RECs certify that one megawatt-hour (MWh) of electricity has been generated from renewable sources.
Tracking
RECs allow for accurate tracking and claiming of renewable energy use.
Revenue Stream
RECs provide a separate revenue stream to renewable energy producers.
Promoting Growth
RECs play an important role in promoting renewable energy growth and driving demand for renewable projects.
RECS Creation and Use Process
Renewable Energy Generation
→
RECS Issuance
→
Tracking and Trading
→
Revenue for Producers
Renewable Energy Sources
Wind
Solar
Hydro
Geothermal
Bio (Biogas/Biomass)
Nuclear
How RECs Work
Generation
When renewable electricity is produced and fed into the grid, RECs are created to represent that generation.
Purchase
Energy consumers can buy these RECs to support clean energy and meet sustainability targets.
Retirement
Once purchased, RECs are retired, ensuring they are not used more than once and demonstrating the buyer's commitment to renewable energy.
Compliance Market
Driven by regulations, utilities and other entities are required by law to obtain a certain amount of their electricity from renewable sources. These rules, known as Renewable Portfolio Standards (RPS), force companies to participate in the REC market to meet their obligations.
Voluntary Market
Companies, institutions, and individuals purchase RECs to meet their own environmental goals. There is no legal requirement here—buyers want to improve their environmental reputation, meet sustainability targets, or offset their carbon emissions.
Certification and Tracking Systems
For RECs to be credible, they need to be certified and tracked. Certification prevents double-counting and ensures transparency. Tracking systems like M-RETS, WREGIS, and NEPOOL GIS verify REC creation, transfer, and retirement.
The Center for Resource Solutions (CRS) oversees certification through standards like Green-e. Green-e certification ensures that RECs meet strict environmental and consumer protection standards, providing assurance to buyers about the validity of their claims.
Importance of RECs
Key Benefits
Provide financial incentives for renewable energy projects
Create economic value for renewable generators
Offer a practical way for organizations to meet sustainability goals
Support the shift from fossil fuels to renewable energy
Challenges
Additionality Concerns
There is debate about whether RECs directly lead to new renewable energy projects. Critics argue that purchasing RECs does not necessarily result in building new facilities, especially if those projects are already financially viable.
Transparency and Pricing
The REC market faces challenges related to pricing and complexity. Price fluctuations and confusion around how RECs work can make it harder for consumers to feel confident in their impact. Clearer rules and improved communication are needed to address these issues.
English