Renewable energy sources like solar, wind, geothermal, solar thermal, hydroelectric, biomass, methane, and fuel cell technologies help reduce pollutants into the environment that are believed to contribute toward global warming by creating electricity through clean, non-fossil fueled sources.
Rising rate environments will help make renewable energy more economically competitive, while at the same time improving the environment.
In many instances, the physical location of renewable energy generation is not located near renewable energy buyers. By separating the environmental attributes of renewable energy from the electricity generated, renewable energy buyers can support the growth of renewable energy – regardless of physical location. This separation of green attributes from power creates two tradable commodities: power and Renewable Energy Credits, or RECs.
What is a Renewable Energy Credit (REC)?
A Renewable Energy Credit (sometimes referred to as a renewable energy certificate or “greentag”) is an environmental commodity that represents the added value, environmental benefits, and cost of renewable energy above conventional methods of producing electricity, namely burning coal and natural gas. RECs help wind farms and other renewable energy facilities grow by making them more financially viable, thereby incentivizing development.
In Pennsylvania, a Renewable Energy Credit is issues for every 1 megawatt hour of power generated for all users, from residential to large industrial. Renewable Energy Credits are becoming monetized in a secondary market.
As legislative requirements increase, RECs may be traded (like stocks) and contribute toward the cash flow of the overall project. For example, a company may purchase Wind Renewable Energy Credits to offset its fossil fuel consumption at older sites.
How does the REC system work?
Renewable energy facilities generate RECs when they produce electricity. Purchasing these credits is the widely accepted way to reduce the environmental footprint of a company’s electricity consumption and help fund renewable energy development.
Purchasing RECs at the same quantity as your electricity consumption guarantees that the energy you use is added to the power grid from a renewable energy facility and supports the further development of these facilities.
CAN DO Certified Provider
Community Energy has a 10-year track record of renewable energy development, resulting in billions of dollars of new energy investment. CEI is a long-term licensed retail provider in Pennsylvania and is experienced in renewable energy credit (REC) management.