Power generated from renewable resources in the US is growing steadily. Since 2010, megawatt hours (MWh) generated by renewables have almost doubled — reaching a record total of 795 million MWh during 2021.¹ However, there’s still plenty of progress to be made.

Research by the International Energy Agency (IEA) shows that while global growth in renewable generation will accelerate, “renewables growth will still need to double” to achieve the Paris Agreement goal of net-zero emissions by 2050.² 

Increasing growth at this rate means showing that investment into new generation capacity is economically viable — by demonstrating demand for renewable power. But how do businesses in the US show that they’re supporting renewable generation sources when it’s challenging to be 100% certain how electricity is generated once it hits the grid?

This is where energy attribute certificates (EACs) come in. These are more commonly known in the US and Canada as renewable energy certificates (also referred to as renewable energy credits or RECs for short).

What are RECs? And why are they important?

RECs are a way to track how and when renewable electricity is generated. Each REC is an environmental attribute created to represent 1 MWh of power generation from a renewable resource.3 To back this up, they come with a range of supporting data to demonstrate their origin, which includes the following:

• Generator name, location, and unique ID

• Certificate serial no. (allowing it to be tracked and its use or retirement logged)

• Renewable fuel type used to generate the power

• Date the power was generated (also known as its vintage)³

Once a REC is created, it can be traded by the facility that generated the power – either bundled with the electricity it’s attributed to or separately. In many cases, they’re traded independently of the energy itself. This allows consumers to support renewable energy, regardless of whether they know where their electricity came from.

While the RECs aren’t necessarily tethered to the power they’re attributed to, they provide tangible proof of financial investment in renewable generation that direct electricity consumption doesn’t. RECs are the environmental attribute of the power they’re associated with. Without them, the power generated from a renewable resource is no different from conventional power.

How are RECs created? 

RECs are created anytime power is generated using a renewable resource. These sources can include solar, wind, geothermal, hydroelectric, and tidal power — and biomass electricity generated from the breakdown of organic matter such as plants, wood, and crop waste.  

Take, for example, turbines generating 10,000 MWh of power on a wind farm; a tracking system operator tasked with managing RECs will check the meter for that source, mint 10,000 RECs and hold them in the tracking system. 

The wind farm owner obtains the RECs from the system operator and can trade them or transfer them to their customers. The key thing to understand is that the process is heavily regulated. The creation of RECs is closely monitored by the various local tracking systems and governed at a state level to maintain their credibility as a tool for driving the use and development of renewable power generation.⁴ 

The management of RECs is covered by nine tracking systems nationwide. Many of these are run by regional independent system operators (ISOs), the same organizations responsible for local grids. 

How do you use RECs?

The voluntary purchase of RECs is a way to meet sustainability goals by supporting power generation from renewable sources. They’re an essential source of credibility when uncertain where the power used came from. 

Usually purchased by retail electricity providers (REP), they’ll reside in a registry for the consumer’s organization. It’s like money in a stock portfolio. This means consumers can transfer or trade them to others or take them out of circulation – a process known as ‘retiring.’ 

This process will, again, most likely be carried out by a REP. They’ll select and retire the amount and type of RECs that meets a consumer’s needs. For instance, if a company is looking to cover its energy use with 100% renewables, the REP can retire enough RECs to match the number of non-REC MWhs the company has used in a particular year (corresponding to the vintage of the RECs to the period in which power was consumed). 

Once retired, a REC can’t be transferred, traded, or used again. To continue meeting sustainability goals, a consumer needs to continue supporting renewable generation by having their REP purchase newly minted RECs. 

How do consumers purchase and manage RECs? 

While this article covers an overview of what RECs are, why you’d purchase them, and how to retire them, chances are you won’t have to manage them yourself. Although you can choose to do that, at Shell Energy, we manage RECs for you, making your sustainability obligations easier.

So, how does that work? For most business customers, RECs are bundled with the electricity we sell. That means you don’t have the headache of purchasing and managing them — we can sort that out for you. And when it’s time to retire your RECs, we can also handle that process.

Ultimately, it means you can be sure your business supports further renewable generation without handling the complexities of purchasing and managing your RECs.

[1] EIA. "Renewable generation surpassed nuclear in the U.S. electric power sector in 2021."

[2] UN Climate Change. "Renewables Growth Must Double to Achieve Paris Goals – IEA."

[3] EPA. "Green Power Markets: Renewable Energy Certificates."

[4] Energy Certificate Association. "Understanding EAC markets."