As sustainability expectations rise across Asia, more businesses are turning to Renewable Energy Certificates (RECs) to prove that their electricity use comes from renewable sources.
For companies in Singapore, Malaysia, and beyond, RECs offer a practical path to meet carbon reduction and Environmental, Social, and Governance (ESG) reporting goals—without the heavy investment of installing solar panels on-site.
Yet, one common question remains: Should you buy RECs on the spot market or enter a contracted agreement with a solar project?
Both approaches serve different strategic needs. Choosing the right one depends on your organisation’s sustainability maturity, energy consumption profile, and long-term commitments.
At Asiarecs, we help corporates procure, hold, and redeem RECs with full transparency—ensuring your sustainability claims are verified, traceable, and aligned with international standards.
In this guide, you’ll discover the key differences between spot and contracted RECs Solar, the pros and cons of each approach, and a practical framework to help you decide which model best supports your business goals and sustainability targets.
Key Takeaways
- Businesses can choose between spot RECs Solar for short-term flexibility and contracted RECs Solar for long-term stability, depending on their sustainability goals and energy strategy.
- Spot RECs allow quick, market-based purchases ideal for annual ESG reporting, while contracted RECs provide predictable supply, price certainty, and stronger traceability to specific solar projects.
- Selecting the right REC model requires aligning procurement with overall ESG strategy, ensuring that renewable energy commitments remain credible, measurable, and supportive of long-term decarbonisation goals.
What Are RECs Solar?
Renewable Energy Certificates (RECs) represent proof that one megawatt-hour (MWh) of electricity was generated from a renewable source such as solar, wind, or hydro. When you purchase RECs, you’re effectively claiming the environmental attributes of clean energy generation—even if your business doesn’t consume that power directly.
In simple terms, solar RECs allow businesses to claim zero-carbon electricity under the market-based Scope 2 method, and support the growth of renewable projects.Each certificate is uniquely numbered, registered, and traceable through recognised international standards such as the I-REC Standard.
In Singapore, RECs are governed under both the I-REC and SS 673 frameworks, which ensure transparent, verifiable issuance and redemption processes—giving businesses confidence that their renewable energy claims are credible and compliant.
Why Do RECs Solar Matter for Businesses?
- Meet sustainability targets: RECs contribute to Scope 2 emission reductions in ESG reporting frameworks.
- Support renewable development: Buying RECs encourages further investment in solar projects.
- Demonstrate commitment: They provide verifiable proof of renewable energy use in sustainability disclosures.
- Flexible and scalable: Suitable for both SMEs and large corporations, regardless of infrastructure.
In Singapore and Malaysia, the REC market has grown rapidly, giving businesses multiple pathways to participate in the renewable transition—either through spot purchases or long-term contracted agreements.
The Two Main Paths: Spot vs. Contracted RECs
When procuring RECs Solar, businesses generally have two main options—Spot RECs and Contracted RECs:
- Spot RECs Solar – Also known as unbundled RECs, spot RECs are purchased on demand through the open market at prevailing prices, allowing companies to buy certificates only when needed. This option offers flexibility, making it ideal for businesses that adjust their sustainability targets or reporting requirements annually.
- Contracted RECs Solar – These RECs are secured through long-term agreements tied to specific solar energy projects. These contracts lock in supply and price stability over a set period, providing greater certainty and traceability.
Ultimately, the choice between spot and contracted RECs depends on your organisation’s priorities, budget strategy, and long-term sustainability vision.
Spot purchases suit short-term or variable needs, while contracted RECs appeal to businesses seeking consistency, credibility, and deeper alignment with renewable energy development. Both paths contribute meaningfully to your clean energy transition.
Spot RECs Solar Explained
Spot RECs Solar are certificates purchased on demand, usually to fulfil immediate reporting or offset requirements. These RECs are available on the open market, allowing businesses to buy from various solar energy sources or regions depending on availability and price.
How Do Spot RECs Solar Work?
- Purchase from verified REC markets or registries at prevailing market rates.
- Receive certificates once payment and verification are complete.
- Redeem or “retire” the RECs to claim renewable energy usage for a specific reporting year.
Key Benefits of Spot RECs Solar
- Flexible procurement: Ideal for companies adjusting their sustainability targets annually.
- Fast compliance: Easily purchased near reporting deadlines for ESG or GHG submissions.
- Varied sourcing: Access to solar RECs from multiple geographies for broader portfolio coverage.
Limitations of Spot RECs Solar
- Price volatility: REC prices fluctuate based on supply, demand, and policy changes.
- Uncertain supply: Availability can tighten when regional demand spikes, especially before reporting seasons.
- Limited traceability: While verified, spot RECs often lack project-level detail that strengthens your sustainability story.
Example Scenario
A Singapore-based retail group may choose spot RECs each year to cover its regional electricity footprint. This approach can give it flexibility to adjust REC quantities annually without long-term financial commitments.
Contracted RECs Solar Explained
Contracted RECs Solar involve longer-term agreements—typically one to five years—with a solar project developer or supplier. Under this model, the business commits to purchasing a fixed amount of RECs generated from a specific solar energy project over time.
