Renewable energy sources have made their way alongside fossil fuels in the energy market. Therefore, it has become crucial to create a system for the sale and exchange of renewable as a unique category.

Renewable energy is indistinguishable from non-renewable once it is generated. Renewable and non-renewable energy enter the electric grid in the same form which makes it impossible to separate it from one from the other at the time of usage.

What differentiates the two?

Renewable carry additional market value apart from the energy itself. This converts into a buyer’s right and they can claim their product to be eco-friendly or green. Informing others that your energy comes from renewable sources could be used for marketing and promotional purposes.

Because of the increasing regulation of renewable energy by state and federal laws, it has become a useful tool to separate the non-energy attributes from the energy itself.

Renewable Energy Certificates (RECs)

RECs are also called energy credit or alternative energy credit. These represent the non-energy traits. One REC contains environmental qualities such as avoided carbon emissions and greenhouse gas reductions. These play a role in the generation of one megawatt-hour of renewable energy.

You can bundle, sell, buy, and trade RECs separately from the energy once it is generated.

Following are the resources that qualify for certification as renewable energy:

  1. Biogas
  2. Biomass
  3. Fuel cells with renewable fuels
  4. Geothermal
  5. Low-impact hydropower
  6. Solar and
  7. Wind

Using RECs

RECs are like a tool which are used to facilitate the exchange system within the energy market. It plays the role of a currency in energy market. But you cannot use RECs more than once. Using RECs means claiming to be eco-friendly and having green renewable qualities of energy by the REC-holder. REC is used when the owner makes a statement of identifying the energy as renewable.

REC is “retired” after it is used/claimed. This means that REC is pulled out of the system of exchange and does not carry value as an indicator of renewable energy.

Tracking Systems of RECs

It is difficult to regulate how, when, and where RECs are used as they lack any material component. To ensure that RECs are not mishandled or double counted, numerous regional tracking systems are present across the United States. They keep tabs on each REC using an identification number. One REC is retired, it is unusable.

Portfolio Standards

Majority of states have come up with mandatory programs which require electricity vendors to allocate a certain percentage of their power from the renewable sources. This is done to lift the renewable industry and move away from fossil fuels. These requirements differ from state to state and are called Renewable Portfolio Standards. Purchasing RECs is a way to meet RPS.

With the help of RECs, it has become possible to identify renewable energy’s unique qualities and use them within the bigger energy market. RECs play an important role in creating system directed towards environment responsibility.