What are renewable energy certificates?

 what are renewable energy certificate




What are renewable energy certificates?


In the beginning there was electricity and Thomas Edison, said let there be light. Ever since then, we’ve been looking for new ways to generate electricity.

Of course it was Nikola Tesla who invented AC current that we use today.

The very first electric generator was built at Niagara Falls, New York. It was a “green energy” source. It was a hydroelectric plant.

Other electric generation plants were built to run by burning coal and then natural gas. Although natural gas is quite clean when burned, the coal plants billowed tons of pollutants into the air. The EPA mandated that coal burning plants should emit fewer and fewer pollutants, over the years. The “scrubbers” that are being used these days clean the pollutants of of the emissions so well that coal burning plants emit mostly carbon dioxide and water vapor.

It is this carbon dioxide that is being labeled as a “greenhouse gas” and is thought to be detrimental to the health of the planet.

With that in mind, people began to look for “clean” ways to generate electricity. Aside from hydroelectricity, there are now solar panels and wind turbines, to generate “clean electricity.”

Hydroelectricity is cost effective. Meaning that it is much cheaper to produce the electricity than it costs to build and run the hydroelectric plant. In short, it is profitable.

Now for the bad news. Solar and wind power are not profitable. Why would anyone go into the solar or wind power generation business, if it just losses money?

How long could one stay in business if you are losing money day in and day out?

This brings us to the answer to our question, what are renewable energy certificates?

What are renewable energy certificates and the EPA?


In the late 1990’s, the EPA came to the rescue of those who were interested in generating “clean energy.” They invented the renewable energy certificate, also known as a REC.

The following is the easiest and most understandable way that I know to explain why the EPA came up with RECs.

The EPA allows for the creation of a renewable energy certificate each time the “clean energy” plant generates 1000 kilowatts of electricity. The RECs can be sold on the open market. I’ll tie all of this together at the end, but for now, know that the payments received for the RECs allow the “clean energy” producers to run at a profit. This allows them to stay in business and continue to generate “clean energy.”

what are renewable energy certificate

What are renewable energy certificates and the electric grid?

Whether it is solar power, wind power, coal or natural gas power, when any kind of electric plant produces electricity, it is producing a stream of electrons. That’s all electricity is, a flowing of electrons through the wires.

For this explanation, we’ll say that there are 4 electric plants. One is solar, one is wind, one is coal and the last is natural gas. As they all generate electricity, the electrons are moved into the electric grid. The grid is where all electricity goes. It is then moved to you as you use it to run your home or office.

For simplicity’s sake, the electricity will be represented by blue marbles. The electric grid will be a really big box. Then there are a lot of wires coming out of the box that go to your homes and offices.

All 4 plants fire up and are generating electricity, the blue marbles are moved into the really big box. Then the customers use the electricity, so the blue marbles move along the wires to their destinations.

Now this is where it gets confusing.

All of the blue marbles, in the box, look and act the same. Electrons are electrons. There is no way of telling where the electrons came from. There is no way to tell who used those electrons that were generated at the solar or wind plants. What are we supposed to do?

This is where the renewable energy certificates come to the rescue.

RECs serve two purposes. One has been explained, above. They are used to subsidize the production of “clean and renewable energy.” The other is to designate who “used” the “clean” electricity.

That’s right, if you want to be “green,” you just need to purchase a renewable energy certificate. You then can lay claim to having used the electricity that was generated by the solar or wind plants.

Your current energy provider may have given you the option to use electricity that is 20% “green.” All they are doing is purchasing RECs.

what are renewable energy certificate

The lifespan of a REC is approximately one month, as the average household uses about 1,000 kilowatts per month. The REC is then retired. You would need to purchase another REC for your next month’s electric needs.

There is a company called, Green-e Energy that audits the generation, sales and use of RECs. This assures the purchaser of the REC that it is used only one time and not resold over and over again.

If your goal is to be a “green energy” user, your best bet is to buy the cheapest electricity that your electricity provider offers and purchase a monthly REC subscription.

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