What are Renewable Energy Certificates?

3 Main Types of Renewable Energy Certificates

Renewable Energy Certificates (RECs), also known as Renewable Energy Credits or Green Tags, are financial instruments that represent the environmental attributes of renewable energy generation. RECs provide a way for individuals, organizations, and businesses to support and promote renewable energy without physically consuming the energy itself. When a renewable energy source, such as a wind farm or solar installation, produces electricity, it generates both electricity and the associated environmental benefits. These benefits include the reduction of carbon emissions and the displacement of fossil fuel-based energy generation.

RECs are created when renewable energy is generated and fed into the grid. Each REC represents the environmental benefits of a specific amount of renewable energy, typically measured in kilowatt-hours (kWh). These certificates can be bought and sold separately from the physical electricity. When an individual or organization purchases RECs, they are effectively supporting renewable energy generation and offsetting their own carbon footprint. The purchase of RECs helps to incentivize and financially support the development and expansion of renewable energy projects, driving the transition to a cleaner and more sustainable energy system.

RECs are an important tool in promoting renewable energy and achieving renewable energy targets. They provide a means for businesses and organizations to demonstrate their commitment to sustainability and reduce their environmental impact. By purchasing RECs, consumers can claim that a certain portion or percentage of their electricity consumption comes from renewable sources, even if the electricity they receive directly from the grid might be a mix of renewable and non-renewable sources. RECs also provide a way for renewable energy project developers to generate additional revenue streams, making their projects more economically viable and attractive to investors. Overall, RECs play a crucial role in the market-based approach to promoting renewable energy and advancing the clean energy transition.