Mexico I-REC prices tumble as end-user demand stalls amid bearish sentiment

The Mexican International Renewable Energy Certificate market is experiencing a downturn, with prices falling below the $7/MWh threshold due to a delayed resurgence in end-user demand.

By mid-November, the Mexico I-REC market exhibited early signs of bearish movements, which solidified by late November. Current-year certificate prices fell below $7/MWh, while previous-year certificates dropped below $6/MWh.

Since late October, traders have reported a decline in the number of requests from end-buyers, who typically place orders for Mexico I-RECs at this time of year.

This trend has raised concerns about a potential market downturn, particularly as prices continued to rise during that period, primarily driven by negotiations among secondary market intermediaries.

Initially, the market outlook appeared optimistic. However, as 2026 approaches, the muted response from end-users — who are typically more active during Q4 and Q1 — has led to more cautious sentiment among market participants.

Amid the potential for further significant price declines, some traders and consultants have drawn parallels between the current trajectory of Mexico's I-REC prices and the dramatic collapse of EU guarantees of origin prices.

After peaking in 2022, GO prices plummeted sharply in 2024, raising concerns about a similar fate for the Mexican market.

On Nov. 12, a trader reported selling wind and solar vintage 2025 certificates below the prevailing market value to mitigate potential losses, anticipating a further decline in prices in the coming months.

This action underscored a significant shift in market behavior, as bearish sentiment began to solidify into tangible trading decisions.

Despite reports of active demand for large volumes of certificates, a widespread challenge remains in fulfilling these orders. The prevailing sentiment among generators and traders indicates that end-users are hesitant to pay prices exceeding $7/MWh. Consequently, most consolidated transactions in the first week of December closed below this threshold.

On Dec. 11, Platts adjusted its wind/solar current-year price assessment to $6.45/MWh, marking its lowest level in six weeks, after a Colombia-based trader reported offers for more than 20 GWh of wind and solar vintage 2025 certificates at $6.50/MWh.

"We have seen that there is a certain desperation to sell Mexican certificates," she said on the offered prices.

This adjustment follows a period of historical highs, with these certificates reaching $7.60/MWh on Oct. 31, representing a notable decline of 15.13%.

January rebound

On Dec. 12, another trader confirmed fair market values for wind and solar vintage 2025 certificates around $6.50/MWh to $6.70/MWh, saying, "It's logical that now purchases are slowing down after market participants see the price dropping, but I foresee that in January, we will see an upwards rebound in both negotiations and prices."

As the Mexican I-REC market continues to navigate these fluctuating price dynamics, some market participants believe that, despite the high market values, some end-users, especially those with global operations and subscribed to initiatives such as RE100, may be willing to purchase certificates during Q1 2026 to fulfill their commitments.

However, traders, generators and advisers have agreed that despite this willingness, the high prices could catalyze significant structural changes in their compliance strategies for scope 2 emissions and renewable consumption commitments.

A generator said that, although participation in the market is voluntary, many end-users -- particularly in the automotive sector -- are facing significant pressure from large industrial clusters. This pressure is driven by the clusters' scope 3 decarbonization commitments, which require their supply chain to demonstrate renewable energy consumption through various strategies — one of which is the procurement of I-RECs — in order to maintain their position within these clusters and contribute to collective sustainability goals.

However, he explained, rising costs have prompted approximately 40% of these automotive end-users in his clients' portfolio to explore alternative solutions, such as installing their own solar panels for self-consumption, which are perceived to offer more substantial long-term benefits than simply purchasing expensive certificates.

A Mexico-based trader indicated that while near-term purchases may continue to be driven by sustainability commitments, end-users will likely start seeking to restructure their sustainability strategies, focusing on more cost-effective and innovative options beyond traditional I-REC purchases.