You may now have the option of buying green electricity from your electric provider, or from an alternative provider through Renewable Energy Certificates.Many states these days have enacted what is called a "Renewable Portfolio Standard," which is a law that requires that some amount of renewable energy be included in the total electricity mix. To achieve this goal, a system of trading in Renewable Energy Credits has been established, allowing the renewable energy to be generated by anyone.

The Electric Reliability Council of Texas oversees most electricity production and distribution in the state and handles this program in Texas as well. These credits can be bought, sold, and traded by companies, green electricity providers that lack their own green generation capacity, and parties wishing to increase the amount of renewable generation capacity for altruistic reasons. The "green" resource is usually wind, though it might come from solar, or in some cases hydro or landfill gas.

RECs, sometimes called Renewable Energy Certificates, Green Tags, or Tradeable Renewable Certificates, are certification that a particular unit of electricity (say, a megawatt hour) was generated by some renewable energy producer, and it is given to the entity that generated the energy. For a unit of energy that was generated, there can be only one REC.

Entities that sell electricity to customers are required to “retire”, or return to ERCOT, a certain number of RECs each year, this number being related to the amount of electricity that they sell. They may buy these, or they may generate the green energy themselves, and be granted the RECs. The requirement to turn in RECs causes the construction and operation of renewable energy facilities. The number of RECs that are required to be retired is calculated based on the amount of renewable energy that legislators determine they want in the energy mix.

RECs are not the same as energy. When RECs are traded, all that is traded is the certification that some green energy was generated, not the energy itself. What gives RECs value is the fact that certain entities must retire some each year.

Anyone can trade RECs. There are brokers who deal in them, and they can be bought and sold like any other commodity.

Companies that sell green electricity may buy electricity wherever they can get it cheapest to satisfy the needs of their customers. They can then buy enough RECs to cover the electricity that they have sold. An important point is that they are not allowed to sell these RECs. They must retire them. If they did sell them, then the renewable energy corresponding to the REC would be claimed by more than one party.

An individual might choose to sign up with a green electricity provider. They might also choose to buy enough RECs to cover their electricity consumption, and then buy electricity from their old supplier. They might even choose to buy more RECs than are required to cover their own consumption.

RECs that are retired are unavailable to those parties that are required by law to buy and retire them. The effect of this is that the amount of renewable energy capacity is increased beyond what the law mandates. Large groups of concerned citizens could increase the renewable energy generation base simply by buying and not reselling RECs. Or a concerned environmental organization might collect funds to buy and retire RECs.

While it is complex, the REC trading system has benefits beyond achieving a stated renewables capacity. It allows anyone to claim credits for their renewable energy generation, it allows concerned citizens to increase the amount of renewable energy capacity beyond the legal requirement by buying and retiring RECs, and it allows anyone to legitimately buy green electricity, whether or not they are served by a company that offers it.

A conscious electricity customer who wishes to use green electricity should not only check into the availability of "green" service, but they may want to consider simply buying RECs in addition to standard service, preferably one with a low percentage of coal and nuclear in their fuel mix. And as always, they should deal with a reputable seller.

Every REC you buy and retire is coal, oil, or gas that isn't burned.

For more information, visit:
http://www.texasrenewables.com/recprogram.htm

Chuck Wright is a renewable energy consultant specializing in system performance monitoring. He has served on the board of the Texas Solar Energy Society, http://txses.org.