What Are Renewable Energy Credits: How RECs Empower Consumers to Use Green Energy at Home

I love flying. I like the roar and the rush of the takeoff, the tranquility once we’re above the cloud deck, and perhaps most of all, watching the shape of the land change as I look out the window. I used to get in trouble for watching the world go by, back when I was part of the flight crew on a small helicopter. I guess I was supposed to be looking for high tension wires out in front of us, not the beauty of the topography beneath.

When I took a commercial flight from Washington D.C. back to Chicago recently, I was, of course, following the changes in the land below. What did I see? Power lines. They’re hard to miss. Even from 40,000 ft. in the air, they cut clear, hard swaths through the coastal flats and forests of the West Virginia Appalachians, all the way across hilly Ohio and the Indiana farmlands. What was even harder to miss, though, were the power plants that supplied them. No matter how unpopulated, hilly, or rugged the country we were flying over was, not a second of that flight passed by without a power plant in sight. They’re really easy to pick out, and not just because of the enormous cooling towers of the nuclear facilities or the smoky tops of the coal, petroleum, or natural gas plants. What makes them so distinguishable is the plumes of steam and smoke they release into the atmosphere.

I’m not an alarmist. From 40,000 ft. it’s pretty clear there was plenty of air left that isn’t being polluted with steam or smoke. Contaminants are small streams trickling into an ocean of clean air, but they’re enough to make a difference for the atmosphere, which has been proven by thousands of scientific studies. That’s why there’s a shift occurring, both at the regulatory and voluntary level, away from fossil fuel and nuclear plants and towards renewable energy sources, like wind, solar, hydroelectric, geothermal, and biomass. Concerned citizens and politicians informed by scientific research are investing in ways to generate power without pumping gases into our atmosphere. As we’ll see, that’s where Renewable Energy Credits come in.

Individual Renewable Power Sources Present Significant Installation Challenges

It isn’t always easy. On an individual level, investing in renewable energy can be a complex, difficult process, and not everybody has the option to install renewable power generation at their residence. Not everyone has space to install large windmills in their backyard, or the amount of direct sunlight necessary to generate a useful level of power from solar panels. Even less common are the water resources needed to create a run-of-the-river hydroelectric power source, the rights to dam a river to create pondage, or a location where the Earth’s crust is thin enough to generate power from geothermal heat. At the individual level, unless you own a pig farm, you don’t even generate enough solid waste to create energy from biofuel—although I’m not sure you’d want to.

Social and lifestyle issues can inhibit individual renewable investment as well. Many working and middle class people have schedules packed with work and childcare, with little free time to consider the extensive, time-consuming decisions around physically altering their home’s power supply. If time isn’t an issue, cost can still be prohibitive: a home wind turbine can run $48,000-$65,000, and a geothermal heating system can range from $20,000-$25,000.

While renters may wish to install solar panels on their rooftops, their landlord may not want to do so, leaving them no options besides moving out. Some residential solar companies offer leasing deals and incentives, but have a complex maze of terms and regulations. The constantly shifting policies of local, state, and federal governments may cause homeowners to regard these offers as more trouble than they’re worth.

Large Scale Renewables Generate a Tithe of U.S. Power

Difficulty installing a home renewable power source doesn’t mean residential energy consumers can’t power their home entirely with renewable resources. Across the country, large-scale renewable power plants have been coming online with ever-increasing frequency. Acres of shadeless solar panels pivot to pick up the sun as it tracks across the sky. Wind farms line ridges and sweep across the plains. Huge dams hold back water to generate hydropower on demand. Landfill gases, municipal waste, and even wood fires from sustainable timber generate biofuel power. All told, renewable energy makes up around 10% of the total power consumption in the United States, although this varies by state and region.

Now you know, as an individual homeowner or renter, you have the power to choose energy from renewable energy sources without installing your own power plant or turbine. The invention of Renewable Energy Credits (RECs) makes it possible.

Renewable Energy Credits Enable Homeowners to Easily Support Green Energy

Buying electricity isn’t like ordering a pizza. You can’t just call up your local wind farm and ask for 1 Megawatt hour of renewable energy. Let’s face it. In fact, you never buy your electricity directly from a power plant. These plants list their energy on exchanges, where it’s purchased by wholesalers and utilities (as well as banks, hedge funds, and other middlemen). Wholesalers then sell that energy to third party energy suppliers. This is the electricity that utilities and third party suppliers then sell to you.

The complexity of energy transmission and distribution means that once electricity enters the grid from a power plant, there’s no way to tell where it was produced or by what means. Electricity is electricity is electricity, whether it was generated by nuclear power or landfill gas. This is what prompted the development of RECs.

When a wind farm pushes a Megawatt hour of energy into the grid (slightly more electricity than an average residence uses in a month), it reports that it has produced energy equal to 1 Renewable Energy Credit, and identifies that credit with a discrete number. These credits are verified by certified independent organizations which vary from region to region. When a wholesaler, utility, or third party energy supplier then wants to buy energy from a renewable source, they purchase a unique REC.

While the actual energy your home uses may come from any source, this purchase guarantees that an equal amount of electricity was produced by a renewable source. In turn, utilities and third party energy suppliers can sell RECs to individual residential consumers. By buying RECs from your energy supplier, you are guaranteeing that the amount of energy you use has been produced by a renewable source, if not the actual energy itself.

As a result, homeowners who want to support the transition from fossil fuels and nuclear to renewable sources like wind and solar can easily and cheaply do so by purchasing RECs from their energy supplier. It promotes the development of large scale renewable energy installations, and eliminates the hassle of installing an on-site, small-scale renewable power source, if one is even an option at your location. Voting with your money this way can help convince our nation to support investment in renewable sources.

I saw something else besides plumes of smoke from nuclear and fossil fuel plants as I was flying home from Washington. Stretched along the length of a ridgeline longer than the city I’d just left, a row of graceful wind turbines were slowly turning, their white paint gleaming in the sun.

If you want to learn more about how to source your home’s electricity from renewable plants, contact Liberty Power, a third party energy supplier with a long history of expertise in renewable energy credits. Get in touch to see how your money can go to building windmills, not smokestacks.


Photo Credit: Transguyjay via VisualHunt.com / CC BY-NC-SA

Liberty Power Editorial Team
The Editorial Team at Liberty Power is a swashbuckling group of passionate and creative Energy experts bringing you the hottest topics on exciting market trends, booming products and services, and the latest news in the industry.
April 11, 2017