECs. Meanwhile, the supply of new RECs entering the over-the-counter (OTC) market may slow down following the government agencies’ implementation of the renewable power scheme. As a result, the REC market may eventually experience a supply shortage, pushing REC prices higher.
For companies that have policies to reduce their carbon footprint from electricity consumption, a key challenge is to consider the right approach to acquiring green power and RECs for their business, taking into account cost factors, available supply and flexibility in making adjustments.

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