Author: Maya Kelty

As Director of Regulatory Affairs, Maya Kelty supports 3Degrees and its clients on global regulatory, legislative, and other policy matters pertaining to renewable energy and emissions reductions markets.

Making RE100 technical criteria changes work for your company

Recent revisions to the RE100 technical criteria, published October 24, 2022, present new opportunities for current and prospective corporate members to align renewable electricity procurement with global grid decarbonization. To help members respond effectively, we’ve outlined the major changes, why they were made, and how to address remaining procurement limitations.


To support global grid decarbonization, the RE100 initiative brings together more than 370 companies committed to achieving 100% renewable electricity across their global operations. Led by Climate Group, in partnership with CDP, RE100’s mission is to drive change toward 100% renewable grids, both through members’ direct investments and by leveraging the advocacy of businesses to drive policymakers to accelerate the transition to a decarbonized economy. To ensure the credibility of its initiative, RE100 requires members to set an ambitious RE100 target to achieve 100% renewable electricity by 2040—with specific criteria for doing so—and to report annually on progress toward their goal.

RE100 provides a platform for corporations to demonstrate leadership and commitment to renewable electricity procurement as well as insight into remaining policy and market barriers. Based on member feedback from a growing number of geographies, RE100 periodically evolves its technical criteria to drive progress globally.


In its October 2022 technical criteria update, RE100 announced two changes designed to meet the needs of the growing market and encourage more impactful procurement actions from all members: market boundary alignment and a 15-year commissioning date. RE100 member procurements will be assessed against these updated requirements for the first reporting period that begins on or after January 1, 2024; for companies reporting on a calendar year basis, this will be the 2025 disclosure cycle.

Aligning EU Market Boundary Criteria

RE100’s updated technical criteria revised the single market boundary in Europe to Association of Issuing Bodies (AIB) member countries that are grid-connected and part of the EU single market, thereby aligning with CDP’s market boundary provisions. Exceptions are made for jurisdictions that import most of their electricity from countries meeting these criteria, such as Andorra, Monaco, and Vatican City. All other European countries now represent individual markets for renewable electricity. Legacy exemptions are allowed for contracts with operational commencement dates before January 1, 2024.

This update has several benefits. Importantly, the revision introduces a principle-based approach to defining market boundaries that can be applied globally: markets must have shared regulation and accounting as well as physical grid interconnectedness. The revision also ensures that a single certificate system (EECS) and a single governing body (AIB) are assessing certificate systems in Europe. This change is expected to encourage more countries to join the system.

For companies reporting to both RE100 and CDP, this update aligns reporting guidance to eliminate conflicting market boundary definitions. For others, this market boundary change may introduce a new restriction: RE100 reporting from 2022 indicates that at least 46 companies procured renewable electricity that would no longer be eligible under these updated rules.

15-year Limit on Commissioning and Repowering Dates

RE100 also introduced a 15-year commissioning and repowering date limit on the facilities members may procure from to meet 85% of their RE100 targets. This requirement does not apply to self-generation, on-site power purchase agreements (PPAs), or those from which there is a direct line connection or long-term project-specific contracts for which the buyer is the original offtaker. Contracts with operational commencement before January 1, 2024, are also exempt. RE100 members will be required to disclose commissioning or repowering dates beginning in the 2023 disclosure cycle.

This change aligns RE100’s technical criteria with the initiative’s mandate to accelerate progress toward zero-carbon grids. While certain exceptions are included to accommodate long-term commitments, data accessibility concerns, and unique procurement goals, this update encourages members to demonstrate leadership by investing in projects that drive new renewable electricity.


For some RE100 members, these changes do not address the significant policy and market barriers that still exist in certain countries and regions. RE100’s 2021 Annual Disclosure Report highlighted some of the most significant barriers corporations face. These include lack of credible procurement options and limited renewable electricity supply.

In addition to publicizing procurement barriers in its annual report, RE100 brings together geography-specific working groups to inform policy engagement. It also continues to study opportunities for credible cross-market procurement. The June 2022 technical criteria consultation initially proposed criteria for credible cross-market procurement, but RE100 chose not to move forward with this revision. After extensive consultation, it found that no credible cross-border procurement options currently exist, and that introducing strict criteria now would potentially limit development of such options.

