Published by SuSca Group
Content Outline
Overview of Renewable Energy Certificate
Overview
WHAT ARE RENEWABLE ENERGY CERTIFICATES (RECS)?
A REC is a digital certificate that evidences the generation of 1 megawatt-hour (MWh) of electricity using renewable sources of energy. It includes factual information to track the source of generation, and also captures all associated environmental benefits for onward use and disclosure by the REC buyer. RECs evidence the source of electricity generation. By capturing this information in a unique digital certificate, the associated facts and environmental claims can be transferred from power producer to end consumer of the REC.
Content
RECs enable electricity buyers to identify and select the source of generation from which they purchase electricity, and demonstrate ownership of the associated environmental attributes. They are used to make electricity consumption claims.
WHAT INFORMATION DO RECS CAPTURE?
RECs tell us important details about the sources of renewable electricity, such as:
- The type of renewable resource used to generate electricity (fuel type)
- Where it was produced (including locational coordinates)
- When it was produced (vintage, which is most often measured in years, but can be as granular as 15-minute intervals of generation)
- Who produced it (legal entities such as power generators)
- What facility or asset generated the power (and its physical characteristics, such as nameplate capacity and other technical specifications.
WHO USES RECS?
1. Voluntary buyers
Businesses or other entities can choose to buy RECs because they want to support renewable energy and show they are using it in a transparent and uniform way.
2. Compliance users
In some countries, laws may require certain businesses or utilities to use renewable energy. Common laws include renewable portfolio standards (RPS’), which obligate specified entities to use RECs to demonstrate compliance with laws or regulations.
REC TRANSACTIONS
* More details on procurement structures can be found in the Transactions topic.
RECs can be bought and sold. This process allows buyers to claim they are using green electricity, even when physical power comes from a grid with mixed sources of generation.
Bundled and Unbundled: RECs are either sold with the electricity, or separate from it.
Bundled
When sold/purchased together, the transaction is called “bundled”. Common bundled transaction structures include power purchase agreements (PPAs), green electricity tariffs (where electricity and RECs are sold together by a utility or retailer), and self-consumption (where an entity produces and consumes electricity). Under bundled transactions, RECs are used as evidence documentation.
Unbundled
When bought/sold separately from electricity, the REC transaction is “unbundled”. Unbundled sales are those in which an entity purchases electricity from one source (such as the utility) and separately purchases RECs.
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