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Renewable Energy Certificates

What is a REC?

A Renewable Energy Certificate (REC), also called a Green Tag or a Renewable Energy Credit, is composed of the environmental and renewable attributes associated with 1 megawatt-hour of renewable energy generation.

The renewable energy certificate attributes are defined by program and by jurisdiction.  A REC can be used to comply with a Renewable Portfolio Standard, a voluntary utility customer program, or by anyone who makes environmental or renewable claims associated with renewable energy facilities.

The Environmental Protection Agency broadly defines a Renewable Energy Certificate as:

Green Power Partnership

A REC (pronounced: rěk) represents the property rights to the environmental, social, and other non-power qualities of renewable electricity generation. A REC, and its associated attributes and benefits, can be sold separately from the underlying physical electricity associated with a renewable-based generation source.

In Oregon, the Department of Energy established a definition in rule for the Renewable Portfolio Standard:

Oregon Administrative Rule 330-160-0015

(9) “Renewable Energy Certificate” (REC or Certificate) means a unique representation of the environmental, economic, and social benefits associated with the generation of electricity from renewable energy sources that produce Qualifying Electricity. One Certificate is created in association with the generation of one Megawatt-hour (MWh) of Qualifying Electricity. While a Certificate is always directly associated with the generation ofoneMWh of electricity, transactions for Certificates may be conducted independently of transactions for the associated electricity.

Oregon’s statute also defines when a REC is “bundled” or “unbundled” from the underlying power.

Oregon Revised Statutes 469A.005

(3) “Bundled renewable energy certificate” means a renewable energy certificate for qualifying electricity that is acquired: (a) By an electric utility or electricity service supplier by a trade, purchase or other transfer of electricity that includes the certificate that was issued for the electricity; or (b) By an electric utility by generation of the electricity for which the certificate was issued.

(12) “Unbundled renewable energy certificate” means a renewable energy certificate for qualifying electricity that is acquired by an electric utility or electricity service supplier by trade, purchase or other transfer without acquiring the electricity for which the certificate was issued.

The Western Renewable Energy Generation Information System (WREGIS), the regional renewable energy generator registry and REC transactional database, offers this definition for RECs it produces:

WREGIS Operating Rules

Certificate: The term “Certificate,” as used in this document, refers to a WREGIS Certificate. A WREGIS Certificate represents all Renewable and Environmental Attributes from one MWh of electricity generation from a renewable energy Generating Unit registered with WREGIS or a Certificate imported from a Compatible Registry and Tracking System and converted to a WREGIS Certificate.* The WREGIS system will create exactly one Certificateper MWh of generation that occurs from a registered Generating Unit or that is imported from a Compatible Registry and Tracking System. Disaggregation of certificates is not currently allowed within WREGIS.

Renewable and Environmental Attributes: Any and all credits, benefits, emissions reductions, offsets and allowances, howsoever entitled, attributable to the generation from the Generating Unit, and its avoided emission of pollutants.** Renewable and Environmental Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Generating Unit, (ii) production tax credits associated with the construction or operation of the Generating Unit and other financial incentives in the form of credits, reductions or allowances associated with the Generating Unit that are applicable to a state, provincial or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to the seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular preexisting pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits encumbered or used by the Generating Unit for compliance with local, state, provincial or federal operating and/or air quality permits.

* A renewable Generating Unit, for the purposes of WREGIS, includes any Generating Unit that is defined as renewable by any of the states or provinces in the WECC.

** The avoided emissions referred to here are the emissions avoided by the generation of electricity by the Generating Unit, and therefore do not include the reduction in greenhouse gases (GHGs) associated with the reduction of solid waste or treatment benefits created by the utilization of biomass or biogas fuels. Avoided emissions may or may not have any value for complying with any local, state, provincial or federal GHG regulatory program. Although avoided emissions are included in the definition of a WREGIS Certificate, this definition does not create any right to use those avoided emissions to comply with any GHG regulatory program.