Renewable Energy Credit
Renewable Energy Certificates
What are Renewable Energy Certificates?
Renewable Energy Certificates (RECs) are the environmental property rights of electricity generated from renewable energy resources. RECs may be sold along with the actual electricity, or can be unbundled from the electricity and sold separately. Only the owner of RECs can claim to be powered by renewable energy.
Where are RECs used?
RECs are used in states with Renewable Portfolio Standards (RPS), which mandate state utilities to produce certain percentages of the state's total electricity from renewable energy resources. For example, California's RPS requires 20% of its electricity to be from renewable energy sources by 2010. So far, 26 states have adopted their own RPS, furthering REC market growth.
How RECs Work
Every time a renewable energy generator produces 1 MWh of electricity (about a family's electricity use for a month) they create 1 Renewable Energy Certificate. In states with an RPS, the electric companies are required to buy a certain percent of their electricity from renewable resources. In order to count the electricity from a wind farm, solar panel, or other renewable generator, the electric company must purchase these RECs. Generators may also sell their RECs to voluntary customers - households and businesses who want to support and be powered by renewable energy. These customers are often motivated by green marketing incentives or just an ethical desire to go green.
The Importance of Additionality
For voluntary purchasers of RECs, it is crucial to ensure that the purchase provides "additionality" - this simply means that a customer's purchase of 1 REC actually causes 1 new MWh of renewable energy to be generated. There has been warranted skepticism that some RECs don't actually provide additionality. Third-party certification systems like Green-e verify that RECs are not double-counted , but unfortunately, many Green-e certified RECs are not additional.
How Village Green Ensures Additionality
Village Green has pioneered a new approach to Renewable Energy Certificates that distinguishes us from other REC providers and guarantees that the RECs we sell provide additionality - we exclusively purchase RECs from states that have an RPS. These voluntary purchases effectively increase the amount of renewable energy produced, because these customers purchase RECs that utilities would otherwise have purchased to meet their percentage quota. When this occurs, utilities must find additional sources of renewable electricity, increasing the overall renewable energy produced.