India’s corporate renewable sourcing: Are IRECs losing ground to VPPAs amid growing demand?

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Vipul Garg:

Hello and welcome to the Platts Commodities Focus Podcast by S&P Global Energy. I'm your host, Whipple Gerk, and today we are looking at how India's corporate renewable energy procurement is evolving, particularly the growing role of instruments like international renewable energy certificates are commonly known as I-RECs, the emergence of VPPAs, also known as virtual power purchase agreements.

For years, unbundled I-RECs have been the go to tool for companies looking to meet renewable energy targets in India, largely because they are flexible and relatively low cost. But as corporate emissions grow, there is increasing interest in more complex procurement structures. So is the market really shifting? What's driving buyer behavior and what do the underlying price trends tell us?

To help us unpack this, I'm joined by two experts, first Utsab Sil Roy, head of operations at Climate Cred, an environmental solutions company that helps businesses measure, report, and offset their greenhouse gas emissions. And later in the podcast, we'll hear from Ahmad Afiq, senior price reporter at Platts, who covers I-RECs market and has been closely tracking price movements and supply demand dynamics in India's I-REC market.

Utsab, let me start with you. How would you describe the current state of India's renewable energy certificate and corporate sourcing markets in 2026? What has been the most noticeable shift in buyer behavior over the past 12 to eight months? Are they scaling up?

Utsab Sil Roy:

So it has been quite a bit of up and down in the last couple of years. We were expecting this year, 2025, to have a higher demand, whereas it actually ended up being a little lower in India. But I feel that may be for multitude of reasons because some of our buyers who used to do halfway procurement ended up delaying the process for whatever the geopolitical reasons or anything like that, which is the whole thing is up for grabs to understand what the basic reason might be, but they did come back end of the year and did the procurement for the full year in one go.

The mentality that I feel probably is shifting a little bit towards I-RECs now because it's a little easier and there's a lot of genuinity towards the product that is being supplied and used in the reporting process. Surprisingly, 2026 has started way better than the previous years. I mean, I'm unexpectedly seen a lot of demand right now. If I have to mention it's almost over half a million demand that we are seeing this year compared to last year when we saw around 300K or 400K. So there has been an increase this year.

Vipul Garg:

I also want to ask about how's the Indian market adopting VPPAs? How corporates in India are actually responding to the VPPAs today? Are we still in education mode or early execution? Are there any particular sectors or buyer types that are showing strong interest?

Utsab Sil Roy:

So since we do the reporting also of companies, so we have had a lot of discussions with companies who have tried strategizing towards how the mitigation method might be and how the use of certificates are. In a way, if you see, sometimes I feel clients get surprised at, "Okay, I'm just purchasing the certificate and I'm doing the redemption of it. And in the report I can showcase that I have become green or I've achieved my targets."

And it's a weird mentality that I've seen that, okay, this cannot just be, "That's it." This probably has to be something more. And that's what VPPAs, it's a floating word where for us we generally work with midsize clients. And the midsize clients, which are factory owners or of a larger company that individual factories are offsetting themselves. So those individual factory owners sometimes ask us, "What is a VPPA? How can we get into that?"

But from what I have seen, I think VPPAs have been more of a decision that is a collective from the management of a company, but the procurement of I-RECs are being currently done are based on the individual factories, the plant managers and the environmental people in a particular factory itself. So that has been a very big change that I think once corporates start seeing that, okay, we have six, seven locations across India and how can we cumulatively put an investment and get out of this market flexibility of what the price of an I-REC will be or the REC will be, I think VPPAs are going to become more and more prevalent.

Vipul Garg:

Amid this conversation on VPPAs, do you expect unbundled I-RECs to remain dominant in India or are they more of a transitional tool? And what kind of buyers will continue to rely on I-RECs even if VPPAs begin to scale?

Utsab Sil Roy:

So companies who are in mid-size will, I think, continue with the I-RECs because they don't want to put in such an amount of capital investment and the complexity of VPPAs. And to be frank, the VPPAs has to be first of all integrated with the Regulatory Commission of India, the national power policies and the state power policies. Those have to be very, very open about all these kind of new methodologies coming in and how the integration will be. Because if you see in India, the Gujarat state policy and probably recently Rajasthan also released a state policy about green commodities, how they're going to utilize, will the government take the advantage? Will the individual companies take the advantage?

