Renewable Energy Certificates
Renewable Energy Certificates enable organizations to comply with state Renewable Portfolio Standards, channel funds to renewable energy projects and green their electricity.
A Renewable Energy Certificate (REC), also known as a Renewable Energy Credit, is created for each megawatt-hour (1 MWh, or 1000 kilowatt-hours) of renewable electricity generated and delivered to the power grid.
Purchasers of RECs provide renewable energy project owners with a revenue stream that supplements the revenue they secure from the sale of the project’s electricity. These additional revenues improve renewable energy project economics, increasing their competitiveness with fossil fuels like coal and natural gas.
Despite being a mature technology, the U.S. Government Accountability Office has determined that conventional fossil fuel generation receives significantly higher federal subsidies than renewable energy generation.
What is a REC?
- RECs represent the legal rights to the environmental benefits associated with the generation of renewable energy.
- Each MWh of renewable electricity reduces the need for one MWh of conventional electricity, avoiding the greenhouse gas emissions and other negative environmental effects related to conventional electricity generation.
- Many state governments use RECs to track compliance with Renewable Portfolio Standards (RPS) and other government renewable energy requirements.
- RECs are needed to track renewable energy generation because once an electron from renewable generation is delivered to an interconnected power grid, that electron becomes indistinguishable from an electron from conventional sources, making it essentially impossible to guarantee delivery of only “green” electrons to an office building, factory or home by an electricity provider.
- RECs therefore provide organizations and individuals with a mechanism to keep the legal title to the environmental benefits of renewable energy distinct from the flow of electrons.
- This allows utilities, LSEs, businesses, government agencies and nonprofits to claim the value and benefits of the renewable energy associated with RECs as their own.
- RECs are independently audited by utility commissions and programs such as Green-e® Energy to ensure that only one customer claims credit for each REC, and the MWh of renewable electricity generation and delivery it represents.
Who purchases RECs?
- Utilities and Load-Serving Entities (LSEs) purchase RECs to help them meet RPS and other government renewable energy requirements.
- Utilities and LSEs also purchase RECs so they can offer their residential and commercial customers green power through voluntary programs.
- Businesses, government agencies and nonprofits purchase RECs to green the electricity used in their operations and comply with government renewable energy regulations.
- Green building professionals purchase RECs to mitigate the environmental impact of the electricity used in their buildings, helping them qualify for points under the LEED Green Power Credit.
What kind of RECs are there?
- Compliance RECs, which can be used by utilities to meet a particular state's renewable energy regulatory requirements.
- U.S. Green Power RECs, which are sourced from U.S. renewable energy projects that use Green-e Energy approved technologies.
- U.S. Wind RECs, which are generated at wind farms located throughout the United States.
- Project-Specific RECs, which are sourced from a specific renewable energy project, such as the Red Hills Wind Farm or the Milpitas Unified School District, or a specific geographical location (such as the state of California).
- Often RECs can fall into multiple categories. For example, U.S. Green Power RECs can often be used to fulfill a utility's state RPS requirements
PROJECT TYPES
Wind
Solar
Geothermal
Biomass
Livestock Biogas
Landfill Gas
Low-Impact Hydro
