What are renewable energy credits?
Electricity from a renewable source is indistinguishable from the electricity produced by other sources with some big exceptions-it does not pollute the air, consume natural resources or emit greenhouse gases. There is value in avoiding these impacts. Companies who produce energy without these environmental impacts receive this value by earning credits for each kilowatt-hour they produce-renewable energy credits.
Renewable Energy Credits, also called Green tags or Tradable Renewable Certificates, are certificates issued by a government agency to a power company which utilizes environmentally friendly methods to generate electricity. The Renewable Energy Credits can in turn be traded and sold on the open market, providing an incentive to companies which produce “green” power. Citizens and companies who are trying to support green power and reduce their carbon footprints can also take advantage of Renewable Energy Credits, regardless as to the source of their power. Sources of green power include solar, wind, geothermal, biomass, biodiesel, some fuel cells, and low impact hydropower. In a company which uses these sources in a state which participates with the Renewable Energy Credits program, the company is offered one credit for a set amount of energy produced, typically 1,000 kilowatt hours. The credit is given a distinct number so that it can be tracked, the power is fed into the grid, and the
Renewable Energy Certificates (RECs), also known as Green tags, Renewable Energy Credits, or Tradable Renewable Certificates (TRCs), are tradable environmental commodities in the United States which represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource.
“Renewable Energy Credits”, also called “Certificates” (RECs), or “green tags” are created when a qualifying renewable energy facility generates electricity, and represent the broad environmental and economic benefits of green power. RECs are sold separately from commodity power and provide customers a means to green their power supply at a low premium rate. RECs allow customers to purchase green power whether or not they have access to renewable electricity generation and without having to switch electricity suppliers. When you sign up for Green Up you are purchasing RECs equivalent to a percentage of your electricity usage.
For every kilowatt hour of electricity a renewable generator generates, it also generates a one-kilowatt hour renewable energy credit. The generator can sell both commodities together as “renewable electricity” or sell the electricity as “generic” electricity to one buyer and the RECs to other buyers.
