How Are Different States Setting Up Renewable Energy Certificate Trading Markets?

Certain states require companies to get power from renewable energy facilities and go green. Other states have mandates that a certain amount of renewable energy should be produced within the state’s borders.

Regulation on the state level helps promote renewable energy resources. One of the ways these state governments are implementing this goal is to set up and promote REC trading within their boundaries. State governments can make energy providers go green through a variety of ways, including allowing energy providers to buy a certain amount of RECs from other in-state providers or from out of state providers. Some states require RECs and REC producers to be certified in their home state and in states they may do REC trading business in. On the other hand, customers, such as businesses, individuals, universities and other clients, can buy RECs regardless of what state they reside in.

REC Certification

However, before any REC production or trading can take place, RECs have to be certified to prevent double-counting or certain types of reselling. Independent REC certification groups like Green-E certify the type of energy used to make the REC, where it was made and other factors related to its usage. After being certified, a REC receives a unique number for tracking and verification. Because 1 megawatt hour of energy can’t be differentiated from another megawatt hour of energy, REC certification symbolizes which MWh is traded. This helps organize RECs being traded across state lines. According to the Renewable Energy Manufacturers Association, more than twenty states rely on RECs to track government renewable energy mandates and to monitor energy transactions.