FAQ: Renewable Energy Certificates (RECs)
What is a Renewable Energy Certificate?
A Renewable Energy Certificate (REC) represents one megawatt-hour (MWh) of renewable electricity generated and delivered to the power grid. Because each MWh of clean renewable electricity results in one less MWh of power produced using fossil fuels, a Renewable Energy Certificate represents the environmental benefits of replacing conventional electricity generation using fossil fuels with energy generation that uses renewable resources.
By matching their electricity use with Renewable Energy Certificates, organizations and households are able to green their electricity, and demonstrate demand for renewable energy. In addition, utilities are able to use Renewable Energy Certificates to demonstrate their compliance with government Renewable Portfolio Standards and other renewable energy regulations. In both cases this demand for Renewable Energy Certificates encourages development of renewable energy resources.
How does the green power reach a business or home?
Actually, it doesn't. When renewable electricity is delivered to the power grid it can go in many directions just like conventional electricity. That is how electricity and the grid works. On the grid there is no physical way to "tag" an electron as green or produced using renewable resources.
This is the one of the reasons that Renewable Energy Certificates were created. By creating a Renewable Energy Certificate when a MWh of renewable energy is first generated, and then matching this Renewable Energy Certificate with a MWh when it is consumed, we are in fact able to tag an electron as green by demonstrating a direct connection between its generation and use.
So how does a REC purchase make a difference?
Renewable Energy Certificates provide wind farms, solar generating stations and other renewable electricity project owners with revenues outside of those they secure selling the electricity generated by their project. These revenues help renewable energy compete economically with coal, natural gas and other fossil fuels.
What impact does conventional electricity generation have on the environment?
Conventional electricity, from coal or natural gas, generates more air pollution than any other industry. In fact, America's power plants produce two-thirds of the pollutants that cause acid rain, one-half of our nuclear waste, one-third of our global warming pollution, and one-third of the air pollutants chiefly responsible for respiratory difficulties in our children and senior citizens.
What is renewable energy?
Renewable energy or green power is generated by the sun, the wind, the earth, and the water; resources such as solar, wind, geothermal, biomass, and low-impact hydro facilities. These resources replenish themselves naturally, and never run out.