Renewable Energy Certificates (RECs) are a companion to carbon offsets which were covered in a previous post related to holiday air travel. RECs and carbon offsets are both instruments that represent a quantifiable environmental benefit associated with an activity.
What is a Renewable Energy Certificate (REC)?
A Renewable Energy Certificate (REC) represents the environmental attributes derived from 1,000 kWhs (kilowatt hours) or 1 MWh (megawatt hour) of renewable energy generation. The energy is fed into the electrical grid and the REC may be sold. Each REC receives a unique identification number to avoid double-dipping.
For instance, a wind farm generates renewable energy and feeds it into the electrical grid where it is comingled with other energy sources and distributed to businesses and homes. The wind farm may obtain 1 REC for each 1 MWh produced and then sell their REC.
Solar Renewable Energy Certificates (SRECs) are RECs specific to solar power.
Purchasing Renewable Energy Certificates for Individuals
Some states and municipalities have established a Renewable Portfolio Standard (RPS) which requires electric utilities to purchase a certain minimum percentage of electricity from renewable sources. RECs are one way to comply with this requirement.
Businesses and individuals purchase RECs to offset their energy use and support renewable energy. This is considered the voluntary REC market. Purchasers of RECs are buying the renewable attributes of those specific units of renewable energy, which helps offset conventional electricity generation in the region where the renewable generator is located.
Renewable energy generators may sell RECs directly to buyers or to a third party who will then resell it. Some companies offer RECs and carbon offsets.
RECs contain specific information such as, where, when, at what facility, and what type of generation (solar, wind, etc.) was used to produce the renewable energy.
In general, an energy resource is considered renewable if it can be naturally replenished. REC energy sources include:
- Hydropower (low impact, not requiring large dams)
- Solar Electric
The sale of RECs is a business and buyers should become informed before making purchases. There are organizations that provide standards, certification, verification, and tracking. Two are listed below.
The Environmental Tracking Network of North America (ETNNA) is a voluntary association of certificate tracking systems, registries, regulators and interested market participants. RECs are currently tracked via 7 regional systems. ETNNA is funded by the U.S. Department of Energy.