What are RECs?

Economically-speaking, coal power plants produce electricity more inexpensively than wind farms. This is why most of the power in the United States is generated by burning coal. However, burning coal emits carbon dioxide along with toxins like mercury into our environment. Comparatively, harnessing wind to turn a turbine is completely clean. To make renewable energy, such as that generated from wind farms, economically viable, renewable energy is sold via Renewable Energy Certificates (REC) programs. Such programs allow clean energy providers to sell both the electricity and the RECs associated with that electricity's production. (One REC is granted for each megawatt-hour of electricity produced.) Accordingly, one can imagine electricity being produced by windmills as having two parts: One part is just electricity–indistinguishable from all the other dirty electricity on the regional grid. The other part is the REC or the clean energy credit which is a certificate that represents the environmentally-friendly aspects of the electricity's generation. So when you buy clean energy credits, you are claiming the environmental benefits of the production of renewable energy. This is how Vail Resorts is able to run its operations on renewable energy even though its power comes off the same grid as everybody else in the region. Vail just acquires credits to match its total energy consumption on top of its regular energy bill.

So how does a electric utility company provide clean energy?
Many states require electric utility companies to own RECs, so technically a small percentage of most people's electricity is clean. But since all electricity is indistinguishable once it is on the grid, the only way a utility company can supply its customers with totally clean energy is through RECs. So for customers who elect to pay the clean energy surcharge, utility companies bundle their regular electricity with RECs. Usually electric utility companies source their RECs from their own projects which can be of varying quality because states have different rules about what constitutes a REC. A REC in one state might not be a REC in another state. This makes it difficult for companies to know what they are getting when they transact clean energy credits through their utility companies.

Your purchase of renewable energy certificates (RECs) is supporting electricity production in the United States. You will continue to receive a separate electricity bill from your utility. For every unit of renewable electricity generated, an equivalent amount of RECs is produced. The purchase of RECs helps offset conventional electricity generation in the region where the renewable electricity generator is located. The purchase also helps build a market for renewable electricity and may have other local and global environmental benefits such as reducing global climate change and regional air pollution. For more information about RECs, please visit www.green-e.org.