Renewable Energy Certificates (RECs): Green Energy Explained

RECs represent the environmental benefits of electricity made from wind, solar, and hydro.

How they work: When a renewable generator produces 1 megawatt-hour of electricity, it creates two things: physical electricity that enters the grid (where it becomes indistinguishable from other sources), and one REC—proof that renewable energy was generated somewhere.

What a green energy plan does: Your supplier buys RECs equal to your consumption. This supports renewable generation financially, but it does NOT physically deliver renewable electrons to your home. The electricity flowing through your outlets comes from the same grid mix as everyone else's.

All electricity goes into the same grid. You cannot tell which electrons came from which source.

The problem: Once electricity enters transmission lines, tracking specific electrons is impossible. RECs solve this accounting problem by creating tradeable certificates.

Here's how it works in practice: A wind farm in Texas generates electricity and sells it to local customers. That same wind farm also sells RECs to a supplier in Massachusetts. The Massachusetts supplier then offers "100% renewable" plans backed by those Texas wind RECs. The customer's actual electrons come from the local grid (any source), but their purchase supports renewable generation elsewhere. It's an accounting system, not a power delivery system.

Tracking systems make sure RECs represent real renewable generation and nobody counts them twice.

The main tracking systems: PJM GATS (Generation Attribute Tracking System) tracks RECs in the mid-Atlantic region including Pennsylvania. NEPOOL GIS handles ISO New England, tracking Massachusetts and New England certificates.

How it works: Each REC gets a unique serial number at generation. Ownership transfers get tracked as certificates change hands. When someone uses a REC for compliance or voluntary claims, it gets retired permanently—no double-counting allowed.

Third-party verification: Green-e certification from the Center for Resource Solutions verifies that suppliers meet renewable energy marketing standards and confirms proper REC retirement. Look for this certification when evaluating green energy claims.

Not all RECs are worth the same. Value depends on source, location, and age.

By source: Solar RECs command premium prices because of higher generation costs and policy support. Wind RECs generally cost less thanks to competitive economics.

By location: In-region RECs from local renewable projects often cost more. National RECs from distant generators are generally cheaper since there's more supply.

By age: RECs represent generation from specific time periods. Some programs require recent-vintage RECs generated within the past year. Others accept older certificates, which typically cost less.

State renewable requirements create demand that affects prices in different markets. A solar REC in Massachusetts commands different pricing than one from Texas.

REC-backed plans and direct renewable energy are not the same thing.

RECs: They support renewable generators financially through additional revenue, but your home still receives grid electricity from all sources including fossil fuels. RECs from existing projects may not fund new renewable development—they just provide additional revenue to projects already built.

Direct renewable: Rooftop solar panels create a physical connection to a renewable source. Community solar subscriptions mean local solar feeding your specific meter. Corporate power purchase agreements directly fund new project construction.

Here's the key difference: RECs are accounting tools. Direct renewable energy delivers clean power to your meter. Both support the renewable industry, but in fundamentally different ways.

People argue about whether buying RECs helps the environment.

Supporters say: REC demand increases renewable generator revenue, improves project economics, and encourages new investment. Every purchase signals market demand for clean energy.

Critics say: Oversupplied REC markets have low prices that provide minimal financial incentive for new development. You might be supporting existing projects without driving growth—the wind farm was already built regardless of your purchase.

The truth: Impact depends on REC prices (higher means more generator support), market conditions (supply vs. demand), and whether purchases drive additional construction.

To maximize impact, buy premium RECs or contracts that fund new projects, not cheap certificates from generators that would exist anyway.

Scrutinize green energy marketing to understand what you're purchasing.

Ask suppliers: Does the plan use RECs, direct renewable supply, or hybrid approaches? Are RECs from in-region sources or distant national markets? Is there Green-e certification or equivalent third-party verification?

Compare prices: Put green plan pricing against standard plans. Some suppliers include renewable content without premium pricing. Others charge significant premiums for identical REC-backed products. The product might be the same, but the markup isn't.

Read the terms to understand: What does "percentage renewable" mean? How are claims substantiated? Are you supporting new or existing projects? These details determine whether your green premium moves the needle.

Want to make a bigger environmental impact? Look beyond basic RECs.

Higher impact options: Community solar programs credit direct renewable energy to your account from local installations. Rooftop solar eliminates grid reliance entirely for covered consumption. New project RECs specifically fund renewable development rather than just supporting existing generators. Carbon offset programs offer alternative approaches to addressing emissions.

Think about your total footprint: Efficiency improvements that reduce consumption matter as much as supply choices. A combined approach—use less energy AND choose renewable supply—delivers maximum impact.

The best strategy isn't just buying green energy. It's using less energy overall while supporting clean energy growth with the power you do use.