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.
BREAKING DOWN '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:
- No Dam Hydro
- Bio Fuels (Mass and Diesel)
- Hydrogen Fuel Cell