So there is a lot of decisions being taken as the advantages are being seen by the state governments also and the companies who are into this mitigation strategy through I-RECs or VPPAs. I feel if the concept of a VPPA is integrated with the open access policies in states, it can be a game changer and it can drive VPPA demands up quite a notch. But I still feel that the mid-size companies, the ones which purchase probably in the range of 5,000 to 10,000, 15,000 I-RECs every year, they'll probably still stick to I-RECs. And why I'm saying this is because we have actually signed contracts of 10 years, five years with a lot of clients who are looking at this as a long-term solution to their net-zero strategy.

Vipul Garg:

Thanks, Utsab. That gives us a strong sense of how buyers are thinking about procurement. But to really understand this market, we also need to look under the hood at how prices, supply and demand have been evolving. So let's bring in Afiq. Afiq, let's start with the price trends. What are the key factors driving the Indian I-RECs price movement in the past 18 to 24 months? And are these price cycles becoming more predictable?

Ahmad Afiq:

Thanks, Whipple. So over the past 18 to 24 months, we saw that the Indian I-REC prices have actually moved in a very cyclical way, but the moves are actually not random. So what's driving the swings is a simple tension. It's certificate availability versus buyer urgency in the markets. So if you take a late 2024 as an example, we saw that prices ease back and fall down towards around 40 cents per megawatt hour at that time because the market felt oversupplied. At the time, buyers had more choice so they did not need to act immediately. Then we saw as the year move into quarter four, 2024 and quarter one, 2025, the supply conditions tightened and price had recovered.

A big part of that supply tightening at that time was also market structure and issuance discipline. When ICX became the sole local issuer in September 2024, we saw issuance controls tighten and reduce the risk of double counting, especially with VPH project. And there was some early adjustment friction, but the process had settled down now. And the certificates availability tightened in a more control way that supports stronger price levels in the market late 2024 and early 2025.

And then after that, we saw the cycle fleet after quarter two last year, 2025. We saw that corporate buyers had worked through much of their near term redemption needs. So urgency fell down and there's uncertainty around emerging procurement options, especially the VPPA discussion that started last year. And it encouraged some buyers to delay purchases.

And then we saw prices move down because of that from roughly around 90 cents to mid-40 cents by early November 2025. So yes, cycles are becoming more predictable and the repeating pattern is earlier recovery when supply tightens and corporates return. A mid-year soft patch as redemption urgency runs down and a late year pick up when demand re-accelerates and spot supply become constrained in the market.

Vipul Garg:

If we look at the Indian I-RECs prices, they look low. And the low prices show that despite strong growth in the corporate demand, as Utsab mentioned, the market still appears structurally oversupplied. How should we think about the balance between issuance and redemptions?

Ahmad Afiq:

Thanks, Whipple. So the first thing is to separate growth from urgency in the market. So in India, corporate redemptions, yes, are rising, but issuance is still rising faster than redemption. So even with improving demand over a year, we saw that the market stays structurally long.

So why does that matter? Because India's renewable energy build out is moving quickly and wind and solar dominates the new capacity additions in the markets. That means the certificate supply engine keeps expanding. So the certificate pipeline grows at the same time that corporates are redeeming I-REC, but it has not yet caught up fully to the issuance.

And that imbalance changes buyer behavior. And when certificates are available in volume, buyers will not feel forced to act or buy immediately. And they become more price sensitive and more discretionary, more willing to wait for better levels instead of paying up to secure scarce supply.

And you can see that kind of over supply pressure in the way spot worked for vintage 2026 this year. So it started early this year around 70 cents per certificate. And as spot supply became easier to source in the markets, liquidity improved and price had softened to about low 60 cents in March. And then when spot availability tightened briefly in quarter two, prices ticked up modestly before the price is again once supply resume media, eventually pushing down toward the low 50 cents recently.

So the way to think about issuance versus redemption is very simple. Redemption growth helps the Indian market, but as long as issuance still runs ahead, the market will stay structurally long. And that keeps downward pressure on prices.

Vipul Garg:

Thanks, Afiq. You also mentioned VPPAs earlier. To what extent are emerging instruments VPPAs changing how buyers participate in the I-REC market even before they are widely adopted?

Ahmad Afiq:

So even before VPPAs are widely adopted, they are already influencing what buyers do, but not in the sense of fully placing I-RECs overnight. We think that it is more about how corporates think and when they decide to move there.

