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“Write to be understood, speak to be heard, read to grow.” ― Lawrence Clark Powell

How RECs Transform US Energy Generation

Posted on 5/24/2018 by in renewable energy REC renewable energy certificates green power RECs
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Author’s Note: This is the second in a two-part series on Renewable Energy Certificates (RECs). In the first post we told the history of REC , its definition and basic purpose. This time, we explore the myriad ways in which RECs are used; impact on the electric grid; role in clean air policy; growth of large scale renewable development; and the REC’s recent resurgence.

Renewable energy has never been more popular or desirable as it is, today. Following the US administration’s controversial decision to opt out of the UN Paris Climate Agreement, it seems the nation’s businesses and institutions are taking up the charge, one by one. Many have committed to the “We Are Still In” program, which follows the precepts of the Paris Accord to reduce carbon emissions. Along with renewable generation and energy efficiency, RECs are a piece of the puzzle. RECs impact the electric grid; play a role in clean air policy and the growth of large scale renewable development, while providing a way for the general public to support renewables.

RECs, Utilities and the Electric Grid

While the cost of solar power is decreasing, not everyone is able to put panels on their roofs. This is where RECs and utility green power programs come in. For those of us who want to support green energy, many can now do it through our electric bill.

 Some of the earliest green power programs were provided by Bonneville Power,  the City of Tallahassee and Eversource (formerly Connecticut Light and Power) or United Illuminating. This attraction to RECs by utilities led to an initial growth spurt for renewable power plants connected to the electric grid. It meant that utilities could immediately offer green power for their customers by purchasing RECs, even those created outside of their system. This additional revenue stream was seen by financiers and lenders as a new way to finance additional renewable energy.  Soon, utilities were reinvesting green power revenues into more solar and wind power as well. 

States began to realize that they could use RECs to push utilities into increasing their mix of renewable energy supply. Many adopted REC-based mandatory renewable goals, starting with Pennsylvania utilities in 2006.  By 2017, 37 states and the District of Columbia had some form of a renewable portfolio standard or renewable goal, and most of these could be met by utilities procuring RECs.  Utilities now see renewable energy connected to the electric grid that has almost tripled from what it was back in 2002, increasing from 6 to 18%.

RECs and Clean Air

During this same time period, RECs have also played a key role in reducing air pollution. Struggling to identify actions to reduce smog under the EPA’s State Implementation Plan (SIP), a group of mid-Atlantic municipalities formulated a novel plan to link RECs with clean air.  Smoggy air was so bad in the Washington DC region in 2002 that it resulted in over 200 asthma related deaths and was considered fourth worst in the country by the Washington Post.  Along with a number of other metropolitan areas, the EPA required them to file approved plans to clean the air.  These SIP plans had to be filed and adjusted annually as conditions merited. 

In 2005, members of the Metropolitan Washington Council of Governments (MWCOG) seized on the idea of purchasing RECs from wind generation in the Appalachians after a report showed that wind turbines there backed down fossil fuel plants operating on the margin in the Ohio Valley and Midwest.  Since prevailing winds travel west to east, this back down decreased NOx emissions flowing into the National Capital region, reducing ground level ozone or smog.  The USEPA recognized this mechanism and over the course of the next ten years over 10,000 MW of new wind came online to supply RECs into the National Capital region. The result: the Baltimore/Washington Region has dropped from fourth worst air in the country for smog to 17th according to the American Lung Association.

RECs for Large Scale Renewable Development

The news is filled with stories these days about corporations procuring renewable energy in quantities large enough to justify the building of an entire solar, wind or even biomass plant. General Motors is now powering most of its operations from wind turbines in Ohio and Illinois. Procter and Gamble uses biomass for its paper products in Georgia. Many internet companies  use renewable power from a new plant to make their data centers 100% renewable, such as, Amazon’s North Carolina wind plant or  Microsoft's solar development in Virginia, along with similar 100% renewable announcements from Google, Facebook, Apple and Intel. 

A significant majority of these projects require RECs to transact.  This occurs even when a utility such as Dominion signs a solar deal with Microsoft, who then retires the RECs to satisfy their renewable requirements.  If the electricity is generated physically away from the customer site, the utility must use a REC to transfer the environmental attributes of that generation to the customer site.  This is because electrons don’t necessarily flow from the solar site to Microsoft. Instead, they flow to the nearest load.  Even onsite projects may require a REC transaction to function as renewable energy, as in the Procter and Gamble biomass plant in Albany, Georgia, where the energy transaction flows to Georgia Power but the RECs convey to Procter and Gamble. 

RECS as a Vote for Renewable Energy

Perhaps the most important reason for RECs is that they provide an opportunity for everyone who uses electricity to let their voice be heard.  Let’s face it, renewable energy is under attack from fossil fuel interests and even the federal government seeking to slow the transition away from traditional sources of energy.  Renewable energy is possibly most vulnerable in the hands of state regulated energy policy makers and through the large regulated electric utilities.  It is hard to argue that we have a truly free market for electricity when over 85% of the people want renewable energy but only 18% of the electricity mix includes renewables.  Lately, most regulated electric utilities and the state public service commissioners (many of them un-elected) have placed more barriers on the use of solar and wind than they have removed. 

Whether you believe in clean tech jobs; establishing a balanced energy policy; clean air for your kids to breathe; our planet’s future, or you simply want to address your own environmental impact – RECs provide a way to voice your support of renewable energy. Individuals and organizations are apparently taking this message to heart as REC sales are rebounding from the slow down they saw a couple of years ago. As more and more people realize the government is not going to solve this problem for us, we, as individual or corporate citizens, must take action. The REC is our most powerful mechanism to fight back.

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