CHAPTER 2: Renewable Energy Certificates

Contributor:  Montgomery County Department of Environmental Protection

What Is a Renewable Energy Certificate (REC)?

Renewable energy certificates (RECs) quantify the amount of clean energy a generator has produced from a clean, renewable source (such as wind or solar) and transmitted to the power grid. The generator accounts for the clean energy transmitted by assigning a unique "certificate," Green tag, or number to each megawatt-hour (1,000 kilowatt-hours) of electricity generated. The generator uses the certificates to account for how much clean energy was produced and how much clean electricity utilities and consumers can buy.

RECs also represent the environmental benefits of clean energy generation. The environmental benefits are the emissions avoided because electricity was produced from a clean energy source instead of from a standard fuel source such as coal, oil, or gas. For instance, RECs represent the pounds of carbon dioxide, sulfur dioxide, and nitrogen oxides that were not emitted due to the burning of fossil fuels. Purchasing RECs allows a household, business or organization to offset the pollution that results from their use of electricity generated by burning fossil fuels.

RECs can be sold by the clean energy generator in one of two ways:

  1. Sell the electricity and the REC to a utility or energy supplier that resells both as clean energy to a consumer. This is what happens when you purchase renewable energy through your utility (See Clean Renewable Energy - The Basics);
  2. Sell the REC to a REC Marketer, who resells the REC (without the electricity) to a consumer who is interested in offsetting pollution and supporting clean energy generators. 

The diagram below shows how RECs from clean energy generators can be sold to energy suppliers or REC Marketers and then to the consumer (you). When you buy clean energy from an energy supplier, the supplier passes the REC on to you with electricity service. When you buy a REC through a REC Marketer, you are just purchasing the environmental benefit of the clean energy without electricity service. This flexibility allows even those who do not directly communicate with their energy suppliers or negotiate their lease conditions (such as businesses, congregations, condominium owners, or renters) to offset the pollution from the fossil-fuel-sourced electricity they buy and use.

Remember: If you are purchasing RECs along with energy from a utility, you are not getting the exact electricity that was generated from the clean energy source. The energy you receive is pulled from the energy grid, which stores energy from many sources across the country. The REC provides a representation of the clean energy you helped bring to the grid and the environmental benefit of that clean energy generation.

Why Buy RECs?

About 38 percent of the greenhouse gases produced in the United States come from electricity generation (See EPAs 2009 Inventory of Greenhouse Gas Emissions and Sinks for more information).

Purchasing RECs supports more clean energy production which helps decrease the amount of electricity generated from fossil fuels. Money generated from the sale of RECs can help fund clean energy projects. Electricity generated from renewable sources can be inexpensive to produce, but getting started is challenging and expensive. There are government subsidies and tax breaks that support renewable energy generation projects, but these subsidies are much less than those available to those using fossil fuels and other energy sources. The sale of RECs gives clean energy generators more flexibility in covering the costs of clean energy projects.

Purchasing RECs also helps balance the supply and demand for clean energy. There is not always a demand for clean energy where it is produced, and some energy suppliers do not offer clean energy options. However, there might be a demand to support clean energy elsewhere. By separating the environmental benefits of clean energy generation from the actual electricity, the generator can get a fair market price for its electricity and help consumers elsewhere offset the emissions associated with their electricity use.

These are several great reasons to purchase RECs. But here's the icing on the cake: Buying RECs is an easy way to reduce your environmental footprint without a large financial commitment. It's just not always possible to buy a new, fuel-efficient car or undertake a home improvement project, but it's easy to make a purchase supporting cleaner energy generation.

How Do I Buy RECs?

You can purchase RECs from a REC marketer; for an up to date list or marketers and retail prices, visit DOE’s Green Power Markets webpage. Depending on the REC Marketer, RECs can be a one-time purchase or can be purchased in monthly installments. Each REC Marketer offers a variety of product options. Several businesses sell RECs online. Some companies send a certificate verifying your REC purchase; others send a letter.

Shop around and find the type of REC (wind, solar, a blend of clean energy generation sources) and the Marketer that is in line with your goals for purchasing clean energy. For instance, is there a specific type of clean energy you want to support? Do you want to support clean energy that is generated in your region or somewhere else in the country? 

How Much Do RECs Cost?

It depends. The per-unit price of a REC depends on the type of clean energy generated (wind, solar, sustainable biomass), where the clean energy was generated, and how many RECs you want to purchase. For instance, wind RECs from the Midwest or Texas, where there is an abundant supply of wind energy, may cost 1.5 cents per kilowatt-hour and may be less expensive than solar RECs from the Mid-Atlantic where the solar industry is just starting to gain a foothold. REC Marketers sell renewable energy certificates from all types of clean energy generators so you can choose the type of clean energy you want to support as well as the location. Current prices from REC marketers can be found on DOE’s Green Power Network web pages.

How Many RECs Should I Buy?

When you purchase RECs, you can buy RECs equivalent to any amount of your total electricity use. Buying RECs in an amount that equals 100% or your electricity use allows you to offset all of the emissions, or you could choose to offset a portion of your electricity use. Regardless of how many you decide to purchase, as a REC consumer, you are supporting the addition of clean electricity—and its environmental benefits—to the power grid.

You can estimate the number of RECs to purchase using your electric bill. Find the "Usage History" on the bill and use the “Last 12 Months Use” or take the “Average Monthly Use” and multiply it by 12 to get an estimate of your annual energy use.

Who Benefits from the Purchase of RECs?

We all do! Your choice to switch to clean energy helps decrease our impact on the environment. The United States has only 5 percent of the world's population, but we produce 25 percent of its greenhouse gases. Clean energy, combined with energy-efficient technologies, is one of the several solutions to help decrease the amount of pollution we release into our environment and protect our planet for future generations.


Contributor: Montgomery County Department of Environmental Protection