Please click here to see any active alerts. A REC can be sold separately from the actual electricity kilowatt-hour, or kWh. A REC is issued for every megawatt-hour MWh of electricity generated and delivered to the electric grid from a renewable energy resource. System hosts may choose to sell the RECs associated with the on-site solar PV system and in their place buy RECs sourced from other geographically eligible green power resources in order to make environmental claims.
I don't think so. But everyone should be clear what they're getting. It's unlikely that RECs are currently providing much direct financial additionality, but it can still be argued that they provide indirect additionality.
In other words, the availability of this modest second revenue stream may not make the difference on any individual project proposal, but on a total market basis, the additional revenue, combined with the tangible demonstration of a demand for clean electricity, favorably changes economic conditions for renewable energy.
On the other hand, that's a pretty modest effect relative to a lot of green claims. It's incredibly cheap now for a business to be "powered by percent clean electricity," but by the same token, it's probably not doing all that much for renewable energy.
There are some ways businesses can more directly help renewable energy, but it can be difficult for consumers to pick those signals out of all the green noise. The door is open to all kinds of greenwashing.
So should you buy RECs? I'll discuss it more in my next post, but the short answer is, sure. They're cheap! Just be aware that under current market conditions, they don't have a very big impact.
That's why they call it cheap. If you want a bigger impact, buy more expensive, higher-quality RECs and reward businesses that do the same. The problem with the REC market now is that it's out of balance; supply exceeds demand. Thus RECs are cheap, and thus have little market-moving impact. The obvious solution is either to constrain supply or boost demand.
If you want to buy clean electricity in the US, you need to know what you're getting, so you need to understand RECs. In my next post, I'll review a few different ways that people can support green power these days. Most involve RECs. Having slogged your way through this background, you will now be better equipped to evaluate those options. Our mission has never been more vital than it is in this moment: to empower through understanding.
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By choosing I Accept , you consent to our use of cookies and other tracking technologies. RECs, which put the "green" in green electricity, explained. Reddit Pocket Flipboard Email. Shutterstock When people find out I'm an energy journalist, they often ask me how ordinary people can support clean energy. There is no such thing as clean electricity, which makes buying clean electricity tricky RECs are, above all, the answer to a need: the need to buy green electricity.
So there's demand for green electricity. But there's a problem. So you can't buy green electricity, not literally. RECs are the US electricity system's answer to that question. What are RECs? As you can see here, greenness is on the rise. Shutterstock Once you've got a system of RECs established, you make it possible to buy green electricity.
What are RECs used for? Don't freak out, but I'm going to blow your mind a little bit with a spaghetti graph of where RECs come from and where they end up: Bloomberg New Energy Finance You don't have to decode all this. Just a couple of things to note. What are RECs not? Not to scale. EPA Big-picture-wise, the growth of renewable energy does affect fossil fuel use. Do RECs actually lead to more clean energy? Bloomberg New Energy Finance Again, two main things to notice.
That's a problem. Shutterstock So should you buy RECs? How can RECs be improved? I'll just briefly touch on two reform ideas. Reform Green-e standards. Obviously no one wants to constrain the supply of renewable electricity; more is better.
But it is possible to constrain the supply of voluntary RECs, simply by tightening the standards they have to meet. Arguably, large tranches of tech-neutral, geography-neutral, age-neutral RECs, some of which aren't even Green-e certified, should be eliminated entirely; they are junk.
Green-e could require that RECs be constrained to the region of their origin, that they be "bundled" like California does, or that they pass some sort of additionality test. All such standards would raise both the quality and price of voluntary RECs. M ore and higher RPSs. RECs are crucial for evaluating clean energy purchases If you want to buy clean electricity in the US, you need to know what you're getting, so you need to understand RECs.
Delivered Fridays. Thanks for signing up! Check your inbox for a welcome email. Email required. When you retire a REC through the associated tracking system, it cannot be sold again, which means no one else can lay claim to that unit of renewable generation.
Though RECs and electricity are produced concurrently, the two "products" are severable and represent different revenue streams for project developers. Bundled RECs often come from new-build projects because in order for developers to receive financing and construct the project, they must show guaranteed revenue streams for the expected energy rather than merely the severed REC.
Buying a bundled REC i. Unbundled RECs, however, can't garner additionality claims. That's because unbundled RECs aren't tied to their underlying power.
While companies can still purchase unbundled RECs to achieve sustainability goals, unbundled RECs don't have as positive an environmental impact because they don't lead to new renewable energy being generated and merely represent a re-shuffling of the existing renewable energy supply on the market today.
Most companies are entering into the renewable energy market because their customers, leaders, and stakeholders want to see them have more sustainable practices. While purchasing unbundled RECs technically "counts" towards sustainability goals, many stakeholders may ask "What change did this actually create?
Voluntary REC markets are almost exclusively driven by climate-related sustainability goals, making them more common for corporate clean energy purchasers. Since there are fewer strings attached, voluntary market RECs have lower prices. Some states have a tier system for RECs to indicate their positive environmental impact.
For example, Tier 1 RECs come from new wind and solar projects. The RECs with a higher carbon-reduction impact are typically more expensive than RECs with a lower impact, like those produced in an already clean grid.
For example, imagine a new clean energy project is built in the southeast, where a lot of coal is being burned to produce energy. A renewable energy project producing RECs there is going to create a much bigger reduction in carbon emissions than if you were to build a new clean energy project in Washington state, where there's a robust hydroelectric-powered grid.
Even though each scenario produces RECs, the RECs from the southeast would generally cost more due to their more positive environmental impact. REC prices can fluctuate based on changes to wholesale energy markets. Although RECs can help you achieve carbon emissions goals, they're not the same as carbon offsets, which are also known as voluntary emission reductions VERs or carbon reduction tons CRTs.
RECs are designed to reduce the carbon impact caused by your company's electricity use- they specifically impact a company's scope 2 emissions. Carbon offsets come from projects or activities that reduce greenhouse gas emissions, increase carbon sequestration or help remove greenhouse gas from the atmosphere. Like bundled RECs, carbon offset projects must be additional , and the emissions they remove have to be "real, permanent and verified" according to the EPA.
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