Who issues Renewable Energy Certificates (RECs) in the US and Canada?

What are Renewable Energy Certificates (RECs)?

Renewable Energy Certificates (RECs) are tradable instruments that represent the environmental benefits associated with one megawatt-hour (MWh) of renewable energy generation.

When renewable energy is produced, it generates two products: the electricity itself and the environmental attributes, such as reduced greenhouse gas emissions. RECs quantify and track these benefits, enabling consumers, businesses, and organizations to support renewable energy and achieve sustainability goals.

Regional boundaries: what are the different energy tracking systems in the USA and Canada?

There are ten energy tracking systems active in the United States and Canada. Also known as registries, they facilitate REC issuance and trading, ensuring each MWh of electricity is only bought and claimed once. Each registry governs a different state or region, while some allow issuance and transactions in states without their own system.

The Western Renewable Energy Generation Information System (WREGIS) is the most widespread registry, covering virtually every state west of the Rockies. Others, such as Ohio, Indiana, and Illinois, have two systems operating simultaneously. Moreover, renewable energy producers in states like Georgia or Florida may register in systems outside their geographical limits, like the Midwest Renewable Energy Tracking System (M-RETS).

Why are there multiple renewable energy tracking systems in North America?

Energy tracking systems emerged from the necessity to document renewable energy production to reach state-mandated goals.

Most states have a regulatory policy known as a Renewable Portfolio Standard (RPS), which mandates the share of renewable electricity power suppliers should provide. That share, of course, must be tracked. So, states developed registries – on their own or with neighboring states – to issue RECs within their geographical limits.

Electricity suppliers then purchase these RECs to reach obligatory quotas. If the mandated percentage is 50%, they must buy a volume equivalent to half of their offering. Once the compulsory purchases are made, the rest of the available RECs go to the voluntary market, where companies can procure renewable energy to achieve their self-imposed targets.

Thus, we have two markets – mandatory and voluntary – where similar RECs can be priced very differently.

How to buy RECs at a low price, and why are registries important?

When buying a product is compulsory, the price of said product is bound to be high. Compliance RECs can be ten times as expensive as voluntary certificates, which can also impact the cost of the second.

RECs that are not sold in the compliance market are offered to voluntary buyers. However, the volume that makes it to the voluntary space depends on each state. In states with ambitious RPS, like California and Oregon, not many certificates are left for voluntary purchasers. Demand from corporate buyers of renewables also tends to be highest in these areas, which drives the price of limited voluntary RECs up.

Conversely, states with a high production of renewable energy and low or non-existent RPS tend to have an abundance of low-priced voluntary RECs. Corporate buyers can then use this as an opportunity to source documented renewable energy at a lower cost.

Can RECs be transferred across registries?

While transferring RECs between different registries is theoretically possible, the options are limited. Each registry operates independently and has its own set of rules, procedures, and regional boundaries. So, restrictions apply.

Take Ercot, for example. The registry that serves Texas allows for the export of certificates to other states, while it does not permit imports.

These differences, however, also allow voluntary corporate buyers to adapt their clean energy strategies and maximize their impact. Some can choose to source as close as possible to their operations. Meanwhile, others might buy RECs issued in other states to support renewables in dirtier grids.

Considering the limits, rules, and characteristics of the different energy tracking systems in the USA and Canada can open opportunities for voluntary consumers. Having the right information to tailor a strategy according to each company’s needs can prove valuable as organizations navigate the landscape.