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What are RECs?

One of the benefits of solar energy systems is the financial benefits you can rack up through generating energy. You will see these benefits through the savings you make on your utility bills and through net metering. To further incentivize people to start going solar. The federal and local governments, utility companies, and other organizations provide benefits. These benefits tend to come in the form of one time incentives like tax credits and rebates. Which draws people into purchasing a solar energy system. Renewable Energy Certificates (RECs) or green tags are an ongoing incentive to benefit solar energy system owners and keep their systems running at their best and producing energy.

How do RECs work?

RECs themselves aren’t electricity. They technically serve as a claim that your home or business is powered by clean energy. This claim is created by generating your electricity through a solar energy system or other forms of clean energy generation. With the clean energy generated, you can claim that you are powered by green energy. 

In some states, you can sell or trade these claims for financial benefits. The credit for the clean energy generation is given to the new owner of the REC. The reason why RECs are valued is that they serve as proof of clean energy generation, and reducing your carbon footprint. As there is no clear way to identify if the energy generated and flowing through the grid is clean. With the current push worldwide to hit clean energy generation goals, there needs to be proof that electricity is generated via clean methods. Organizations, companies, and individuals who are concerned with green energy usage want these credits.

How are RECs generated?

A REC is made when a renewable energy source like a solar energy system, generates one megawatt-hour (MWh) or 1000 kilowatt-hours (KWh) of electricity and delivers it to the grid. This means that the grid system isn’t able to generate RECs, as a grid-tied connection is required. For example, if your solar energy system has generated about 7 MWh of electricity, you would have 7 RECs that you can choose to keep or sell.

Why do people purchase RECs?

As mentioned before, some individuals and organizations are interested in purchasing and owning RECs. RECs can prove that you are using clean energy from the grid without having to generate your clean energy. This is helpful if an organization or business is based in multiple areas and/or unable to install a solar energy system on their property. Effectively, they can reduce their carbon footprint, and do their part in reducing their greenhouse gas emissions. This model also supports the renewable energy market and helps increase the demand and supply for renewable energy.

You can classify REC purchasers into two categories, compliance, and voluntary purchasers. Business and utility companies tend to fall into the category of compliance buyers that buy RECS to meet their renewable portfolio standards. They have to fulfill their requirements for renewable energy use and require proof they are sourcing renewable energy. Voluntary REC purchasers tend to be environmentally friendly organizations and companies that want to be conscious of their energy sources and reach their environmentally friendly standards. They might even be individuals who want to support clean energy.

How much are my RECs worth?

If you have generated enough electricity for RECs, you might be looking to sell them off to make some income. Firstly, you will want to know how much your RECs are worth. The reality of RECs is that they only have monetary value if they are registered in the official national registry. Registration fees can be in the hundreds of dollars for RECs, so it would be worth considering the value of your RECs. 

The value of RECs varies between states. According to the National Renewable Energy Labs (NREL) data presentation. From December 2020 to August 2021, REC prices (nationally sourced, Green-e Eligible) increased from $1.50/MWh to

$6.60/MWh. For SRECs, the current market price in New Jersey as of the 22nd of April 2022 on SRECTrade is $234. Washington D.C.’s bid price on the same date sits at $392.

As you can see the value of RECs compared to SRECs themselves can vary drastically. Although you may be wondering what is the difference between RECs and SRECs.

What’s the difference between RECs and SRECs?

There isn’t much of a difference between Renewable Energy Certificates (RECs) and Solar Renewable Energy Certificates (SRECs). Both work on the same principle of generating RECs through a solar energy system. SRECs however, are required to be generated by a solar facility or energy system. One of the reasons why solar has its own standout set of RECs is because some states have renewable portfolio standards that require a certain amount of solar to be in their renewable energy production. This is commonly referred to as a solar carve-out. The solar carve-outs will also have an established SREC market to sell your SRECs. States that have SREC markets won’t sell them directly, instead, they’d go through an aggregator or broker to monetize your SRECs. Although you will have to keep in mind the price of your SRECs will be determined by alternative compliance payment (ACP). This is a fine given to your utility company if they don’t meet your state’s renewable portfolio standard targets.

How do I sell my RECs / SRECs?

There are multiple ways you can go about selling your RECs / SRECs:

  • You can sell your RECs through your installer or solar financier.
  • Put your RECs / SRECs through an aggregator.
  • Working with an aggregator or broker to purchase your RECs directly or find you a buyer.
  • Use an auction or exchange platform to sell your RECs.

While these are different ways you can sell your RECs, it must be noted that you have to own your energy generation system and home to generate the RECs. If your solar energy system is on a lease, the RECs will go to the installer. If you are moving homes, you will also lose the right to sell your RECs. As the home and solar energy system ownership will be transferred to the new owner. This can be another bargaining chip in your favor when it comes to negotiating the selling price of your property. As it’s already proven that solar energy systems can increase the value of your home.

Get started with solar energy today

If you are looking to start your transition to solar energy, we are here to help. Our website also has a free online estimate tool that generates a personalized report for you from a simplified questionnaire. That report will contain the potential savings you can net, and the cost of a solar energy system installed on your property. You can also contact us directly via phone at +1 (602) 363-8919 or via email at Scott@elitesolarenergy.org for more information regarding solar energy for your property.