Renewable Energy Credits (RECs) have long been a go-to product for companies looking to satisfy renewable energy goals and carbon reduction metrics. Historically, RECs have been an appealing option due to the low cost and ease of purchasing compared to more complex, and often capital-intensive, renewable energy projects such as onsite solar. If you’re currently following the REC market in anticipation of buying RECs, however, you’ve probably noticed a steady climb in pricing. Over the past 15 months, the cost of a Green-e^® Certified REC has risen from roughly $1 per REC to almost $8 per REC. Just two years ago, the same RECs were selling at closer to $0.50 each.

If you are one of many organizations across the country looking to purchase RECs to meet carbon reduction requirements but don’t want to break the budget with climbing prices, it may be time to consider renewable energy alternatives. In this article, we provide an overview of RECs and some possible alternatives to buying RECs which may be more beneficial to your business.
 

A Brief Overview: What are RECs and How Do They Work?

One REC represents one megawatt-hour (MWh) of renewable electricity that is generated and delivered to the grid, which in turn reduces average grid emissions. Electricity enters the grid via many different sources; from wind and solar power to natural gas and nuclear power. Buying RECs provide certified proof that your organization is using renewable energy from the grid without having to install solar panels or another renewable energy system on your property.

If a solar array produces 5 MWh of electricity, for example, it has 5 credits to either keep or sell. If your business buys those 5 RECs, you are buying the “renewable” attribute of 5 MWHs of electricity from the solar producer and you can claim that 5 MWh of your company’s electricity usage came from a renewable source. Click here to learn more about buying and selling RECs.
 

About Green-e^® RECs and Escalating Prices

Purchasing Green-e^® RECs has historically been the easiest and one of the most cost-effective ways for an organization to meet renewable energy and decarbonization goals. Green-e^® is the governing body that tracks and retires certified RECs. Green-e certified RECs must come from renewable resources that are less than 15 years old. Most Green-e^® RECs falling under the Green-e Any or Green-e^® Wind product come from wind resources in Texas. With increasing corporate demand for renewable environmental attributes to meet carbon reduction goals, RECs have become a scarce resource. The environmental attributes from new wind and solar plants are being bought outright as part of their development. In addition, we have seen REC-generating facilities reaching 15 years of being in-service age. A reduction in the availability of Green-e^® RECs has put significant upward pressure on prices, forcing companies to look elsewhere to meet renewable metrics.
 

Clean Energy Alternatives–Beyond RECs

Most large, publicly traded and privately held organizations have developed or are developing decarbonization goals. Part of an organization’s goal is often to have a percentage of their energy consumption come from renewable sources. In response to escalating renewable energy credit pricing in today’s market, many organizations are considering other clean energy options.

For some organizations, continuing to purchase Green-e^® RECs, regardless of the increased cost, is still the best avenue to demonstrate a commitment to renewable energy. Other organizations are turning to carbon offsets, purchases from offsite renewable projects and/or onsite renewables as a cost-effective option for making environmental claims.
 

Carbon Offset Programs

Carbon offsets are another product you can buy for making environmental claims in addition to, or in place of, purchasing RECs. Carbon offset programs allow companies to invest in local or international carbon offset projects to balance their organization’s carbon footprint. There are a variety of accredited carbon offset projects and initiatives to help organizations decarbonize their operations. Many companies choose a carbon offset program based on the type and quality of the project offered, the longevity and transparency of a program, whether the program is third-party verified, a program’s causes such as protection of natural resources, prevention of deforestation, or promoting greater social justice.
 

Offsite Renewable Energy

There are many benefits to utilizing offsite renewable energy sources, not the least of which is ownership of the environmental attribute. Offsite renewables, such as wind and solar, can help reduce electricity costs, provide greater budget certainty, mitigate energy market price risk, and help your organization meet its energy goals. In some cases, it is more cost-effective and better aligned with sustainability goals, to purchase renewable energy along with the environmental attribute directly from a new off-site facility.
 

Onsite Solar Energy

Investing in a commercial solar installation is another viable alternative for many organizations. Onsite solar installation is a great option for medium to large-sized businesses – and solar is scalable so you can start small and increase your solar installation if your business and energy demand grows. Commercial solar panels can be installed on company-owned rooftops, ground-mounted on your land, or erected as canopies over property or parking lots. Click here to learn more about whether solar energy is right for your business.
 

Getting Started

If your organization is considering setting decarbonization goals or making a commitment to renewable energy but you’re not sure where to begin or who to trust, an advisor may be able to provide the insight and direction needed to make better-informed decisions and transition to a new and sustainable energy strategy.

Usource is part of the NextEra Energy family of companies, the world’s largest producer of wind and solar energy. As part of NextEra Energy, Usource is uniquely positioned to analyze, facilitate and execute on innovative renewable energy projects to ensure that each client’s energy strategy meets their unique business goals and decarbonization objectives.

We work with large organizations and institutions to help each assess their current energy usage and budget, review carbon emissions reduction and sustainability goals, and source traditional and renewable energy options that can meet the unique needs of your organization.