So in India, once the VPPA proposals started coming into focus last year, we did observe some corporates essentially did a quick wait and see behavior. They were asking few questions if VPPAs end up being RE100 accepted financial instruments. Do we lock in I-RECs now or do we pause until the framework becomes clearer?

So even that kind of hesitation, especially if it spreads across several buyers can show up in a softer demand momentum. So that's why the early impact is mainly timing and expectations, not a sudden shift in market share. So that's it. I-RECs still have a strong value proposition in the market. They are simple, they are flexible, particularly for RE100 buyers who are early in their procurement journey or where setting up physical PPA is complex.

And because India's power market is decentralized and state level rules differ, so that practical execution advantage really matters. So the big challenge or limited for VPPAs is still the economics part of it. Developer need returns to work and many expect VPPAs could be more expensive than using I-RECs alongside brand power, at least at the start. So the adoption will likely be credible and immediately.

So in overall, the likely outcome is a split between VPPA and unbundled I-RRC, not a total shock. And even before the VPPA scale, they are already nudging bias to compare options more carefully and in some cases to delay purchases, creating a measurable effect on I-REC demand timing.

Vipul Garg:

Thanks, Afiq. That's really helpful in understanding the mechanics behind what we are seeing. Let's zoom out and look at what all of this means for the future of corporate sourcing in India. Coming back to Utsab. If we fast-forward three to five years, what does the ideal renewable procurement mix look like for an Indian corporate?

Utsab Sil Roy:

Thanks, Whipple. There are two kinds of buyers that we see these days. There's a wait and watch kind because they're still thinking where do we invest? If we have to invest in a particular technology that will give us green power, which is the most efficient one to invest now? And then there's of course the ones which they go all out and they try to be ahead of the market.

But again, like I said previously, the people who are trying to be ahead of the market are the ones who are the much, much larger companies, the ones which have six, seven million tons of CO2 being released in their reports and stuff. They're the ones who are more focused on getting their renewable energy policies and renewal energy procurement done.

Now, if you look at three to four years or five years, I feel there will be a shift towards more of a distributed power where morning power and evening power and all these kind of things are going to be very, very integral. And I think that can play a big role in the way the renewable procurement shapes up because then you're suddenly looking at wind power to be more prevalent or systems to be more prevalent or waste to energy to be more prevalent because you can produce those powers at the nighttime.

Because when I look at the power strategy that is these days being discussed in the bureaucracy or anywhere, it is most like, even if you see the policies of the Indian government, they're trying to force BSS battery storage systems or wind power for nighttime power procurement because solar is rapidly rising. And I think people have to a certain extent realized that solar power is doable. It is very convenient, continuous source of energy that people can rely on.

Vipul Garg:

Thanks, Utsab. And finally to wrap up, what's one trend in the market that you think is currently underestimated and one risk that could slow down progress in India's corporate renewable sourcing market?

Utsab Sil Roy:

See, in India, if you have seen the trend of thermal energy, there has been orders from the government to increase the thermal capacity of the entire grid by 30, 40%. Now India is expecting a lot of industrialization to happen and all the companies that are coming in are coming in now with the strategy that they have to go net zero, they have to go carbon neutrality and all these things.

So I think one of the particular methods in which there has been a lot of discussions and people are talking about is waste to energy. If you see the CBG investment that has gone in in the last couple of years with the government helping out with the subsidies and stuff, it has been surprising how the investors and the businessmen of India have so aggressively gone through this process from shifting their current business to investing in CBG as a source of energy. That is something that we feel that it can play a huge part, but it is being neglected.

If something that can actually stop this, it is probably the availability of funds. There has a lot of it that has been invested in CBG has come through money outside India. I think the banks in India and institutional funds in India are still trying to figure out how best they can utilize things like green bonds or green funds or something where the Indian government has already released a lot of schemes for MSMEs, which people are so not aware of. The lack of awareness is very, very surprising to me.

Vipul Garg:

That's all we have time for today. My thanks to Utsab and Afiq for sharing their insights on a market that's clearly expanding. As you have heard, India's corporate renewable energy landscape is evolving, balancing rapid growth in demand and structural role supply and navigating the shift from simple certificate purchases towards more sophisticated procurement strategies. We'll be watching this space closely to see how the balance plays out in the months ahead. This podcast was produced by Chandreyee Mukherjee from Gurgaon. Thanks for listening and we'll see you next time.