White Papers RPS and RECs – Managing an Increasing Regulations | Page 3

RPS and RECs – Managing an Increasing Regulatory Burden
from renewable sources. As

A ComTech Advisory Whitepaper

Figure 1

of early 2012, 30 States and
the District of Columbia had
either

RPS

or

mandated

similar

renewable

programs; in addition, a
further seven states had
established voluntary goals
(Figure 1)2.
Under the current mandatory
RPS programs, it’s estimated
that

the current market

requirements are for up to
140

MWh

power,

of

which

renewable
by

some

estimates is expected to grow to over 200 MWh within a couple of years. Much of the demand for meeting these
renewable portfolio standards will be met by the renewable generation resources within the states; however, even
within those state boundaries, physical renewable power may not be available on the gird for a particular marketer
or utility due to geographic constraints. By utilizing RECs, that marketer can still offer consumers the option of
certifiable green energy, or the regulated load serving utility in that state or region can meet their mandated
renewable obligations.

How do RECs work?
Renewable power generators produce two separate products - physical power and flows to the grid and RECs. With
every 1,000 kwh produced, a new REC is created by that generator, and once created, the generator can bundle
transfer the REC with the produced power, essentially certifying that power as a renewable product and receiving
the premium that accompanies that designation. Alternatively, they may have chosen to separate the two products,
selling their generated power without the certificate and receiving the rates that would be applicable for non-green
electricity. They can then sell that REC in the secondary market, allowing generators or marketers without access to
physical renewable power to sell a green energy product to their customers.
Each REC produced is effectively an accounting of the power generated, and will generally contain the following
information:

2

http://www.eia.gov/todayinenergy/detail.cfm?id=4850

Copyright 2014, Commodity Technology Advisory LLC

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