Have You Heard About Recs?

Let’s start by defining renewable energy. It is energy derived from naturally-occurring sources that can be constantly replenished such as solar, wind and hydroelectric power. Some call it green or clean energy and it is getting a lot of attention as people place more emphasis on sustaining the current environment for future generations.

As a baseline, the generated electric capacity in New England is 31,000 megawatt-hours with the following resources that generate it: natural gas at 49%, nuclear at 30% followed by renewables at 18%. The Grid Operator is reporting that Developers are planning to install almost 16,000 megawatt-hours of wind and solar generation over the next several years. This rapid growth in renewable energy is primarily driven by state policies and subsidies.

For every unit of renewable electricity generated, a tradable mechanism called a Renewable Electric Certificate (REC) is created as a legal tender that represents the environmental benefits associated with one Megawatt-hour of electricity generated from a renewable energy resource. These certificates may be sold and traded where the owner of the REC can legally claim to have purchased renewable energy. Although anybody can purchase RECs, the RECs are certified by Green-e Energy who requires each supplier to disclose the quantity, type and geographic source of each certificate, available on the Product Content Label. Green-e Energy also verifies that the Renewable Energy Certificates are not sold more than once or claimed by more than one. 

The price of a REC depends on the location where some utilities and suppliers have an adder into the price of supply or independently one can purchase RECs that total the annual consumption. As an example,  if your annual consumption is 100,000 kWhs and the average price of a REC in New England is $10.00, your net outlay will be $1,000. Having spent the premium on the REC, the organization can now claim that they are ‘GREEN’ and that its energy used comes from sustainable sources.

I hope this helps to explain the basics behind Renewable Energy Credits and please let us know if your organization would like to participate.

Your friendly Neighborhood Energy.