White Papers RPS and RECs – Managing an Increasing Regulations | 页面 2

RPS and RECs – Managing an Increasing Regulatory Burden

A ComTech Advisory Whitepaper

“While the use of Renewable Energy Certificates, or RECs, is an effective
method of allocating the cost of Renewable Portfolio Standards (RPS)
across the breadth of the market, the tracking and administration of those
certificates places a significant burden on power suppliers, particularly
smaller utilities such as municipals and cooperatives. As these standards
increase in scope and amount of renewables mandated, the burdens
increase proportionally, leaving many of these companies unable to
effectively manage their business and regulatory requirements on
spreadsheets.”

Introduction
Renewable energy certificates or ‘RECs’ have become the currency of the renewable or green power industry,
allowing power providers to expand their product offerings and offer ‘green’ power irrespective of whether or not
they can physically generate it. Consumers can also be assured that should they choose to buy renewable power, in
support of the renewables suppliers servicing the market, that the power they use has either come directly from a
renewable generator, or if a renewable generator is not servicing their facility, that it is offset in the market by power
from a renewable source, such as wind, solar or hydro, in another geographic area.
Essentially, as described by the US EPA, a “REC represents the property rights to the environmental, social, and other
nonpower qualities of renewable electricity generation. A REC, and its associated attributes and benefits, can be sold
separately from the underlying physical electricity associated with a renewable-based generation source.”1 It is the
separatability from the underlying physical electricity that actually creates the value and benefits for both the
producer of green power, whose investment is supported by selling RECs, and consumers who wish to enjoy the
benefits of green power but who may not have direct access to renewable power due to their physical locations.
The driving force behind the development of the REC and its underlying market has been the development of state
level renewable portfolio standards or RPS. These either 1) mandate a certain level of electricity servicing the
markets in that adopting state be from renewable sources, or 2) set voluntary goals for electricity sold in the states

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http://www.epa.gov/greenpower/gpmarket/rec.htm

Copyright 2014, Commodity Technology Advisory LLC

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