Renewable Energy Certificates (RECs)

There are plenty of incentives to switch to renewable sources for energy over non-renewable ones— cutting pollutants, sustainability, minimizing our ecological impact— but it can be difficult to transition to a carbon-neutral lifestyle, especially if your grid isn’t supplied by renewable energy. That’s why Renewable Energy Certificates (RECs) have been created to provide consumers with a way of supporting renewable generators.

What are Renewable Energy Certificates?

• Renewable Energy Certificates (RECs) support the generation of clean, renewable electricity.
• RECs are sometimes called renewable energy credits, green tags or green credits.
• One REC equals 1 MWh of electricity produced from renewable sources.
• Buying RECs allows companies to match their electricity use with renewable energy.
• RECs fund renewable power producers that supply the grid.
• REC prices vary based on market supply and demand.

Renewable Energy Certificates, or RECs, are specifically focused on generating electricity sustainably. This is because the power is generated from clean, abundantly available fuels which are neither to be excavated nor burnt, as in the case of fossil fuels.

RECs are a commodity that serves to represent the value and advantages of using renewable energy, such as wind power, solar power or electricity derived from biomass.

One REC is a commodity that represents one megawatt-hour of electricity (1 MWh) produced by a renewable energy facility. When a company buys RECs of equivalent value to the company’s energy consumption, the company offsets the power they’ve sourced from traditional energy sources by funding the green generators that supply the energy grid.

There are a number of renewable energy credit markets, including “green pricing” programs operated by local utility companies. REC prices are not fixed; they vary depending on the supply and demand, similar to traditional energy.

How we can help you purchase RECs

Our experts work with companies and institutions to source Renewable Energy Certificates (RECs) that align with your corporate sustainability and clean energy goals. We also provide customized energy and emissions accounting to help businesses accurately quantify and manage their emissions.

Complete the form above, and one of our corporate sustainability experts will be in touch.

Renewable Energy Certificates in Canada

There is not only one, but several companies and organizations that certify Renewable Energy Certificates in Canada. Whether those organizations are US or Canada-based, they are expected to comply with North American standards to certify Canadian RECs. 

To name a few organizations that certify RECs for Canada would be: 

• M-RETS (a non-profit organization that manages the activity of clean energy resources through its environmental monitoring system.) https://biogasassociation.ca/featured_member/member/m_rets

• Green-e (a trusted global leader that provides a clean energy certification program, making it easier for consumers to choose more sustainable products for their homes and businesses) Green-e | Powering a renewable future 

• UL Ecologo (provides certification that identifies that products (cleaning products, electronics, electricity products, industrial equipment and other) have lower environmental and health impacts compared to alternatives.  ECOLOGO® Certification Program | UL Solutions 
• WREGIS (Western Renewable Energy Generation Information System) (as an independent tracking system, WREGIS ensures that each megawatt-hour of renewable energy is accounted for.) WREGIS | Western Electricity Coordinating Council  

The Canadian government’s renewable energy programs are focused on net-zero emissions by 2050, making RECs a useful way to support clean energy production for businesses, households and industries.  

REC Regulations in Canada

Qualified renewable energy producers typically have two revenue streams associated with Renewable Energy Certificates (RECs): one from the sale of the electricity generated and another from the sale of the RECs representing the environmental attributes of that electricity.

In Canada, one REC represents 1 megawatt-hour (MWh) of renewable electricity generated from eligible sources. By purchasing RECs through certified tracking systems, organizations and individuals can claim the environmental benefits associated with renewable energy generation.

However, the purchase and retirement of RECs are subject to specific regulations and verification processes.

• RECs must be generated from eligible renewable sources, such as hydro, wind, or solar power. 

• They must be issued and tracked through recognized electronic registries, which verify the generation source and ensure transparency in ownership and transfers. 

• RECs must also be retired after use, meaning they are permanently removed from the tracking system to ensure that the environmental benefit of the same MWh of renewable electricity cannot be claimed more than once. 

• The REC market structure is flexible in terms of how certificates are sold. RECs may be purchased bundled with physical electricity or unbundled, meaning the certificate is sold separately from the electricity itself. 

• Finally, RECs can be used by organizations to meet the requirements of corporate sustainability programs, provincial renewable energy initiatives, or voluntary environmental claims. 

How do Renewable Energy Certificates work? 

It starts with the production of renewable energy (clean energy) by a generation company or energy facility, where one REC equals one MWh of electricity. 

The REC is certified and registered by a certified organization, which assigns it a unique serial number and tracks its lifecycle.  

Further, the facility has two selling options: either through an REC or as a one package with the generated renewable energy.  

A certified registry tracks and records the sold REC all the way from a seller to a buyer (a generating facility to the purchasing company).  

Finally, when the buyer retires the REC, it can no longer be used or sold. The buyer, however, will be credited with one MWh of clean energy for each REC.  

Renewable Energy Certificates Lifecycle 

Understanding the lifecycle of a Renewable Energy Certificate (REC) is vital for tracking the environmental attributes of renewable electricity and ensuring that each REC is counted and retired only once.

The REC lifecycle generally follows several stages:

1. Generation from a renewable energy source (wind, solar, hydro).
At this stage, a qualified renewable energy facility generates one megawatt-hour (MWh) of electricity and delivers it to the grid. At the same time, a corresponding REC is created to represent the environmental attributes associated with that unit of renewable electricity.

2. Issuance and tracking in a registry.
The REC is then recorded in a certified electronic tracking system or registry. The registry verifies the generation data and assigns the certificate a unique identification number, ensuring transparency and preventing double counting.

