Want to add renewable energy to your building but don’t have the funds or desire to invest in your own system? Renewable energy certificates (RECs) allow you to offset a percentage of your megawatt-hours with zero-emissions electricity without the capital expense of adding on-site generation.
Refresh Your Sustainability Profile
Renewable energy certificates are an attractive alternative if you don’t want to rip up your parking lot to add geothermal wells or have the right roof to support solar panels. These energy purchases carry all of the advantages of clean power without the trouble of generating it yourself.
“A renewable energy certificate embodies the environmental benefits of a megawatt-hour of electricity generated from a renewable source,” says Jeff Swenerton, communications director for the Center for Resource Solutions, a nonprofit for climate change solutions and program administrator of the Green-e verification program, the only independent standard for renewable energy certificates.
A REC is simply an offset, not the electricity itself. Your property could be thousands of miles away from the point of generation, such as obtaining your REC from a wind farm in Oklahoma when your building is located in New York. The renewable electricity enters the grid and mixes with power from other sources – while the energy is used within the region of origin, the REC ensures only your company gets credit for its sustainable attributes.
“Contributing toward RECs also provides developers with a revenue stream that improves renewable energy project economics, which increases their competitiveness with fossil fuels such as coal and natural gas,” emphasizes Edward Malesevich, a sustainability advisor for Transwestern, a commercial real estate firm.
Before you embark on a green power purchase, however, make sure you don’t have any improvement projects remaining in your facility that could decrease your energy spend.
“We always encourage energy efficiency first,” Swenerton stresses. “If a building manager has a limited number of dollars to spend on electricity issues, they need to prioritize reducing their consumption.”
A Win-Win for Clean Energy
Start by establishing which percentage of your energy load you want the REC to fulfill. Many companies elect a full 100% offset, while others will secure lower ratios appropriate to their budget. You can also designate which region or type of source the RECs are from, though you may sacrifice price for these restrictions, notes Swenerton.
Transwestern uses RECs widely throughout its portfolio. Property managers can offset 25%, 37.5%, 50%, 62.5%, 75%, or 100% of their energy usage for a two-year contract, Malesevich explains. Green power purchasers are typically office buildings with mixed use spaces, such as restaurants or retail.
“Our properties choose to source off-site renewable energy as a strategy to mitigate the environmental impact of their energy use and earn points towards LEED certification,” he adds.
Your offset level will also influence certificate costs. While price can vary between providers, there’s a lot of competition to secure contracts, Swenerton says: “There’s no NASDAQ ticker for the price of RECs – they’re all bilateral transactions, which are individually negotiated trades.” Because of this dynamism across the REC industry, owners should shop around before selecting a provider.
“We encourage properties to first contact their local utility provider to see if renewable energy sources are available directly,” says Malesevich. “If local power isn’t an option or the premium is too high, we suggest contacting preferred providers through Green-e. As the price for RECs can fluctuate on a regular basis, providers are typically selected based on how competitive their rate is.”