How Do Contracted RECs Solar Work
- Enter into a bilateral or brokered contract that defines REC price, volume, and delivery schedule.
- Certificates are issued annually as the project generates renewable energy.
- Businesses redeem these RECs each year for sustainability reporting.
Key Benefits of Contracted RECs Solar
- Price stability: Protects against market fluctuations by locking in fixed rates.
- Predictable supply: Guaranteed allocation from a known source each year.
- Enhanced credibility: Easier to demonstrate long-term environmental commitment and project-level traceability.
- Positive storytelling: Businesses can reference specific solar farms or regional projects in their sustainability communications.
Limitations of Contracted RECs Solar
- Commitment required: Multi-year contracts reduce flexibility to scale back or shift REC volumes.
- Upfront planning: Involves internal coordination between finance, sustainability, and procurement teams.
- Possible opportunity cost: Market prices may drop below contracted rates in some years.
Example Scenario
A multinational manufacturer with a 2030 carbon-neutral target may sign a three-year contracted REC agreement in Malaysia linked to a local solar project. This can allow consistent, verifiable renewable energy sourcing aligned with its long-term ESG strategy.
Spot vs. Contracted RECs: Key Comparison
Criteria | Spot RECs Solar | Contracted RECs Solar |
Purchase Model | One-time / short-term | Multi-year agreement |
Price | Variable, market-driven | Fixed or negotiated |
Supply Source | Market pool or regional mix | Specific solar project |
Flexibility | High | Moderate |
Traceability | Moderate | High |
Risk Exposure | Price and supply volatility | Contract commitment |
Procurement Speed | Fast | Slower, requires setup |
Best For | Businesses with changing or short-term goals | Organisations with stable, long-term ESG strategies |
Analysing the Trade-Off
Spot RECs are ideal for agility and quick compliance, while contracted RECs build credibility and consistency.
- SMEs or service-based firms: Often choose spot RECs for cost flexibility and ease of purchase.
- Large corporates or public-listed companies: Tend to prefer contracted RECs for stable pricing and deeper sustainability storytelling.
- Hybrid approach: Some companies combine both—locking in contracted RECs for core targets and topping up with spot RECs as reporting needs evolve.
How to Choose the Right Model for Your Business
Selecting between spot and contracted Renewable Energy Certificates (RECs) isn’t just a financial choice—it’s a strategic decision that reflects your company’s sustainability maturity, operational predictability, and brand positioning.
The right approach depends on how ready your organisation is to integrate renewable energy into its broader ESG commitments. Below is a practical framework to guide your decision-making.
1. Assess Your Sustainability Maturity
Understanding where your business stands on its sustainability journey is the first step:
- If your company is in the early stages of ESG reporting or just beginning to explore renewable energy, spot RECs offer a flexible and low-commitment starting point. They allow you to support renewable generation without long-term obligations—perfect for testing the waters and gaining internal experience.
- However, if your organisation has already established public decarbonisation or net-zero targets, contracted RECs deliver stronger credibility. These multi-year agreements ensure traceability to specific renewable projects and demonstrate genuine commitment to long-term sustainability goals, enhancing transparency in stakeholder reporting.
2. Review Your Budget and Reporting Cycles
Your financial planning horizon also influences your choice:
- Spot RECs: They fit companies with annual budgets or variable electricity consumption, providing flexibility to purchase certificates as needed without future commitments. This is ideal for firms facing uncertain market conditions or fluctuating operations.
- Contracted RECs: They suit businesses with stable energy usage and predictable budgets. Locking in REC prices for several years can offer cost predictability and hedge against market volatility—an advantage for larger enterprises or those integrating renewable sourcing into multi-year ESG strategies.
3. Consider Your Brand’s Narrative
Your sustainability messaging should align with your procurement model:
- A company looking to showcase tangible project impact—for example, supporting a specific solar or wind farm—will benefit from contracted RECs, which link directly to identifiable renewable sources.
- Meanwhile, businesses that prioritise agility, scalability, or broad market support may lean towards spot RECs, emphasising their contribution to the overall renewable energy ecosystem without committing to one project.
4. Evaluate Internal Capabilities
Operational readiness plays a major role:
- Contracted RECs typically require more administrative oversight, such as contract management, performance tracking, and legal review. This can be resource-intensive but yields greater transparency.
- Spot RECs, in contrast, involve simpler procurement processes—often facilitated through sustainability advisors—making them ideal for teams seeking minimal administrative burden.
5. Think Long-Term
Sustainability isn’t static. Many organisations start with spot RECs to build familiarity and internal buy-in before transitioning to contracted models. Over time, as ESG capabilities and reporting frameworks mature, locking in multi-year REC contracts becomes a strategic move—providing both credibility and cost stability.
Ultimately, the best model is one that evolves with your business, supporting your sustainability ambitions today while preparing you for deeper renewable integration tomorrow.
Finding a Partner in Transparent RECs Solar Procurement
Navigating the REC market can be complex, especially with varying registry systems, verification standards, and supplier networks across Asia. That’s where our team brings clarity and confidence to every step of your renewable energy journey.
