What are renewable energy credits (RECs) and why do they matter?

How do renewable energy certificates work?

These certificates function as proof that one megawatt-hour (MWh) of electricity was generated from a renewable energy source and fed into the power grid. When a renewable energy facility produces electricity, it creates both the physical electricity and a REC. The electricity goes into the grid, while the RECs can be purchased by individuals or organizations to claim the environmental benefits of that clean energy. By buying RECs, consumers support renewable energy production and can offset their own carbon footprint, even if the electricity they use comes from non-renewable sources.

Understanding RECs and their importance

RECs are a cornerstone of the clean energy economy. When you buy a REC, you're not purchasing the electricity itself — instead, you're investing in the environmental benefits of renewable energy. This is a powerful way for businesses to demonstrate a commitment to sustainability and for individuals who want to take steps toward a greener lifestyle. Whether you're a company aiming to meet sustainability goals or a homeowner wanting to make a difference, RECs offer a simple, impactful way to support clean energy.

Why RECs matter

RECs play a vital role in accelerating the transition to renewable energy. They help:

• Meet renewable portfolio standards (RPS): These are state-level policies that require utilities to source a certain percentage of electricity from renewables.
• Support voluntary green power markets: Individuals and businesses can choose to offset their electricity use by purchasing RECs.
• Drive investment in clean energy infrastructure: This is especially true in states like Texas, where wind and solar energy are rapidly expanding.

Evaluating the impact on your carbon footprint

Purchasing RECs is one of the easiest ways to reduce your carbon footprint — no solar panels or major investments required. Whether you're a homeowner, a small business or a large corporation, RECs let you:

• Offset the emissions from your electricity use with clean, renewable energy
• Support the growth of new wind, solar and other renewable energy projects
• Show your commitment to sustainability and climate action

For example, if your household uses 12,000 kilowatt-hours (kWh) of electricity per year, buying 12 RECs (each representing 1,000 kWh of renewable energy) can offset that usage with clean power. This is especially helpful for renters or businesses that can’t install on-site renewables but still want to make a meaningful environmental impact.

The role of tracking systems

To ensure transparency and prevent double-counting, RECs are tracked through certified systems. In Texas, the Electric Reliability Council of Texas (ERCOT) regulates the electricity market and, in turn, manages the REC trading program. Each REC is assigned a unique serial number and tracked from generation to retirement. This ensures that every REC is legitimate and claimed only once, providing confidence to buyers and regulators alike.

How RECs are generated

To appreciate the impact of RECs, it helps to understand where they come from. RECs are not just abstract certificates. They’re directly tied to the production of clean, renewable electricity. Whenever a generation facility produces renewably sourced energy, a REC is created to represent the environmental value of that electricity. This process ensures that each REC is backed by real, measurable renewable energy generation, making them a credible and effective tool for supporting the clean energy transition.

From solar farms to wind facilities

RECs are created when renewable energy facilities, like solar arrays or wind farms, generate electricity and feed it into the power grid. For every 1 megawatt-hour (MWh) of electricity produced, one REC is issued. In Texas, these often come from:

• Wind farms in West Texas and the Panhandle, which are some of the most productive in the U.S.
• Solar farms in South and Central Texas, where abundant sunshine makes solar energy highly efficient.
• Hydroelectric plants, though less common, also contribute to REC generation.

These RECs can be sold separately from the electricity, allowing customers anywhere to support renewable energy development.

Supporting climate goals with RECs

Investing in RECs is a simple yet impactful way to support the transition to clean energy. By purchasing RECs, you help fund renewable energy projects like wind and solar farms, reduce your carbon footprint and show your commitment to sustainability.  Whether you're a business, a city or an individual, RECs help you align with important environmental goals and policies. For example:

• Businesses can use RECs to meet their ESG (environmental, social and governance) commitments.
• Some Texas cities use RECs to meet clean energy goals and reduce emissions as part of their commitment to 100% renewable energy.*
• Utilities and governments rely on RECs to meet renewable energy targets, ensuring that more of our electricity comes from clean sources.

With programs like Reliant EcoShare℠ and Make It Solar, for a small monthly fee added right to your electricity bill, Reliant will purchase RECs or carbon offsets on your behalf to help reduce your overall carbon footprint. You can also enjoy 100% renewably sourced electricity plans like 100% Solar, which utilizes RECs to match 100% of your energy usage with solar-generated power. 

Navigating the green power market

As interest in clean energy grows, so does the market for RECs.  Understanding how the REC market works can help you make informed choices about your energy impact.

The RECs market operates in 2 main segments:

• Compliance markets, where utilities and electricity providers are required by law to purchase RECs to meet state Renewable Portfolio Standards (RPS).
• Voluntary markets, where individuals and organizations choose to buy RECs to demonstrate their commitment to clean energy and environmental responsibility.

Prices in both markets can fluctuate based on factors like supply and demand, policy changes and the type of renewable energy involved. 

The difference between RECs and SRECs

While all RECs represent renewable energy, solar renewable energy credits or certificates (SRECs) are a specific subset tied exclusively to solar power. Some states have "solar carve-outs" in their renewable portfolio standards, requiring a certain percentage of energy to come from solar sources. 

These carve-outs create a separate market for SRECs, which are often more valuable due to limited supply and strong policy incentives. By mandating that a percentage of energy consumption come from specific renewable sources, like solar energy, states can: 

• Encourage investment in solar technology
• Accelerate the growth of solar installations
• Ensures that solar energy plays a meaningful role in the state’s clean energy future

While Texas does not currently have a solar carve-out, SRECs can still be purchased voluntarily to support solar development.

Should you buy renewable energy credits?

If you’re looking for a simple, flexible way to support clean energy and reduce your environmental impact, RECs might be the perfect fit. Not sure if they’re right for you? See if any of these sound familiar:

• You want to shrink your carbon footprint
• You can’t install solar panels or switch energy providers
• You’d love to support clean, renewable energy projects
• You’re looking for an easy way to meet your sustainability goals
• You want to make a difference without changing your daily routine
• You care about aligning your lifestyle with your environmental values

If any of these resonate with you, RECs might be the perfect next step in your clean energy journey.

Supporting renewable energy with Reliant

At Reliant, we want to help customers support the growth of renewable energy and help reduce reliance on fossil fuels. Whether you're exploring clean energy options, investing in RECs or looking for simple ways to live more sustainably, we’ve got renewable home solutions that make it easy. 

Frequently asked questions

Do RECs mean I’m using green energy at home?

No, your electricity still comes from the grid, which includes a mix of sources. But by purchasing RECs, you ensure that an equivalent amount of renewable energy is added to the grid on your behalf.

Are RECs the same as carbon offsets?

No. RECs offset emissions from electricity use by supporting renewable generation. Carbon offsets, on the other hand, address emissions from other sources like transportation or manufacturing.

How do I know my RECs are legitimate?

RECs are tracked through certified systems like ERCOT in Texas. Each REC has a unique ID and is monitored from creation to retirement to ensure authenticity.

Can RECs help my business meet sustainability goals?

Yes, RECs are widely recognized in sustainability reporting frameworks. They’re a cost-effective way to demonstrate environmental commitment.

Source:

*https://frontiergroup.org/resources/clean-energy-pathways-texas/