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Solar Energy, Electrons Sold Separately?
Dec21

Solar Energy, Electrons Sold Separately?

Introduction to Renewable Energy Certificates (RECs) Renewable Energy Certificates (RECs), commonly referred to as “Green Tags,” help states meet their Renewable Portfolio Standards (RPS) and other renewable energy mandates.  As state RPS requirements call for utilities to procure specific percentages of the energy they provide from renewable sources, RECs are gaining traction as a convenient opportunity.  This post will provide a brief introduction to RECs are and how they can be used.   Renewable Energy Certificates (RECs) A Renewable Energy Certificate, also known as an REC, is the legal ownership of the “clean” qualities of 1 MWh of electricity that’s generated from renewable energy sources.   When electricity is generated by a qualified renewable source like solar, something really cool happens.  Two commodities are generated:  the electricity itself and the clean qualities of that electricity.   Electrons are the same whether they’re produced by photovoltaics or fossil fuels, so the electrons from the renewable source can be sold just like any other electricity.  The rights to the properties associated with this generation, however, can sometimes be traded independently.  This is where Renewable Energy Certificates come into play. One REC is equal to 1 MWh, or 1000kWh of the clean characteristics of electricity that’s produced by the renewable source.   In the case of Solar Renewable Energy Certificates, or SRECs, this would be the “solar” attribute of the electricity generated by the solar panels.    A clean energy provider receives one REC for each MWh that their facility produces, which they can then sell.   After purchasing an REC, these clean characteristics can be legally claimed by the purchasing party.  RECs basically allow the customer to acquire the environmental benefits of renewable energy in measurable quantities.    Though the ownership of these certificates is tracked by renewable energy tracking systems such as M-RETS (Midwest Renewable Energy Tracking System) and/or WREGIS (Western Renewable Energy Generation Information System), the qualities associated with RECs are intangible so they don’t have to be restricted by geographical location in the same way as the actual electricity.  The clean qualities of the REC will sometimes have to be bundled with the actual electricity, but in theory they don’t necessarily need to be.  The extent to which RECs transcend these physical limits does depend on legislation, but we’ll see how REC markets play out with legislation in the coming years. In renewable energy certificate markets, facilities are used to keep track of the certificates. Every MWh that is generated is given an identification number so it cannot be used twice or by more than one party.  After a certificate is claimed by its rightful owner, is considered to be “retired” and cannot...

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Basics of Renewable Energy Certificates

The solar or wind power system you install on your home or business generates two things. The obvious is electricity although it also produces something most consumers don’t know of, Renewable Energy Credits (RECs) also know as “green tags.” For example, since the solar panels you install generate electricity that does not hurt the environment or human health, that benefit is an asset which are usually purchased by consumers because they want to be more “green” or by utilities as a result of regulatory requirements. One REC represents one megawatt-hour of renewable electricity. If your state does not offer rebates, you maybe still be able to earn income from your solar power system by selling the RECs your system generates. In 2007, a 2.5 kW solar electric system could earn about $140 per year in REC sales. Currently, REC pricing is unpredictable, although the value for RECs are expected to rise in the future, as legislation is passed to set a national cap on carbon emissions. In 2008, in the utility market RECs sold in a range of $20-$30. Check the map below to see if you live in a state that has a REC trading program in place. Want to learn more about green tags? Click on this...

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