Renewable Energy Certificate - REC

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:

  • Solar
  • Geothermal
  • No Dam Hydro
  • Wind
  • Bio Fuels (Mass and Diesel)
  • Hydrogen Fuel Cell
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