RPS and RECs – Managing an Increasing Regulatory Burden

Renewable energy certificates or ‘RECs’ have become the currency of the renewable or green power industry, allowing power providers to expand their product offerings and offer ‘green’ power irrespective of whether or not they can physically generate it. Consumers can also be assured that should they choose to buy renewable power, in support of the renewables suppliers servicing the market, that the power they use has either come directly from a renewable generator, or if a renewable generator is not servicing their facility, that it is offset in the market by power from a renewable source, such as wind, solar or hydro, in another geographic area.

Essentially, as described by the US EPA, a “REC represents the property rights to the environmental, social, and other nonpower qualities of renewable electricity generation. A REC, and its associated attributes and benefits, can be sold separately from the underlying physical electricity associated with a renewable-based generation source.”1 It is the separatability from the underlying physical electricity that actually creates the value and benefits for both the producer of green power, whose investment is supported by selling RECs, and consumers who wish to enjoy the benefits of green power but who may not have direct access to renewable power due to their physical locations.

The driving force behind the development of the REC and its underlying market has been the development of state level renewable portfolio standards or RPS. These either 1) mandate a certain level of electricity servicing the markets in that adopting state be from renewable sources, or 2) set voluntary goals for electricity sold in the states from renewable sources. As of early 2012, 30 States and the District of Columbia had either RPS or similar mandated renewable programs; in addition, a further seven states had established voluntary goals.

Download the white paper today: RPS and RECs – Managing an Increasing Regulatory Burden


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