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What is a Renewable Energy Certificate?

Rhythm Team on Friday, July 9, 2021

Electricity is invisible and moves at lightspeed. So, it makes sense that, when electricity enters the grid, there’s literally no way to track where it goes. The electrons that power a home could have been created by some coal from West Virginia today and from a little sunshine from the Sunshine State tomorrow. It’s a great way to ensure that the grid is always flowing with energy for us to use, but there’s one downfall to it: How do we track when renewable energy enters and exits the grid?

Enter: Renewable Energy Certificates (RECs).

What are Renewable Energy Certificates?

Renewable energy certificates, also known as RECs, are tradable, invisible, non-tangible energy commodities that verify that one-megawatt hour of electricity was generated from a renewable energy source like wind, solar or hydro. RECs allow us to measure progress on clean energy. Think of it as a receipt, ensuring the benefits associated with renewable energy.

How do RECs work?

When electricity is produced by renewable generators, it enters the electric grid—essentially taking the place that dirty energy could have been. But electricity isn’t the only thing that these renewable energy generators create—they also create RECs. For each MWh of electricity, the renewable energy generator produces, exactly one REC is created. Renewable energy companies—like Rhythm—can buy these RECs to verify that the energy their customers use is backing renewable energy sources.

Who benefits from RECs?

First, the planet. There are surefire environmental benefits. Purchasing RECs ensures that you’re doing your part to green the grid and reduce emissions to save the planet. Second, the economy. Renewable generators not only make money from the electricity they produce to power homes and businesses, but they also make money from selling RECs. These immediately help offset upfront costs of developing renewable energy projects, maintenance, and it leads to job growth. Renewable generators are way less expensive than fossil fuel generators to run, so, once built, those generation cost savings get passed through to customers in the form of lower electricity rates. RECs help make future endeavors become realities.

In that way, choosing renewable energy plans backed by RECs can be thought of as a way of investing in a cleaner, more opportunistic future.

Categories: Energy Explained
Tagged: rec, renewable energy, go green, renewable energy certificate, energy explained, green energy

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