What is a renewable energy certificate or REC?
When a generator produces energy from renewable sources (solar, wind, biomass, etc), along with the associated renewable and environmental attribute, the electricity itself is typically sold into the grid at some market value. The associated renewable and environmental attributes are captured as a REC, which represents one megawatt hour of electricity generated from renewable sources and delivered to the grid, is sold separately and has its own market value. RECs can be “counted” only once toward a consumer’s supply and are then retired on behalf of the retail consumer of the RECs. The purchase of RECs ultimately results in an added cash flow for renewable generation—an important financial incentive for the developer/owner of the renewable generation facility. The purchase of RECs promotes the continued development of renewable energy resources and the displacement of electricity generated from fossil fuels.
