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Renewable Energy Certificates (RECs), also known as Green tags, Renewable Energy Credits, or Tradable Renewable Certificates (TRCs), are tradable environmental commodities in the United States which represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource. The following generation technologies typically qualify as producers of RECs: solar electric, wind, geothermal, low impact hydropower (small-run-of-the-river facilities, not ones that produce dams), biomass, biofuels and landfill to gas, fuel cells (only if powered by hydrogen produced by one of the above approved generators, not from fossil fuels).
These certificates can be sold and traded and the owner of the REC can claim to have purchased renewable energy. While traditional carbon emissions trading programs promote low-carbon technologies by increasing the cost of emitting carbon, RECs can incentivize carbon-neutral renewable energy by providing a production subsidy to electricity generated from renewable sources. It is important to understand however, the energy associated with a REC is sold separately and is used by another party. So when you purchase a REC you get only a certificate.
The market for RECs are driven state renewable portfolio standards (RPS) pursuant to which utilities must generate a certain percentage of their electricity form renewable generation sources. The RPS law also requires the grid operator to gant interconnection to the grid and to purchase electricity from renewable sources. For example, California requires electricity generators to produce 20% of their gneration from renewables by 2010, and New York requires 24% by 2013. These utilities may either develop their own renewable generation projects or may purchase RECs in order to meet their obligations under the RPS.
In the United States, a majority of states has enacted an RPS. RECs are also issued by power generators outside of any RPS framework, in which case the credits are purely voluntary, and their prices are generally lower.
In states which have a REC program, a green energy provider (such as a wind farm) is credited with one REC for every 1,000 kWh or 1 MWh of electricity it produces. For a 100 MW wind project with a capacity factor of 35%, and a REC price of $10/MWh, the sale of RECs will increase pre-tax revenue by approximately $3 million per year (100 MW x 35% x 8760 hours/year x $10/MWh). Such a project could supply power to approximately 32 thousand homes assuming residential consumption of 800 kWh/month.
State issued RECs are generally serialized in order to easily track and avoid double-counting and may be sold separately from the power generated, however voluntary RECs may not be assigned a serial number. The U.S. does not have a national registry, however, RECs are tracked by regional systems associated with regional grids such as WREGIS, NEPOOL, PJM GATS, ERCOT, and Midwest Renwable Trackgin System, and by private certification organizations such as Green-e, Environmental Resources Trust.
Legal Documentation Online Forum
SAMPLE DOCUMENTS
ABA-EMA-ACORE Master Renewable Energy Certificate Purchase and Sale Agreement
Texas State REC Agreements
Geothermal REC Purchase Agreement
Solar REC Purchase Agreement
Solar REC Purchase Agreement
OTHER RESOURCES
Windustry Community Wind Toolbox
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