What Are Renewable Energy Certificates?

Renewable Energy Certificates (RECs), or renewable energy credits, are environmental financial products that provide evidence that energy has been generated from a renewable source, such as solar or wind power.

A REC proves that the bearer owns the environmental attributes associated with one megawatt-hour (MWh) of electricity generated from a renewable source, which is about equivalent to the amount of electricity used by about 330 homes during one hour.

When a certificate is retired, the party executing the retirement can claim the green or environmental attributes – they can then match the retired certificates with electricity consumed (in the same region and time period) and claim the use of emission free electricity for the matched amount.

How renewable energy certificates work

RECs allow for significant flexibility in the climate and energy markets, as those without direct access to renewable energy sources can purchase these certificates and fund environmentally-friendly sources of energy.

When producers of green energy sell a REC, they are essentially selling the “green bragging rights” to the renewable energy they produced, but they get to keep and use the actual energy – either for their own consumption or to sell to the grid.

Buyers of RECs, on the other hand, are buying the green or environmental attributes – essentially they can claim that they have funded and used renewable energy equal to the amount of RECs purchased and retired.

The benefits of RECs

1. Access to emission-free electricity

One of the principal benefits of Renewable Energy Certificates is that entities can benefit from renewable energy without installing power systems on-site or having direct access to sources of renewable energy. For example, if a business has offices in several locations, the use of RECs provides evidence that the company is powered by renewable energy despite not having direct access to these sources of energy.

2. Encouraging more renewable energy production

Purchasing RECs supports the development of renewable energy infrastructure by providing energy producers with an additional revenue stream, making the development and operation of renewable energy assets more appealing.

3. Helping organisations achieve ESG goals

Buying a REC as an organisation demonstrates environmental leadership. It provides a clear message that environmental practices are a high priority, which can appeal to the values of partners, investors and customers alike.

A new kind of renewable energy certificate: the dREC

A dREC™ is simply a digital representation of a renewable energy certificate that is permanently tied to verifiable digitally-captured data.

Our sustainability data management software, Allinfra Climate, creates digital versions of RECs. Through our suite of smart contracts, we create dRECs that track and store all relevant asset, underlying power and certificate information.

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Is your organisation looking to purchase dRECs to meet sustainability goals? Or are you an energy company looking for a more efficient way to collect, record and monetise production data? Either way, we can help. Get in touch with our team for a demo of Allinfra Climate.