Renewable Energy Certificates, or a “REC,” are complicated things. Since renewable energy is an industry that is growing quickly, an increasingly amount of people are looking for ways to prove that they’ve participated in reducing their carbon footprint, or avoiding contributing to the pollution on the planet. RECs are a way to trackt and control the amount of planet friendly energy being produced, and are a commodity in their own right. Today we’re going to talk about them a little bit, about how they work, are tracked and handed out. Because there are far too many differences between countries and their regulations to cover in one article, we’re just going to focus on US information about renewable energy certificates today.
What Renewable Energy Certificates are
Renewable Energy Certificates are known by a number of different names or nicknames. RECs, green tags, green certificates, tradable renewable certificates, and so on. They are a way to keep track of the energy that’s produced by lower-pollution forms of electricity like wind or solar power. Because it’s impossible to track electricity from various sources once it’s into the main pool of the national grid, these renewable energy certificates are a way to prove that you’re buying into the reduced carbon footprint energy source lot, and they have become a commodity in their own right. By producing these certificates, energy producers are able to prove that they’ve put their environmentally friendly energy into the grid.
Once a producer creates 1 megawatt hour [1MWh] (1,000 kilowatt hours [1,000kWh]) of energy from a renewable source, such as wind, solar, or hydro power, and releases it into the power grid, they generate one renewable energy certificates or REC as it is commonly shortened. This is “proof,” as it were, that this energy has been put into the grid. Once a purchaser buys this REC separate from the direct energy, it becomes a fully tradable commodity, like a future or a stock. You can use it to say “yes, I have invested in the renewable energy market.”
Currently, the US does not have a fully official Federal tracking system set up for green tags, but there are other ways to do so. There are regional and state systems set up, such as the NARR, WREGIS, or MIRECS. These cover different groups of states and have various ways of certifying the renewable energy certificates that are produced in those areas. Each one has a unique identification system for the region, and regulatory agencies accompany them. There really isn’t a way, currently, to track individual renewable energy certificates on the market. Mostly, agencies focus on certifying RECs when they’re created, and performing audits at the end of the market process. Large groups of tags are easier to track because of the way the systems are created.
In actuality, individual purchasers don’t generally have accounts with the tracking agencies unless they are large purchasers themselves. Because the green tags are only traced in large groups, as a single buyer it’s important to keep track of the numbers you buy and ensure that you check out the history of the renewable energy certificate numbers as you get them.
The great thing about RECs is that it allows anyone to participate in efforts to lower carbon footprints and the pollution creation of traditional energy. You don’t have to have a wind farm or a giant dam with turbines, and you don’t need a forest of solar cells on your lawn. It’s a way for the common citizen to say “hey, I value green energy, and even though I can’t do anything directly, I will purchase and support the creation of that energy by investing in people who make this green energy.”
While it’s not a federal program, yet, regional agencies are around to certify and track the renewable energy certificates as they are produced. You have the ability to access audits as they are a part of the certification process, and can also see the paperwork as needed. All in all, it’s a way for the environmentally-minded person to take part in the race towards alternate energy.