How Renewable Energy Certificates Work

Renewable Energy Certificates (RECs), also known as Renewable Energy Credits or green tags, represent the green or renewable attributes of energy produced by certified renewable resources. A REC represents one megawatt-hour (MWh) of electricity generated by a qualified renewable energy resource like a wind turbine, geothermal plant or solar facility.

RECs can be sold, traded or bartered, and the owner of the REC can claim to have purchased renewable energy.

The RECs and the electricity produced by a certified renewable resource can either be sold together (bundled) or separately (unbundled). The purchase of a REC buys the “greenness” of that energy.

Some states have renewable portfolio standards (RPS), a state policy requiring that a minimum amount (usually a percentage) of the electricity each utility delivers to its customers comes from renewable energy. In the future, there may be similar federal standards.

In states with REC programs, a green energy provider (a wind farm, for example) is credited with one REC for every 1,000 kilowatt-hour (kWh), or one MWh, of electricity produced. An average residential Idaho Power customer uses about 1,050 kWh a month.

A certifying tracking system gives each REC a unique identification number to ensure it’s used only once. The electricity produced by the renewable resource is fed into the electrical grid and the associated REC can then be used, held or traded.

REC prices depend on many factors including:

  • Location of the facility producing the RECs
  • Whether there is a tight supply/demand situation
  • Whether the REC is used for renewable portfolio standards (RPS) compliance
  • Type of power
  • Bundled or unbundled.

When electricity is generated from a certified renewable resource (like wind turbines, geothermal or solar), the power is either sold on the wholesale market or delivered to customers.

For every 1,000 kilowatt-hour (kWh) or one megawatt-hour (MWh) of electricity produced by a certified renewable resource, a corresponding Renewable Energy Certificate (REC) can be sold or kept by the owner of the resource.

Renewable power generated and sold on the wholesale market or delivered to customers.

If Idaho Power sells its RECs, money from the sale of the RECs is returned to customers in the form of lower electric rates. Because the RECs were sold, Idaho Power cannot claim that the renewable electricity associated with those RECs was delivered to its retail customers. The new REC owner has purchased the rights to claim the environmental attributes, or “greenness” of that energy.

Electricity Delivered To Customers
Resource by Type Percent
Hydroelectric 38
Coal 40
Natural Gas & Diesel 1
Purchased Power 21
Wind 0
Geothermal 0
Total 100

If Idaho Power keeps its RECs, the company can claim electricity delivered to customers was generated by renewable resources.

Electricity Delivered To Customers
Resource by Type Percent
Hydroelectric 38
Coal 40
Natural Gas & Diesel 1
Purchased Power 1
Wind 10
Geothermal 10
Total 100