utilities and wind power

Renewable Energy Credits

Renewable Energy Credits (RECs) are the commodity that represents the environmental attributes of renewable energy.  Renewable energy, the generation of electricity from renewable, inexhaustible resources such as sun, water, geothermal heat and the wind, can be thought of as having two components:

1. The underlying electricity
2. A separate commodity called a "Renewable Energy Credit" (REC) which captures the lack of emissions by the environmental attributes of the electricity generated by renewable resources.

The quantity of RECs is measured by the same measurements of the electricity generated at the same time – typically a REC represents one megawatt-hour worth of environmental attributes generated by a megawatt-hour of electricity from a renewable resource.

The REC may stay associated with the underlying electricity – when sold as renewable energy, the REC stays "bundled" with the electricity as a form of "premium-grade" electricity.  Or, the REC may be separated from the electricity (which is sold separately with other megawatt-hours of "regular" electricity) and the REC can be sold and bought in other markets and transactions that are separate from the electricity itself.

Standards for RECs are promulgated by groups such as the Center for Resource Solutions (CRS) to ensure that the integrity and marketing claims associated with RECs are sound and valid.  They also maintain strict standards to ensure that RECs are only "used" one time – once a REC is used to satisfy a requirement or to satisfy any other kind of requirement it is consider “retired” and may not be used again.  See the "green-e" link at the right for more information.

RECs are important in both voluntary markets (see link at left for Green Pricing Programs) as well as in compliance markets. Compliance markets often refer to the requirements that utilities need to meet in order to comply with state RES requirements (see Renewable Electricity Standards link at the left, too).  RECs are often the "commodity" used by utilities to comply with the RES requirements for those states in which they serve customers with such requirements.

Markets for RECs are still developing and strong regional markets, or even a national market, for REC trading can provide a low cost tool to implement RES requirements at a state and national level. RECs provide a key role in developing markets, both voluntary and compliance markets, and can aid in renewable energy and wind power growth and development.

For any questions, contact Jeff Anthony, the AWEA Manager for Utility Programs at janthony@awea.org