An Introduction to Renewable Energy Credits (RECs)

By Natasha Risinger

Most states have passed  “Renewable Portfolio Standard” regulations that requires an increase in the generation of energy from renewable sources. Electric utilities and Retail Electric Providers (REPs) are charged with the responsibility of generating and selling a specified amount of renewable energy over time. Each megawatt hour of renewable power that is generated yields a renewable energy credit (REC).

Here is some need-to-know information about RECs.

What is an REC

An REC is a certificate that serves as proof that an electricity provider has generated one megawatt-hour (MWh) of electricity from a renewable energy resource. The energy provider has to first generate the electricity then feed it into the grid before being issued a renewable energy certificate. These certificates are tradable and become eligible for sale on the open market.

Renewable energy can be produced by mandated entities (electric suppliers) or by by individuals who have their own systems at home. If a private individual/company produces renewable energy they can opt to upload it to the grid and sell it back to the utility companies.

Who Purchases RECs

These certificates are purchased by anyone who wants to buy into the drive to go green. Buyers and suppliers may be mandated or voluntary bodies. Electricity providers are mandated entities as they are required by law to produce a certain amount renewable energy. Utility companies who want to offset emissions or need to acquire a certain amount of MWh of renewable energy to boost their compliance will purchase RECs. Mandated entities that fail to meet their standard requirement are fined sums that are significantly higher than the cost of the RECs.

Private companies can join the cause to reduce greenhouse gas (GHG) emissions by purchasing RECs as well. They can then use these RECs to gain recognition for environmental and social responsibility. RECs can be considered as a form of energy currency.

If you produce your own renewable energy and supply some to the grid you receive RECs, which you can then sell back. Your RECs can save you a lot of money when you purchase items that are related to renewable energy (for example solar panels). You can keep abreast of the latest trends and developments in renewable energy production by doing online research about Electricity News and Information for Texas.

The Pros of RECs

• They allow you to support the production of renewable energy and contribute to the cause against global warming.
• You can supply renewably energy to the grid and earn RECs.
• You can sell you RECs for cash.
• Businesses can purchase RECs to indicate they are a green company.
• RECs provide a source of additional income to private individuals and energy companies and therefore prompt more production.
• They can be traded and bartered just like any other commodity.
• You can choose the renewable energy source you prefer to buy into (wind, solar).

Cons of RECs

• You do not necessarily receive clean energy when you purchase RECs – their purpose is to offset your use of fossil fuel-based energy sources.
• Some companies that purchase and use RECs to gain a green status only do so for marketing reasons.
• They will increase your energy bill by a small amount. Costs can vary so shop around.

If you intend to purchase RECs, try to purchase them from a supplier nearby to maximize the benefits of offsetting your carbon footprint.

Natasha Risinger is an energy researcher and blogger. Her articles appear on a number of blogs that are eco-related.