Renewable Energy Certificate - REC

AAA

DEFINITION of 'Renewable Energy Certificate - REC'

A certificate that is proof that one megawatt-hour (MWh) of electricity was generated from a renewable energy resource. Once the electricity provider has fed the electricity into the grid, the Renewable Energy Certificate (REC) they received can then be sold on the open market as a commodity. Because of the additional cost for producing "green" energy, the RECs provide an additional income stream to the energy provider, thus making it a bit more attractive to produce.

Also known as Green Tags, Tradable Renewable Certificates (TRCs), and Renewable Energy Credits.

INVESTOPEDIA EXPLAINS 'Renewable Energy Certificate - REC'

There is no national registry of RECs, however the multiple issuing firms work together to ensure continuity of requirements. As of 2008, the "green" technologies for producing electricity are:

  • Solar
  • Geothermal
  • No Dam Hydro
  • Wind
  • Bio Fuels (Mass and Diesel)
  • Hydrogen Fuel Cell
RELATED TERMS
  1. Advanced Technology Vehicle Manufacturing ...

    A U.S. Government subsidy created under section 136 of the Energy ...
  2. American Clean Energy And Security ...

    A piece of legislation that was created in an attempt to establish ...
  3. Emissions Reduction Purchase Agreement ...

    A transaction that transfers carbon credits between two parties ...
  4. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  5. Carbon Credit

    A permit that allows the holder to emit one ton of carbon dioxide. ...
  6. Green Fund

    A mutual fund or other investment vehicle that will only invest ...
RELATED FAQS
  1. What is socially responsible investing?

    In the financial world, where profit and return are often the priorities of the average investor, the vehicles we use to ... Read Full Answer >>
  2. What are cleantech stocks?

    Clean technology, commonly referred to as cleantech, is a term used to describe environmentally-friendly technologies that ... Read Full Answer >>
  3. How is fair value calculated in the futures market?

    The fair value is the theoretical calculation of how a futures stock index contract should be valued considering the current ... Read Full Answer >>
  4. What are the major types of insurance policies that insurance companies will offer?

    The principal commodities used in producing chemicals are oil, natural gas, coal and a wide variety of metals and minerals. ... Read Full Answer >>
  5. What is the difference between speculation and hedging?

    Speculators and hedgers are different terms that describe traders and investors. Speculation involves trying to make a profit ... Read Full Answer >>
  6. What is the difference between underwriting and investment income for an insurance ...

    Underwriting and investing are two different methods an insurance company uses to generate income. The underwriting income ... Read Full Answer >>
Related Articles
  1. Insurance

    Green Investors Get Heard

    Find out how to make your portfolio and the companies in it greener.
  2. Investing

    Clean Or Green Technology Investing

    Innovations in energy and consumption grow as companies adopt them to reduce costs.
  3. Mutual Funds & ETFs

    Evaluating Green Equity Investments

    Learn how to find stocks that are both eco-friendly and profitable.
  4. Personal Finance

    Go Green With Socially Responsible Investing

    Find out how morals and ethics can bring you a surprising return.
  5. Economics

    What Does It Mean To Be Green?

    Green investing is the new buzz word for companies and investors. Find out what it means.
  6. Options & Futures

    Top 10 Green Industries

    Put a little green in your wallet by investing in these growing areas.
  7. Personal Finance

    Building Green For Your House And Wallet

    The earth-smart money is on these environmentally friendly housing projects.
  8. Options & Futures

    The Biofuels Debate Heats Up

    Interest in these new energy sources is growing. Should you buy in?
  9. Charts & Patterns

    Should Investors Get Into Oil Now?

    Oil has enjoyed a steady climb after a violent plunge. Where is it going next, and how can investors profit?
  10. Investing Basics

    Understanding Non-Deliverable Forward (NDF)

    A foreign exchange hedging strategy where the parties agree to settle the profit or loss in a foreign currency futures contract before the expiration date.

You May Also Like

Hot Definitions
  1. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  2. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  3. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  4. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
Trading Center