What are Renewable Energy Certificates?

When a renewable energy facility generates electricity, it makes two things: electricity and Renewable Energy Certificates (RECs). RECs represent the environmental benefits of renewable energy.

For example, producing electricity from solar panels does not create harmful air pollutants, which means a benefit for the environment and human health. One REC represents the environmental benefits of one megawatt-hour of renewable electricity. RECs are often sold separately from the electricity. These RECs are usually bought by consumers through voluntary programs or by utilities as a result of state regulatory requirements.

Renewable Energy Generators (like a wind farm or solar panel array) produce electricity and RECs. REC Suppliers purchase the certificates and resell them to customers and utilities. The Consumers still get electricity from the grid, but they can also purchase the RECs to support renewable energy.

Consumers can purchase RECs as a way of supporting renewable energy. Most consumers get their electricity from the grid, which is made up of a mix of electricity from all the generators in an area. Because the grid is a mix, consumers cannot directly purchase renewable energy through the grid. By buying RECs, consumers are insuring that renewable energy continues to be put into the grid.

Utilities in Massachusetts are required to provide customers with minimum levels of electricity generated from "new" sources (i.e. "new" is defined as renewable energy facilities built since 1997). Utilities can meet these requirements by purchasing RECs or paying a penalty. Massachusetts law requires all utilities to match 3.5% of the load they deliver in 2008 with new sources.