The Transformative Potential of D-RECs in Emerging Markets

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Governments, nonprofits, international development organisations, and small and medium-sized enterprises all have key roles to play in addressing the climate crisis, as do individual consumers. But if the world hopes to find a workable solution to climate change, large corporations must transition away from fossil fuels for their power needs.

In developed markets, procuring renewable energy is a large part of corporations’ climate strategies, which aim to reduce their carbon footprints – often to fulfil specific climate change-related commitments. Corporations bought a record 31.1 gigawatts of clean energy through power purchase agreements in 2021, up nearly 24% from the previous year’s record of 25.1 gigawatts, according to BloombergNEF. These corporate procurements typically involve entering into large-scale power purchase agreements, or purchasing renewable energy certificates (RECs) from wind farms or utility companies.

A REC is a market instrument that certifies one megawatt-hour of electricity was generated from a renewable resource. When RECs are purchased, they give their owners the legal right to claim renewable energy use from a specific source – without needing to track the actual electricity that flows through the power grid. This makes it fairly straightforward and cambodia whatsapp number data easy for large corporations to invest in renewable energy in developed markets – all the tools and systems are already in place.

But while this progress in developed markets is important, emerging markets are being sidelined. Not nearly enough investment is being driven into clean, reliable energy systems in these countries, which also tend to have the most carbon-intensive grids. And since these countries also generally lack the regulatory framework to enable their renewable energy providers to sell RECs to global corporations, they’re unable to access this source of funding to expand their clean energy production. This is a missed opportunity, because building more renewable energy systems in developing economies would have a much more significant carbon impact than deploying these systems in Europe or North America.

What if we harnessed the growing innovation around the digitisation of energy systems to connect global corporations with climate commitments to energy developers in emerging markets, to help drive the financing these developers need to deploy more renewable energy?