How Our Team Supports You
- Procure: Source verified solar RECs from credible, accredited projects in Singapore, Malaysia, and the wider Asia-Pacific region.
- Hold: Manage your RECs portfolio through trusted registry accounts to ensure traceability and compliance.
- Redeem: Retire RECs transparently for sustainability reporting or carbon disclosure submissions.
What Are The Benefits?
- Regional coverage: Deep experience in I-REC systems across Southeast Asia.
- End-to-end transparency: Full visibility from purchase to retirement, ensuring your sustainability claims are audit-ready.
- Tailored advisory: Custom procurement strategies aligned with your energy usage, targets, and budget.
Hassle-free experience: We handle verification, documentation, and registry management—so you can focus on your ESG priorities.
Myths and Misconceptions About RECs Solar
Despite their growing popularity, several myths persist around solar RECs. Let’s clear up the most common ones:
Myth 1: “RECs are just paper credits.”
Fact: This is perhaps the most common misconception. In reality, RECs are far from symbolic or meaningless.
Each REC represents the environmental attributes of one megawatt-hour (MWh) of renewable electricity generated from a certified source—such as a solar or wind farm—and fed into the grid. These certificates are digitally issued, tracked, and retired within recognised systems like the International Renewable Energy Certificate (I-REC) registry.
Every transaction is recorded to prevent double-counting and ensure transparency. In other words, RECs are verifiable digital assets, not mere “paper claims,” and they provide a reliable way to account for renewable energy usage even when direct physical access to solar power isn’t feasible.
Myth 2: “Buying RECs doesn’t make a real impact.”
Fact: Some believe RECs are only a marketing tool—but this couldn’t be further from the truth. When a company purchases RECs, it helps create financial demand for renewable generation.
That demand, in turn, supports the operational and financial viability of solar developers, encouraging them to expand clean energy capacity. In markets like Singapore, where available land limits on-site solar installations, RECs in Singapore play a critical role in enabling offsite participation in the clean energy transition.
Simply put, the more businesses buy RECs, the stronger the signal sent to investors and developers to build more renewable infrastructure.
Myth 3: “RECs are only for big corporations.”
Fact: While multinational companies often lead the way in REC adoption, the landscape has evolved significantly. Today, solar RECs are accessible to small and medium-sized enterprises (SMEs) as well.
Through spot purchases or short-term contracts, SMEs can easily participate in the renewable energy market without large capital investments. In fact, many Singaporean SMEs now leverage RECs to enhance brand credibility, meet supplier sustainability expectations, and attract eco-conscious customers and investors.
By understanding and addressing these myths, businesses of all sizes can confidently use solar RECs as a credible, traceable, and scalable path toward renewable energy commitment and ESG progress.
Empower Your Sustainability Journey with Asiarecs
Whether your organisation values flexibility or long-term certainty, the key is choosing a RECs Solar strategy that fits your business goals.
- If you need a fast, flexible solution for annual ESG reporting, spot RECs may be your best starting point.
- If you’re committed to multi-year renewable sourcing and brand credibility, contracted RECs provide stability and stronger project-level impact.
- And if you want the best of both worlds, we can help you design a hybrid approach that balances agility, cost control, and sustainability integrity.
At Asiarecs, we make renewable energy procurement transparent, verifiable, and effortless. From sourcing to redemption, we ensure every REC you hold contributes meaningfully to your sustainability journey.
Ready to find out which solar RECs model suits your organisation best? Ask for a price quote or speak with our experts today—and take the next confident step towards a cleaner energy future.
Frequently Asked Questions
What is the difference between RECs and carbon credits?
Renewable Energy Certificates (RECs) represent proof that electricity was generated from renewable sources such as solar, while carbon credits represent the reduction or removal of one tonne of carbon dioxide from the atmosphere. RECs address Scope 2 emissions (electricity use), whereas carbon credits typically offset Scope 1 or 3 emissions related to direct operations or value chain activities.
Can solar RECs help my business achieve net-zero goals?
Yes. Purchasing RECs Solar allows your business to account for renewable electricity consumption, reducing your Scope 2 emissions as part of a broader net-zero strategy. However, RECs alone don’t make a company carbon neutral—they work best when combined with energy efficiency improvements and carbon offset initiatives.
Are solar RECs recognised internationally?
Most RECs Solar in Asia are verified through recognised standards such as I-REC (International REC Standard), which is accepted globally for corporate sustainability reporting. These certificates meet international verification requirements under frameworks like the GHG Protocol and CDP, making them valid for multinational companies with global ESG commitments.
How long are solar RECs valid after purchase?
RECs Solar generally remain valid for the reporting year in which the renewable energy was generated. Businesses typically redeem or “retire” their certificates within 12 months to claim renewable energy use for that specific period, ensuring compliance and traceability in ESG disclosures.
Can small and medium enterprises (SMEs) buy solar RECs?
Absolutely. SMEs can purchase RECs Solar in smaller quantities through spot markets, allowing them to demonstrate environmental responsibility without major financial commitments. This flexibility makes RECs an accessible and cost-effective tool for improving sustainability performance and brand credibility.
