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Environmental Markets / Renewable Energy Certificates (RECs)

Renewable Energy Certificates (RECs)

Renewable Energy Certificates (RECs) are generated from renewable energy sources in the U.S. RECs represent the environmental attributes of power that are generated from renewable energy projects and provided to the grid. A Renewable Energy Certificate (REC) works like an accounting or tracking mechanism for solar, wind, and other green energies flowing into the power grid. Once the power provider has fed the energy into the grid, they receive a REC, which is then sold on the open market as an energy commodity. RECs earned may be sold to others that are polluting as a carbon credit to offset their emissions.
Many states have a Renewable Portfolio Standard (RPS), which requires power services to create a certain amount of renewable power that increases every year. The requirements are a huge driver of the Renewable Energy Certificate trades. Fore example: Power companies could purchase these certificates from homeowners to meet the state's renewable requirement.
RECs can go by other names, including Green Tags, Tradable Renewable Certificates (TRCs), Renewable Electricity Certificates, or Renewable Energy Credits. 
  • RECs represent the environmental attributes of power that are generated from renewable energy projects and provided to the grid;
  • One REC represents one-megawatt hour (MWh) of energy generated from a clean, renewable source such as wind, solar, hydro, or certain types of renewable biomass;
  • RECs generate little to no carbon as they produce clean energy;
  • For example, wind farms produce more than 20 million megawatts hours of electricity per year

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