Q: What is renewable energy?
A: Renewable energy or green power is generated by the sun, the wind, the earth, and the water; resources such as solar, wind, geothermal, biomass, and low-impact hydro facilities. These resources replenish themselves naturally, and never run out.
Q: What are the options for purchasing renewable energy?
A: There are many ways consumers can purchase electricity generated from renewable resources. In states where it is available, one can purchase renewable electricity from the local utility or another electricity service provider. Alternatively, a consumer can purchase renewable energy certificates or install renewable generation on-site.
Q: What is a Renewable Energy Certificate?
A: A Renewable Energy Certificate (REC) represents one megawatt-hour (MWh) of renewable electricity generated and delivered to the power grid. Because each MWh of clean renewable electricity results in one less MWh of power produced using fossil fuels, a Renewable Energy Certificate represents the environmental benefits of replacing conventional electricity generation using fossil fuels with energy generation that uses renewable resources.
By matching their electricity use with Renewable Energy Certificates, organizations and households are able to green their electricity, and demonstrate demand for renewable energy. In addition, utilities are able to use Renewable Energy Certificates to demonstrate their compliance with government Renewable Portfolio Standards and other renewable energy regulations. In both cases this demand for Renewable Energy Certificates encourages development of renewable energy resources.
Q: How does the green power reach a business or home?
A: Actually, it doesn't. When renewable electricity is delivered to the power grid it can go in many directions just like conventional electricity. That is how electricity and the grid works. On the grid there is no physical way to "tag" an electron as green or produced using renewable resources.
This is the one of the reasons that Renewable Energy Certificates were created. By creating a Renewable Energy Certificate when a MWh of renewable energy is first generated, and then matching this Renewable Energy Certificate with a MWh when it is consumed, we are in fact able to tag an electron as green by demonstrating a direct connection between its generation and use.
Q: So how does a REC purchase make a difference?
A: Renewable Energy Certificates provide wind farms, solar generating stations and other renewable electricity project owners with revenues outside of those they secure selling the electricity generated by their project. By financing renewable energy that’s been delivered directly into the power grid, RECs help reduce the output needed from existing fossil fuel burning power plants. As demand for energy increases, renewable energy allows us to keep up with energy demand without the need to build or expand more fossil fuel power plants.
Q: What is the compliance market for renewable energy?
A: In some states, electric utilities are required to supply a mandated percentage of their electricity from renewable sources of energy. As of 2011, 29 States and the District of Columbia have enacted legislation requiring utilities to include renewable energy generation in their service grids. These programs, commonly referred to as Renewable Portfolio Standards or Renewable Electricity Standards, constitute the compliance market for renewable energy.
Q: What is the voluntary market for renewable energy?
A: All renewable energy purchased due to customer choice and not legal requirements falls into the voluntary market for renewable energy. In 2009, total retail sales of renewable energy in voluntary markets exceeded 30 million MWh, enough electricity to power more than 2.6 million homes for a year
Consumers in voluntary markets can voluntarily support renewable energy through several options, including purchasing Renewable Energy Certificates (RECs), participating in utility green power programs, or installing generation equipment on-site.
Over 800 US utilities offer their customers green power pricing programs. The overall price for renewable electricity has consistently dropped over the past seven years, resulting in an average added cost of only $5.40 per month (as of 2011) to a household’s electric bill for clean, renewable energy.
Q: Where do I learn more about renewable energy markets?
A: Visit our publications and links page for additional resources on the voluntary and compliance markets for renewable energy.