How to Buy Clean Energy:
Buyer’s Guide to RECs


How to Buy Clean Energy:
Buyer’s Guide to RECs


Companies around the world are committing to GHG reduction goals, such as Science-Based Targets, at an unprecedented pace. As part of their journey, companies are expected to measure and reduce their Scope 2 emissions – principally derived from their electricity consumption. Scope 2 emissions can be reduced by using less power, such as through efficiency upgrades, however most Scope 2 progress comes through the transition to clean (zero emission) electricity supply.

Despite the importance of clean energy in this equation, the mechanisms for purchasing and accounting for the consumption of clean energy are often misrepresented and misunderstood. This confusion has led to blanket criticism and press coverage of RECs as “not real,” and even evidence of corporate “greenwashing.”

In this primer, our team sheds light on how RECs work, how to gauge REC quality, and how to understand your options for buying RECs that meet your needs.

Renewable Energy Certificates (RECs) 101

Regardless of the source of electricity generation, once power is exported onto the grid for transportation, all power is fungible, therefore it is impossible to recognize “renewable” power as it reaches your facilities. To solve for this fact and track the environmental attributes of power generation, “Renewable Energy Certificates” (RECs) and Tracking Systems were created – initially by states to monitor compliance with regulations that mandated the adoption of renewable energy. Note: Renewable Energy Certificates and Renewable Energy Credits are used interchangeably in the industry.

These certificates, originating in the 1990’s to early 2000’s, became the fundamental and unavoidable accounting instrument for tracking the attributes of power generation. RECs are generated in parallel with the physical power (1 MWh = 1 REC) and may be sold separately from the physical power. RECs contain embedded information such as the technology and date (the “vintage”) of generation. Once generated, the RECs are tracked electronically in a registry, such as the Generation Attribute Tracking System (GATS) of PJM, where they can be transferred to another entity and/or retired.

Image: North America Tracking Systems

When making a voluntary purchase of clean energy, companies must purchase RECs and have them “retired” on their behalf – thereby removing the tradable certificates from circulation and claiming the Scope 2 reduction benefits for their own operations. Once retired, these RECs may be applied in your GHG Inventory to replace carbon-intensive electricity consumption. Importantly, there is no alternative to RECs, as RECs are the only acceptable instrument for purchasing renewable energy to reduce emissions. However, not all RECs are created equally.


How to Buy Renewable Energy

In seeking to avoid greenwashing claims and ensure your purchases are impactful, what matters most is how you select and purchase these RECs. While the standards for “high-impact” RECs are evolving, there are 5 common considerations that Buyers should understand:

Consideration #1: Certification

Multiple organizations exist to control quality standards for RECs around the world. In North America, the leading standard-setting body is the Center for Resource Solutions (CRS), the non-profit that administers the Green-e certification program. Green-e certification provides validation that your RECs meet certain quality criteria, and while certification is optional, Green-e has become a common standard followed by most voluntary REC Buyers.

Consideration #2: Additionality

Purchases that are influential in adding new renewable energy generation onto the grid are characterized as having “additionality”, whereas RECs purchased from pre-existing solar and wind projects lack additionality and are perceived as lower quality. RECs from existing projects are often sold separately from the underlying physical power, in which case they are labeled as “Unbundled RECs,” and fall on the low end of the spectrum of additionality.

Consideration #3: Deliverability

The GHG Protocol allows for RECs generated within a certain geographic boundary (such as the boundary surrounding the United States and Canada) to be applied to consumption within that boundary. However, there is growing pressure to ensure that RECs are generated closer to the point of consumption – and particularly on a grid that is physically connected (and thereby “Deliverable”) to the grid that serves your load.

Consideration #4: Emissionality

Rather than prioritizing the proximity of REC generation to consumption, some organizations may choose to prioritize RECs generated in grids that are more carbon intensive – thereby increasing the grid decarbonization effects of their purchases. “Emissionality” is the term coined to describe the measurement and prioritization of the grid-level emission-reduction impacts of your REC procurement.

Consideration #5: Time-Matching (24/7 CFE)

Finally, some organizations are sounding the alarm that the status quo of “annualized matching” of REC purchases is not enough. If your operations continue after the sun goes down, no amount of Solar REC purchases can truly decarbonize the grid serving your load. As a result, companies are beginning to seek RECs that match their consumption on an hourly-basis, incorporating a portfolio of technologies including storage, hydroelectricity and geothermal that match their hourly load profile in aggregate.

For any company, it’s important to understand your options and select REC purchasing strategies that meet your unique environmental and financial goals.

We have distilled the various options into 5 general categories:

  1. 1. Unbundled RECs

    Purchase Unbundled RECs from an operational project as a standalone commodity, with price driven by supply and demand in each market. These generally lack additionality.

  2. 2. Retail-Bundled RECs

    Bundle RECs into deregulated power supply contracts for a price premium, with varying structure and pricing. These often lack additionality, but can be structured for additionality.

  3. 3. Green Utility Programs

    Acquire RECs through standard or custom-negotiated rate tariffs and/or programs offered by regulated utilities. These programs are diverse and sometimes provide additionality.

  4. 4. On-Site Generation

    Install on-site solar (or wind) generation and produce RECs for self-consumption. These are arguably the most additional RECs available, however they are often limited in scale.

  5. 5. Off-Site PPAs

    Bilateral contracts with an off-site project, where the Buyer receives RECs and fixes a long-term power price. PPAs are complex, but offer strong additionality claims at scale (read more on PPAs).

Companies should explore and pursue a portfolio of these options, tailored to their operational footprint and commercial requirements. This portfolio may even evolve over time as demand grows and the organization advances in maturity or ambition.

Some of these options come at a guaranteed price premium, as is the case with Unbundled RECs, whereas other options including on-site solar PV can provide guaranteed cost savings – often with no upfront cost required.

Renewable Energy Advisory

We’ve helped some of the most recognizable brands in the world to understand, evaluate, and implement the right options for them. This process includes the analysis of energy data across a company’s operations – allowing us to construct a portfolio based on criteria such as the regulatory environment, market structure, facility characteristics, credit profile and risk appetite of the company.

Interested in identifying the right solutions for your company? Get in touch with our team.