Renewable Energy Credits (RECs)

Renewable Energy Credits are tradable, non-tangible energy commodities in the United States that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable resource (renewable electricity). These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy. While traditional carbon emissions trading programs promote low-carbon technologies by increasing the cost of emitting carbon, RECs can incentivize carbon-neutral renewable energy by providing a production subsidy to electricity generated from renewable sources. It is important to understand that the energy associated with a REC is sold separately and is used by another party. The consumer of a REC receives only a certificate. In states that have a REC program, a green energy provider (such as a wind farm) is credited with one REC for every 1,000 kWh or 1 MWh of electricity it produces (for reference, an average residential customer consumes about 800 kWh in a month). A certifying agency gives each REC a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying REC can then be sold on the open market.

 

How does the REC system work?

Renewable energy facilities generate renewable energy credits (RECs) when they produce electricity. Purchasing these credits is the widely accepted way to reduce the environmental footprint of a user’s electricity consumption and help fund renewable energy development. Purchasing RECs at the same quantity as electricity consumption guarantees that the energy used by the user is added to the power grid from a renewable energy facility and supports the further development of these facilities. Whether purchased from an electricity supplier, a third-party entity, or a local utility’s “Green Pricing” program, all systems are based on the purchase of RECs. Standard Power of America offers the same product as a local utility company but at a fraction of the price.