Why Buy RECs?

There are two primary reasons why people and organizations buy RECs:

• They want to: Projects and organizations that generate green power may also sell their RECs to voluntary customers—households and businesses who want to support and be powered by renewable energy. These customers are often motivated by green marketing incentives or an ethical desire to be more environmentally-friendly. For power companies, by offering RECs as a standalone product or by rebundling RECs with energy as green power, these companies can substantiate their marketing claims using REC ownership as proof.
• They have to: Renewable portfolio standards and electricity environmental disclosure requirements may rely on RECs to verify compliance. In the U.S., states with Renewable Portfolio Standards (RPS, a mandate for state utilities to produce certain percentages of the state's total electricity from renewable energy resources) the electric companies are required to buy a certain percent of their electricity from renewable resources. In order to count the electricity from a wind farm, solar panel, or other renewable generator, the electric company must purchase these RECs.

Advantages to Buying RECs

RECs can offer customers several advantages relative to green power primarily because they can be sold separately from electricity and can be purchased from any source in the country. These advantages include:

• Lower cost
• Wider selection of suppliers
• Greater variety of renewable resource options
• Simplified transactions
• Easier ability to interact directly with renewable energy projects

RECs help overcome many barriers to buying and selling renewable energy attributes bundled with electricity, including:

• Transmission access and pricing policies,
• Resource intermittency,
• Mismatches between the timing of generation and demand, and
• Lack of market liquidity, among others.