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Understanding Renewable Energy Certificates

Written By: Warm Thoughts Communications on August 23, 2021

offsets and RECs new englandMost of us want to do our part to combat climate change within our own homes, but sometimes we don’t have the means or skills to make radical changes to our living space, like adding solar panels or otherwise installing our own windmills.

The good news is there’s another way to lighten the load on the planet without needing to dangle from your roof and invest thousands of dollars in equipment: using Renewable Energy Certificates, or RECs.

Why Have RECs?

As you probably know, the electricity that flows from the grid to our home can be generated by any number of sources, including wind farms and nuclear plants, among others. The problem is that there is no way to track where—and how—the energy that came to your house was generated.

A REC enables us to account for, track and assign ownership to renewable electricity generation and use. Each REC represents one megawatt-hour (1 MWh, or 1,000 kilowatt-hours) of electricity generated by one of these sources. Using RECs, utilities can keep track of how much renewable energy is generated and consumed by the market.

A Real-World REC Example

If the electricity in your home comes from a renewable source, such as a wind or solar farm, that farm earns one REC for every MWh of electricity it produces. The REC can be sold or traded (much like a stock) to another company, including that of electrical utilities.

So, for example:

The Advantage of RECs

The main advantage of RECs is that they provide a way to increase the use of renewables without having to invest time and money to install the hardware yourself. Purchasing RECs also indicates to the market that there is a demand for renewables, which therefore encourages greater investment in renewable energy infrastructure in the future.

What’s the Difference Between RECs and Offsets?

Both offsets and RECs represent the environmental benefits of actions that can reduce greenhouse gas (GHG) emissions. The difference between the two lies in what they measure: offsets represent a metric ton of emissions avoided or reduced, while RECs represent actions that result in one MWh of renewable electricity generation.

Offsets and RECs are fundamentally different instruments with different impacts, representing different criteria for qualification and crediting in the context of inventory or emissions footprint. To learn more about the differences between offsets and RECs, check out this document from the Environmental Protection Agency (EPA).

Should I Choose to Invest in RECs?

RECs are a good fit for you if you:

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