Invest in the Future with Renewable Energy Certificates

Feb. 22, 2011
Renewable energy certificates pad your green power portfolio and encourage development of renewables.

Even if you don’t have the space or funding to build your own wind turbine or install solar panels on your roof, you can still share in the development of renewable energy.

Renewable energy certificates, or RECs, provide documentation of the environmental benefits associated with 1 megawatt-hour of electricity produced from renewable resources, such as solar, wind, biomass, and geothermal. The business producing the electricity sells that energy back to its local utility, and in return, can receive an REC symbolizing its clean energy contribution. The Green Power Partnership, an EPA sub-agency that encourages renewable energy purchases, helped establish REC markets and publicize this green-boosting option.

"The point of the Green Power Partnership is to aggregate the demand side of the market, take commercial and institutional energy users, and encourage them to make voluntary purchases of green power above and beyond what’s covered by regulation," says Blaine Collison, Green Power Partnership director. "We can actually help accelerate the pace of new renewable energy generation in the United States."

The Energy Marketplace
Each certificate is assigned a unique identification number by the third-party regional tracking systems that certify and track RECs and green-power businesses in that area. Each tracking organization is associated with a regional electricity reliability council and has an ongoing relationship with local electric utilities and transmission system operators.

The facility generating the green power can choose to sell the RECs to the same utility that purchases its power (a process known as "bundling") or sell the certificates separately to the highest bidder.

"The money you spend on certificates goes right back to the developer," says Jeff Swenerton, communications director for the Center for Resource Solutions, a San Francisco-based nonprofit offering a certification program for renewable energy providers. "Without RECs, they’d be able to sell one thing for that megawatt-hour, which is electricity. Now they can sell electricity and renewable energy certificates. You can’t route electrons to a particular house, so what’s actually coming through the outlet won’t change, but they’re getting extra for the societal good they are producing."

RECs are bought and sold in two ways. The compliance market helps meet goals for buyers who are required to purchase a certain amount of renewables, such as companies located in states that enforce a renewable portfolio standard.

The voluntary market is made up of businesses and individuals seeking to buy renewable energy on their own. Some utilities will buy them on your behalf through an opt-in green power program; otherwise, anyone can buy RECs independently, sometimes online. The price can drop as low as $2-3; specifying the source or type of power you want to support (e.g. narrowing your search to wind farms in Iowa) drives up the price.

Buying an REC won’t change the source of what comes through your outlets, but it can boost research and development of greener technologies and allows purchasers to invest in clean power. Adding this extra financial incentive is key in steering the market toward cleaner sources of power.

"Power plant developers are profit-driven," Collison says. "RECs capture the preferred environmental performance of a wind farm vs. a coal plant or another fossil fuel plant. By putting an explicit economic value on it and making that value transactable, and therefore a revenue stream for power plant developers, it provides a direct market-based financial incentive for wind developers or solar developers to make more. If there is more profit available in building the wind farm than something else, the market will build the wind farm."

Joining the Club
Generating your own RECs requires you to develop a dependable source of renewable energy and feed it back onto the grid. Specific criteria can vary by certifying agency, but acceptable sources frequently include:

  • Wind
  • Solar
  • Geothermal
  • Biogas
  • Biomass
  • Low-impact small hydroelectric projects

It’s rare for a commercial business to have the room or funding to erect an on-site generator, but many still choose to buy a bundle of RECs on the voluntary market for reasons that vary widely, from branding to offsetting the company’s carbon footprint. The EPA’s Green Power Locator map can help you locate renewables close to home or find specific projects to support.

"Some buyers are hoping to drive new clean technology," Collison says. "It’s an issue of American technological leadership and creating a new homegrown electricity supply."

Janelle Penny ([email protected]) is associate editor of BUILDINGS.


About the Author

Janelle Penny | Editor-in-Chief at BUILDINGS

Janelle Penny has more than a decade of experience in journalism, with a special emphasis on covering facilities management. She aims to deliver practical, actionable content for facilities professionals.

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