Renewable energy certificates (RECs) are supposed to encourage development of green power. Do they?
They lurk behind the controversy when a company like Apple or Amazon claims to operate facilities entirely with green power. Complaints of a hoax come from both sides of the political spectrum.
In fact, these companies get their energy from the grid using whatever power plants supply from whatever source. They justify their green claim by purchasing RECs. Are RECs legitimate? I think so.
It’s not just large corporations. Homeowners can switch to green power using RECs, too.
Electricity comes to us from the grid. The grid gets it from fossil fuels plants, nuclear plants, dams, solar panels, or wind turbines. It all gets jumbled together. There’s no way to plug into the grid and ask that you get only electricity from a wind farm.
So how do RECs let anyone say they get 100% of their electricity from a wind farm?
What are RECs?
State establish Renewable Portfolio Standards and other regulations. These require electric service providers to incorporate a certain minimum level of renewable energy into their product.
Entities not required to adhere to these policies can still participate voluntarily.
RECs are “tradable instruments.” That is, you can buy and sell them sort of like you can buy and sell stocks and bonds.
But our economy has had stocks and bonds for generations. They’re hard enough to understand. Hardly anyone, it appears, really understands the newer and more esoteric RECs.
For example, how can anyone know a REC comes from a legitimate source and that only one party claims it? Third-party organizations exist to certify them, including the Center for Resource Solutions. According to CSR’s Green-e® standards, these sources qualify as approved sources:
- Solar electric
- Hydropower that doesn’t come from big dams
- Fuel cells using renewable fuels
Certification documents the source of generation, where it’s located, when it was generated, and other information to authenticate the claim. Each REC certifies generation of one megawatt hour (MWh) of electricity from one of the approved sources.
If a utility owns a solar farm or wind farm, it produces a REC. On the other hand, any homeowner or company can install a renewable power system and use it. Or instead they can sell a REC. In that case, they have sold their right to claim to buy green power from their own system.
Green-e® and comparable standards ensure that two or more entities can’t claim the same REC.
How do RECs work?
RECs and electricity are different products. They work toward the same goal by different means.
Sale of all renewable energy involves a REC. Customers can buy the electricity and the REC as a bundle from the same company, Or buy the two from different companies.
Not all companies or households can directly purchase green energy.
A company may not own land suitable for building a green power source. There may not be a nearby renewable energy company that will sell energy directly to it instead of to the grid.
A house may not be built in a favorable location for solar energy. And if it is, only the owner can install the panels. Renters can’t. But they, too, can use RECs to encourage green energy.
Each certificate has a unique identification number. An electronic database tracks its ownership. Ten regional tracking systems cover the entire US and Canada. RECs can be traded across regional boundaries. Here’s an example.
- The North American Renewals Registry (NAR) tracks and authenticates renewable energy in Kansas,
- A wind farm in Kansas produces 300,000 MWh of electricity.
- NAR issues 300,000 RECs for the wind farm’s account.
- The wind farm sells those RECs to a REC trader that also has its account with NAR. NAR notes the transfer of ownership from the wind farm to the trader.
- The trader sells the RECs to a buyer in Minnesota. Minnesota is part of Midwest Renewable Energy Tracking System (M-RETS), not NAR.
- So NAR transfers all the data related to those RECs to M-RETS.
- M-RETS deposits the certificates into the buyer’s account.
- Each megawatt of electricity the buyer uses results in the retirement of one REC. Its record of REC purchase and use substantiates its renewable energy claims.
Here’s an explanation from the Environmental Protection Agency:
How can ordinary people use RECs?
Mostly, large corporations deal with RECs. Especially if they have to satisfy state renewable energy portfolio standards.
Many corporations voluntarily buy RECs so they can meet their own sustainability standards. So do government agencies.
Some companies exist especially to promote green power and let ordinary consumers get in on it.
The example in the last section comes from a federal website. It describes the end user as a group of Veterans Authority facilities.
But it can as easily be customers of a company like Arcadia Power. Arcadia operates in all 50 states.
It exist buys RECs from approved renewable sources anywhere in the country. It signs up customers and bills them for electricity. The electricity actually comes into the house from the local utility. Arcadia pays the utility and charges its customers a little more for the RECs.
You can, if you like, buy a plan from Arcadia. Then, just like Apple or Amazon, you can claim to power your home with 100% renewable energy.
In other words, by owning the RECs, you essentially own the benefits of the production of renewable energy, even though that electricity does not actually power the home.
How can you and well known large corporations legitimately make such a claim?
Because by purchasing a share of the REC, you have enabled a renewable energy company to produce the amount of power you use. Your utility provides whatever it provides, but that wind farm or other approved source makes the entire grid cleaner by supplying electricity to the grid from renewable sources.
The more electricity that comes to the grid from renewable sources, the less must be supplied from fossil fuels.
Bottom line on Renewable Energy Certificates / Chris Lau and Jaineel Aga, World Resources Institute. November 2008
Federal Renewable Energy Certificate guide / Office of Federal Sustainability, Council on Environmental Quality. June 16, 2016.
Should I source my home power from renewable energy? / Ask Umbra, Grist. May 11, 2015
Renewable energy in palm. Source unknown
Solar farm. Public domain, US Air Force photo
Wind farm. © Copyright Stephen Craven and licensed for reuse under this Creative Commons Licence
Solar parking lot. Some rights reserved by Kevin Dooley