Renewable Energy Credits

Renewable Energy Credits are also known as Renewable Energy Certificates (pronounced "REC's" in the business, like a car "wreck"), or "green tags", or Tradable Renewable Certificates (TRCs). These tradable environmental commodities represent proof that one megawatt-hour of electricity was generated from a renewable energy source.  Renewable energy credits provide an incentive for companies to produce green energy over fossil fuel-based energy; along with the green energy they produce, they earn RECs to sell for an additional profit.

RECs are generated from the production of many types of renewable energy, including solar, wind, geothermal, small hydropower plants (Not large dams), biomass, biofuels, and hydrogen fuel cells.  These RECs are bought and sold, and the owner of the REC can claim to have purchased renewable energy.  RECs are often sold separately from the electricity that was generated. When you purchase an REC, you only get the certificate, not the actual electricity. For example, a renewable energy provider, such as a wind farm, gains one REC for every megawatt-hour of electricity produced.

This is roughly equal to the amount of energy used by an average home in a month. This green energy is then released to the local power grid, and the REC can then be sold by the wind farm. If you own an REC and the required amount of regular electricity, you are said to own that amount of green energy, regardless of the actual source of your electricity.  There are two separate markets for renewable energy credits"

1)  In 25 states, "compliance markets" have been created. In these states, electric companies are required to supply a certain percent of their electricity from renewable sources. Utilities in these states will need to purchase RECs equivalent to that percentage of their electricity sales.  They can either choose green energy suppliers and purchase their RECs along with the energy, or use energy created using fossil fuels and purchase the RECs separately.  

2) On the other hand, "voluntary markets" are where the end customer, such as a homeowner or business owner, decides to purchase renewable energy credits to show their commitment to going green.  Corporate and household purchases of renewable energy are usually voluntary purchases because no laws currently exist to make homes or businesses choose renewable energy sources.  If you are looking to show your commitment to green energy, you can buy RECs to support the use of renewable energy sources, or you can buy RECs from your utility company, thereby increasing demand of renewable energy. 

The company producing the power can either sell the RECs separately from the electricity (selling the electricity to the customer as “generic” energy, not green energy) or they can be sold as a package deal.  For example, your electric company may offer you the opportunity to pay a little more each month for wind power. If you agree to this, you are actually buying the RECs, along with the same type of power you were already using. This is because it is impossible to separate generic electricity from wind-power electricity on the power grid; all electricity is the same.  You get the renewable energy credit showing that you have purchased wind power, but the electricity you are actually using may have come from a variety of sources. 

Are you looking for tips that will shortcut your development time and save you headaches? If so, then I highly recommend you check out this step-by-step installation guide for new renewable energy systems. This regularly updated, essential how-to guide includes instructions on everything from how to wire your first new renewable energy system, how to recondition batteries, how biodiesel is made...even how to assemble solar cells! Click here to go to earth4energy

An introduction to Solar Energy Systems -->