Good news for companies seeking green energy supply contracts: the decreasing cost of National Green-e certified renewable energy certificates (RECs) can make it more cost-effective for businesses to meet their sustainability goals and support renewable energy sources. This news is particularly important for companies aiming to reduce their carbon footprint and operating expenses.
Green-e REC prices rose throughout 2021 to peak above $7/MWh before falling to $4.5/MWh in early 2022 and down to $2.5/MWh currently. This trend holds for both National Wind and National Solar RECs. The decreasing cost may reflect the growing maturity of the renewable energy market, with increased supply and competition helping to stabilize prices. However, the trend from the 2021 peak to the current affordability also highlights how the REC markets can experience fluctuations, similar to other commodity markets.
What is a REC?
A REC is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. RECs are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource.
For example, if a wind power facility produces 5 MWh of electricity, they have five credits to either keep or sell. If you or your business buys those credits, you are buying the “renewable” aspect of the electricity from the wind farm, and you can say that 5 MWh of your electricity use came from a renewable source.
Voluntary vs. Compliance RECs
Consumers buying green energy supply contracts participate in the voluntary REC market, also called the “green power market.” Voluntary markets allow a consumer to procure renewable electricity at levels above and beyond what mandatory policy decision requires and to reduce the environmental impact of their energy use. It is a good way for environmentally conscious organizations to reduce their greenhouse gas emissions.
Utility companies and energy supply companies typically purchase compliance RECs to meet obligations defined by some states. These regulations, referred to as Renewable Portfolio Standards (RPS), are designed to increase the use of renewable energy for electric generation. The RPS standards mandate a percentage of energy to be sourced from wind, solar, or other renewable assets. The RPS content of a consumer’s electric consumption cannot be used by the end user to make sustainability claims.
While National Green-e Recs are a common, cost-effective product, consumers are not limited in where they buy RECs in the U.S. and can shop for RECs in other retail markets. Retail RECs indicate a retail price that will depend highly on the volume, length of the contract, location, generation source, and date of the RECs.
What is Green-e Certification?
Green-e certification is a program that verifies and certifies renewable energy and carbon offset products to ensure they meet specific environmental and consumer protection standards. It is widely recognized in the US as a reputable certification for green power and carbon offset products. Green-e certification includes verification that the RECs meet specific environmental and quality standards, ensures trust and transparency in the marketplace by allowing consumers to make informed choices, and provides oversight and monitoring to ensure compliance with program standards.
Incorporating a Sustainable Energy Strategy
It is important to understand that green energy is not a one-size-fits-all product. Evolution Sustainability Group can help your organization select green energy products that best fit its objectives. For more information about sustainable energy options, contact our team at firstname.lastname@example.org or fill out our contact form.