If you have shopped for electricity service recently, you have likely noticed products and offers with slogans such as, “This plan is sourced from 100% wind power”, or “This plan is guaranteed to be sourced from at least 50% solar.” If your next question is, “How is that possible?” you are not alone.
In a world where consumers have begun to pay more attention to their carbon footprint power retailers have become increasingly focused on the composition of their portfolios. Over the past 10 years, the renewable share of the grid has roughly doubled and represents nearly a quarter of all generation. Marketing clean, renewable, power has grown from niche business to big business.
Electric power is pooled on the grid regardless of its source. This means the electrons generated and flowing from a coal fired plant are identical and inseparable from the electrons generated and flowing from a wind turbine. So, what allows certain electrons to be deemed ‘clean’ over any other? The answer is a Renewable Energy Credit (REC), which represents a megawatt hour (MWh) of electricity produced from a renewable energy source. The REC is a legal document that allows a company to represent a MWh as generated from a renewable resource.
Learn more about RECs and the challenges for trading and risk management solutions in our latest whitepaper.