The renewable energy credits market: where to buy RECs
Last updated 6/7/2019
Anyone, anywhere in the United States can buy renewable energy credits (also known as renewable energy certificates, or RECs). RECs represent electricity generated by renewable energy sources such as solar or wind power facilities. Any corporation, business, nonprofit, or individual concerned about their carbon footprint can purchase RECs to ensure that their electricity is coming from renewable energy.
Beyond purchasing RECs voluntarily, or in a “voluntary market,” some electrical utilities are required to purchase them due to state regulations. This type of market is called a “compliance market.”
An overview of the renewable energy credits market
When it comes to buying RECs, states can be divided into either compliance or voluntary markets. Your state’s market will affect the cost of RECs where you live.
In compliance states, electrical companies must generate a certain percentage of their electricity from renewable sources. This is due to a state regulation known as the Renewable Portfolio Standard (RPS). If the utility does not generate enough RECs through renewable energy that it—or if it does not generate renewable energy at all—a utility must purchase RECs to make up a difference. This provides proof that a percent of the utility’s electricity came from renewable sources, since RECs represent the clean energy attributes of renewable electricity. Compliance markets exist in 29 states, Washington, D.C., and Puerto Rico.
States with voluntary markets do not require utilities to produce a certain percent of electricity from renewable resources. Utilities do not have to buy RECs in these states, but customers may still choose to purchase RECs for other reasons. Because buying RECs is not mandatory for utilities this makes demand lower. As a result, RECs do not cost as much in voluntary states as they do in compliance states.
| Compliance | Voluntary | |
|---|---|---|
| Renewable Portfolio Standards (RPS) | Yes – a certain percent of a utility’s electricity must comes from renewable energy (RECs) | No – they may have a renewable energy goal, but they impose no regulations |
| Price of RECs | High, since purchase of RECs is mandatory | Low, since all RECs are purchased voluntarily |
| States in this market | 29 states, including all of New England, Texas, most of the Southwest and West, Washington D.C., and Puerto Rico | Includes a large portion of the Southeast – Louisiana, Georgia, Kentucky, and Florida – as well as Wyoming, Idaho and the Dakotas |
Where to buy RECs
Purchasing RECs always guarantees that the power you are using comes from a renewable resource, such as wind or solar. However, the RECs you buy do not have to be generated in your state—they can come from anywhere in the U.S. For example, Iowa generates a large amount of wind power every year. No matter where you live, you can purchase and “use” this renewable energy.
Choosing where you buy RECs from can be an important part of your choice to support green power. Organizations and individuals can buy RECs from any supplier, which means that a company in Vermont can buy RECs generated in South Dakota. The company would save some money by doing so, because Vermont has a compliance market and South Dakota has a voluntary market. However, buying more expensive Vermont RECs would be a show of support for local renewable energy generation.
REC buyers must weigh these factors when considering their REC options. If you want to support local green power, call your supplier and ask if it has locally sourced RECs. If a low-cost option is more important, you may actively look to buy RECs from out of state. In states where fossil fuels are more common than renewable energy generation, buying RECs can help support the growing market.
How to buy RECs
If you are a customer of one of the 850 utilities in the U.S. that offer a green power program, you do not need to go through an outside supplier to purchase renewable energy. Instead, you can purchase RECs through your electrical utility. With green power programs, utilities buy RECs and charge customers a premium for the added cost incurred by them. Check with your utility to see if they offer this kind of program. Most green pricing premiums cost around 1 to 2 cents per kWh.
You can also purchase RECs directly from outside suppliers, bypassing your utility as the middleman. Green-e is an organization that certifies REC providers. Organizations with Green-e certification can guarantee that:
The RECs come from a new energy project, which means that you are supporting expanding the renewable energy market and not just satisfying a requirement.
The RECs are not “not double counted.” In other words, if you purchase RECs then they cannot also be counted towards meeting a state’s renewable energy goal.
