Selling renewable energy credits is a new and interesting market. Here is some information about selling renewable energy credits and a basic understanding of the market.
Renewable Energy Certificates (RECs) are frequently referred to as Green Tags, Renewable Energy Credits, and/or Tradable Renewable Certificates (TRCs). RECs represent the environmental and economic value of electricity produced from clean, renewable, emission-free energy resources that will never be depleted and are safe for our environment. The REC is not actual energy, just the right to say that you have offset the production of dirty power for clean power.
Producers of green power should consider selling renewable energy credits as well as the power itself, which will increase their profits. Other parties can buy RECs if they need to satisfy regulatory requirements or improve their corporate appearance. When RECs are sold, the organization buying the RECs obtains the right to claim environmental advantage.
RECs allow energy users all across the country to support alternative energy generation. RECs contribute to the growth of the renewable power sector, and with buyer support will continue to help make alternative power even more cost competitive.
In areas which have a REC program, an alternative energy provider (such as a wind farm) is credited with one REC for every 1,000 kWh or one MWh of electricity it creates. The average residential customer uses about 800 kWh per month. A certifying organization gives each REC an exclusive identification number to make sure it isn't sold twice. The green energy is then fed into the electrical grid (by law), and the complementary REC can then be sold on the open market.
Several certification and accounting associations attempt to ensure that RECs are correctly tracked and confirmed and are not sold more than once.
There are two main markets for RECs in the United States - compliance markets and voluntary markets.
A policy called the Renewable Portfolio Standard (RPS) is responsible for creating the compliance markets. Renewable Portfolio Standard requires electric companies to supply a predetermined percent of their electricity from renewable sources by a specific year.
For example, California electric companies must provide 20% energy from renewable sources by 2010. Electric utilities in these areas with RPSs must demonstrate compliance with their requirements by buying RECs. In the California sample, the electric companies would need to hold RECs equivalent to 20% of their sales.
Want to help companies and property owners go green? Sell your RECs on the voluntary market. Voluntary markets allow customers choose to purchase renewable power, generally out of a desire to go green. Most commercial and domestic purchases of RECs are voluntary. Alternative power providers can sell their RECs to voluntary buyers, usually at a lower price than compliance market RECs.
Detractors indicate a flaw with this system. The problem in this system is that it does not necessarily replace dirty energy. Since some alternate energy resources, most notably wind resources, are irregular and unpredictable, their production does not replace an equivalent amount of other sources, per kW of capacity. However, they do replace on a per kWh basis, electricity from combustion sources, thus reducing greenhouse gases and undesirable byproducts.