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Renewable Energy Certificates: Bridge to a Renewable Future

July 28, 2015 By Michael Hartofilis

Michael Hartofilis

There has been much confusion in the energy industry and among consumers as to the exact meaning and benefits of renewable energy certificates (RECs). Frankly, my colleagues and I recently spoke to a specialist on RECs, and there was still apparent ambiguity, if not outright contradiction, communicated as to what these certificates represent. That is a shame because I believe they’re very good for our industry and the planet at-large, and if customers don’t understand what a product is, there’s not much of a chance they’re going to invest in it. I think it’s fair to assume that most people have never even heard of RECs. So it’s probably best that we start from square one.

A renewable energy certificate, as defined on the US Environmental Protection Agency (EPA) website, represents the property rights to the environmental, social and other non-power qualities of renewable electricity generation. This essentially means that the customer purchasing the REC is responsible for that renewable energy generation and its environmental benefits, thereby validating a home’s or business’s claim to be going green.

Of course, electricity is electricity. Electrons are electrons. Utilities companies, which are still entirely responsible for energy delivery even if homes or businesses are enrolled with a third-party supply company, do not parse out which sources of electricity they’re delivering. So unfortunately, there’s no way to isolate renewable sources and make sure the power you’re receiving is coming from solar, wind, wave, geothermal, etc. Even if your home or office is fitted with solar panels, that energy is likely still going back to the grid, and you’re receiving the same supply mix as everyone else.

What RECs do is finance renewable energy production to increase the percentage of renewable sources on the grid available to all consumers, while increasing the likelihood that your home or business is being powered by renewable sources. Essentially, you’re changing the market. You’re a pioneer forging toward a green pasture, if you’ll pardon the poeticism. That is the very reason that third-party energy service companies are so important. They provide options to customers in order to change the market; provide more products, services and competitive pricing; and improve our shared future.

Now, down to brass tacks: How much does it cost? Well, I think everyone will be happy to know that renewable energy supply plans, which are marketed in various percentages, come at a negligible additional expense, meaning fractions of a penny difference in your rate. And if you’re with a company giving highly competitive rates that beat the utility companies and many other ESCOs in most cases, you’re often able to purchase renewable energy at a lower cost than nonrenewable. So given the choice…well, is there really a choice?

The environmental benefits are clear: increasing the amount of clean energy supply going onto the grid; decreasing the amount of carbon emissions and waste going into air, water and soil; and ensuring a brighter future for our planet and all those who inhabit it. But for those out there who don’t particularly care about these benefits — let’s call them Ebenezer Scrooges, Christmas Eve edition — might there be additional advantages for a business? I believe so. Companies are always looking for ways to separate themselves from their competition. And given the choice, with comparable pricing, customers will always go green. That’s the culture we gratefully find ourselves in. Positive actors are incentivized and rewarded — not just by the government, but also by consumers. The pendulum has shifted. It is no longer morally acceptable or even accurate to stand idly by and say “the market decides.” Because we can, and should, decide the market.

Michael Hartofilis is vice president and co-founder of Greenlight Energy.

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