Renewable Energy Certificates

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Revision as of 14:20, 26 July 2008

Renewable Energy Certificates (RECs) are environmental commodities that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource. These certificates can be sold and traded via an open public market.

The owner of RECs can claim to have purchased renewable energy. While traditional carbon emissions trading programs promote low-carbon technologies by increasing the cost of emitting carbon, RECs can provide incentives for carbon-neutral renewable energy by providing a production subsidy to electricity generated from renewable sources.

In states which have a REC program, a green energy provider (such as a wind farm) is credited with one REC for every 1,000 kWh or 1 MWh of electricity it produces (for reference, an average residential customer consumes about 800 kWh in a month). A certifying agency gives each REC a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying REC can then be sold on the open market.

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