Renewable Energy Certificate - REC
Categories: Tech, Regulations
Renewable Energy Certificates (RECs), or Green tags, Tradable Renewable Certificates, are tied to units of “green” electricity. Businesses can buy and sell RECs in the marketplace like any other commodity. Each REC is 1 megawatt-hour of energy from a renewable source that’s been pumped into the electrical grid.
Why would you want to bother paying for a REC as a business? Because REC holders get production subsidies. It’s a positive incentive for businesses to get on the renewable energy train.
RECs are born at renewable energy plants, where the energy is initially pumped into the grid. Solar, wind, geothermal, hydropower, biofuels...you get the picture. From there, they can be sold on the open market to whomever wants production subsidies. Plus, saying your business is “going green” doesn’t hurt either...for some businesses, anyway.
In this way, RECs are similar to carbon emissions trading, since it puts green incentives into a marketplace of buyers and sellers. The government is trying to market-ize and move the country along towards more sustainable energies. Unlike carbon trading though, RECs are all positive; there’s no penalty for not having RECs. Just benefits if you buy them.
