About Renewable Energy Certificates
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Once electricity is produced from a renewable source (e.g. a wind turbine or a solar farm) and enters the electrical grid, it is commingled with electricity generated from other sources.
Since electricity itself cannot be labeled, a market-based system is used to de-couple and monetize the value of environmental or green attributes from the value of actual commodity electricity. These so-called renewable generation attributes (referred to as Renewable Energy Certificates or RECs) are identified, tracked, and then traded in the market. 1,000 kilowatt-hours of produced green electricity = 1 REC. RECs are like “vouchers” that prove that electricity is "green."
Some benefits of RECs include:
- Allowing accounting of attributes of renewable electricity that sets it apart from conventional electricity,
- Providing an additional revenue stream for renewable energy projects,
- Freeing renewable energy sellers from the need to deliver renewable electricity in real time to the ultimate users,
- Contributing to the growth of the renewable energy sector,
- Allowing flexibility when complying with renewable energy standards or goals set by different states.
RECs are purchased either voluntarily (e.g. by individuals, organizations, or companies whose values and goals compel them to do so) or in compliance with existing laws and regulations which vary state-by-state (e.g. electric utilities, power plants, etc.).
The value of RECs is variable. As can be seen on the “State SREC Pricing” graph (DOE – Renewable Energy Certificates), the Solar REC pricing in Massachusetts between 2009 and 2015 had a high of ~$500 and a low of ~$150 per REC (i.e. for each 1,000 kWh of electricity produced by a solar energy installation).
If you have a roof-top solar installation - the income from solar RECs will show up as a check in the mail made out to you or as a direct deposit. Most residents choose to participate in market trading of their Renewable Energy Certificates via an aggregator of their choosing.
If you are purchasing “green electricity" - that means that your electrical supplier is purchasing Renewable Energy Certificates on the REC market.
Q - If I have solar panels on my roof, my home uses green electricity, correct?
A – Not necessarily.
Many people want to use local renewable energy by installing solar panel on their roofs. This is the most efficient way of using energy, since none is lost during transmission through the electrical grid.
Your project contributes to the renewable energy sector and produces green electricity. However, you cannot claim that the electricity your home uses is green if you are selling off Renewable Energy Certificates. The green attributes of renewably generated electricity have a monetary value, and are a commodity that is sold and bought. When you are selling Renewable Energy Certificates, you are selling the right to characterize your electricity as renewable.
As a homeowner, you can claim your electricity green if you are not selling RECs from your solar project or if you are purchasing green electricity either independently or from your electricity supplier. Otherwise, you can simply say that you are generating renewable energy and then selling it to others!