3. Trading in the REC market.
Once issued, the REC becomes available for trade. It may be sold bundled with the physical electricity or unbundled, meaning the certificate is sold separately. Transactions are often facilitated by intermediaries such as traders, brokers, or aggregators.

4. Retirement of the REC.
At the final stage, once the REC is used to support a renewable energy claim, the purchasing party instructs the registry to retire the certificate. Retirement permanently removes the REC from circulation, ensuring that its environmental attributes cannot be claimed more than once.

Does buying RECs make a difference?

Purchasing a REC does not necessarily mean that the energy powering your home or business came directly from clean energy sources, as not every grid has a green generator supplying it. However, once energy is injected into the grid, it is indistinguishable from the energy that was generated through other means. Instead, the consumer purchases the equivalent number of RECs to the amount of MWh of energy that they would like to redeem, as a counterweight to the non-renewable energy that is consumed. 

It may seem like a roundabout way to incentivize green energy, given that non-renewable sources are still contributing to the grid. For those who are serious about reducing emissions, it can be hard to tell if buying RECs makes a difference. However, your purchase of RECs will: 

• Provide the renewable power plants with the demand and funding required to stay in the market.  

• People who purchase from grids that are solely powered by non-renewable resources can support green suppliers, as REC trading is not restricted to your local grid. 

• If you can use green energy to power your business but cannot afford to invest in your own renewable generation, buying RECs could be for you. 

Are all RECs the same?

Companies and organizations seeking to achieve their BOMA Best® or LEED® certifications can earn points towards these by purchasing Renewable Energy Certificates. REC owners are able to trade and sell their certificates, but once a REC is applied towards any certification, it is retired and can no longer be sold. If you need help figuring out which option is right for your business or purchasing a REC, one of our representatives can help guide you through the various green energy solutions available.

Each REC receives its own unique serial number to prevent duplicate sales. The price is contingent on essentially three factors: source, vintage and provenance.

Source is the resource they use to generate electricity, such as (hydroelectricity, wind, solar, geothermal, biomass, etc.) Vintage is the year the REC was generated and came to market. Provenance is the location of the facility and its remoteness.

For large consumers with green generators nearby, it may be more feasible to purchase bundled RECs, meaning the number of RECs you purchase is directly tied to your consumption. These are often done in contracts to guarantee the funding necessary for the generator to develop. Unbundled RECs, however, stem from an excess of supply and are therefore more affordable. These can be purchased to offset previous or future consumption, and may be more ideal for smaller consumers.

REC vs Carbon Offsets 

Although they work differently, both Renewable Energy Certificates and Carbon offsets work towards supporting and achieving the net-zero emissions goal.  

While REC indicates one MWh of electricity made from a renewable source, carbon offsets are used to neutralize a set amount of greenhouse gas emissions. When a company buys a carbon offset, they are paying for a project dedicated to reducing or removing greenhouse gas emissions (planting trees, as one example). However, when someone purchases RECs, even if their power comes from traditional sources, they are enabling the environmental benefits of using renewable energy.  

Overall, carbon offsets are intended to balance the emissions, while REC’s purpose is to support and claim renewable energy.  

REC Certificates vs Carbon Credits 

While both certificates and carbon credits are tools that support environmental goals, they serve different purposes: the former addresses the source of electricity, while the latter addresses the impact of emissions. 

• Renewable Energy Certificates represent electricity generated from renewable sources (wind, solar, hydro), while carbon credits represent reductions in greenhouse gas emissions. 

• One REC is issued when a renewable facility produces one megawatt-hour of electricity, allowing an organization to claim that its electricity consumption is matched with renewable energy generation. 

• Carbon credits, by contrast, each represent the removal or reduction of one metric ton of carbon dioxide equivalent (CO₂e) from the atmosphere. These credits come from projects such as agricultural practices that reduce emissions, methane capture, and forest conservation. They are intended to offset emissions that cannot be eliminated, providing companies and individuals with a way to lower their net carbon footprint. 

VPPAs or RECs: What’s the difference?

This question is posed frequently and reveals some confusion in the marketplace as to what VPPAs are. While both RECs and VPPAs are meant for green branding, offsetting carbon emissions indirectly, and improving investor portfolios, there are some differences between them.

Virtual Power Purchase Agreements (VPPAs) are a financial contract between a corporation and an energy provider in which the corporation pays for power at a mutually agreed price, usually for 10-20 years. Any difference between the agreed VPPA price and market spot prices is usually settled monthly between the business and the generator. VPPAs are generally contracted in deregulated markets such as Alberta and can be signed with an active renewable power producer or a renewable project pre-construction. With the VPPA, the business also receives bundled RECs (RECs directly associated with generated power). Based on the laws and regulations arrangement, these RECS can be retired or resold in the market.

RECs (or unbundled RECs) can be procured from trading desks either for the short or long term. These independent RECs can only be retired for business use and cannot be traded once purchased. Independent RECs can also be purchased in regulated markets as they are an indirect way to go green and cut carbon emissions.

How to Get Renewable Energy Certificates (RECs) for Your Business

There are multiple ways corporations can receive renewable energy certificates. By following the next few steps, you can obtain Renewable Energy Certificates: 

• An energy consultant can assist with choosing a certified REC provider or registry that operates in your area. They can explain how RECs work and provide insights about the rules and options for RECs in Canada. 

• Decide how many RECs you would want to purchase, select the type and amount and which renewable source you would prefer, such as wind, solar, or hydro.  

• Purchase the RECs from a trusted marketplace or through a certifying facility.  

• Receive proof of your purchase and track the REC based on the serial number and registry details.  

• Finally, request the registry to retire the REC, and claim renewable energy.