When a lack of credible procurement options results in a company’s inability to meet its target, RE100 instructs companies take complementary actions in line with the campaign’s overall goal of accelerating the transition to zero-carbon grids. These include:

  • Transparently report on barriers to procurement. Transparent reporting helps RE100, policymakers and regulators, corporations, and other key stakeholders understand where market and policy limitations exist and helps enable collaborative discussions to drive solutions. If a company is unable to reach its target because the criteria for a credible renewable electricity claim cannot be met in a market, this represents a true lack of opportunities to contribute to grid decarbonization. Often, these jurisdictions require policy action to address non-financial barriers before supply-demand dynamics can drive renewable energy development. Shining a light on these market realities presents an opportunity for businesses to increase their impact and use their influence in combination with other organizations to advocate for market change.

“Members’ announcements should transparently acknowledge if RE100’s technical criteria were not met, and ideally where they were not met. This is not to penalize members: it is essential for amplifying calls for urgent policy change where RE100’s technical criteria cannot be met.”
How RE100 members are held to account

  • Engage in policy advocacy work, either through RE100’s focus areas or through other trade associations. Policymakers and regulators must understand the market and policy barriers companies face when trying to procure renewables in their country and why addressing those challenges is important to businesses. Sharing individual stories and challenges is critical, but there is often value in combining voices to show demand and drive action. Companies can participate in RE100’s policy work or advocacy efforts to engage with relevant stakeholders and propose market solutions.
  • Increase the impact of procurements in markets with increased options. Companies can also communicate how they are demonstrating leadership in other areas. For example, in markets where procurement is more accessible, companies can focus on high-impact procurement methods—such as procurement from new projects through long-term, direct, or project-specific contracts—or showcase innovative procurement strategies.

All current and prospective members should remember that RE100’s goal is to encourage renewable electricity adoption and support. That’s why it requires transparent reporting but does not emphasize penalties. The latest technical criteria changes should be seen as part of a larger effort to advance corporations’ adoption of renewable resources.

If you have any questions on the changes to the RE100 technical criteria or the initiative in general, please reach out.


SEC’s proposed climate-related financial risk disclosure mandate: what this could mean for your organization

SEC Climate-related risk disclosure

The impacts of climate change are so grave and far-reaching that virtually every entity and system on the planet is subject to some form of climate-related risk. Private industry is no exception and is already being confronted with the detrimental impacts of climate change. From the annual devastation of droughts and wildfires, to adverse weather events disrupting shipping and supply chains, to changing policies and consumer preferences, businesses increasingly must calculate climate risks and build long-term strategies to address them.  

To further reinforce this concept, earlier this year, the U.S. Securities and Exchange Commission (SEC) proposed a rule change that requires publicly listed companies to include climate-related disclosures in their financial statements and reporting, including disclosure of their greenhouse gas emissions. The implications of the proposed mandate are already causing ripple effects across the private sector. Companies are hypothesizing how the proposal could affect them and educating themselves on how to include climate risk in their strategic planning. 

The public comment period for the proposal has been extended to June 17, 2022, and we ‌expect the final rule to change before being brought to the SEC commissioners for approval later this year. For those of you who are catching up on the key pieces of the proposed mandate, in this blog, I’ll summarize what the proposal means for businesses, the main components of the rule, and expected timelines for when these policies might take effect.

SEC proposal aligns corporate climate-related disclosures with investor needs

The proposed rule requires climate-related financial risk disclosures in line with recommendations set forth by the Task Force on Climate-Related Financial Disclosures (TCFD) and greenhouse gas emissions disclosure in line with Greenhouse Gas Protocol’s Corporate Standard to be included in annual SEC filings. A company that knowingly misstates information related to climate-related risk could be subject to criminal penalties. Companies should interpret this to mean that they must take realistic steps to represent their climate-related risk and use reasonable assumptions to develop climate-related risk financial metrics. 

Most companies will need to make changes to their climate risk assessment processes and disclosures in response to the SEC reporting requirements. Currently, most companies do not report on climate-related risk in line with all TCFD requirements. The SEC’s analysis of the proposed rule highlights a Moody’s Analytics review of the public filings of 659 US companies in 2020/2021 that found very few included the 11 TCFD disclosures in their public reporting.1

Even companies reporting through CDP’s Climate Change Questionnaire, which has incorporated questions that align responses with TCFD disclosures, will need to step up their reporting. In a review of the 2020 survey (reported in 2021), CDP analysts found that only 14% of S&P 500 companies that reported to CDP achieved 100% TCFD-aligned disclosure. An additional 74% were at least 80% aligned with TCFD.2

CDP TCFD reportingCDP TCFD reporting

The introduction of TCFD-aligned reporting requirements by the SEC will significantly improve corporate and investor awareness of climate-related risks and enhance the resilience of investment portfolios. The TCFD is composed of companies that both prepare and consume financial disclosures. The recommendations are designed to guide companies toward meaningfully integrating climate change into their business planning and strategy development. The associated disclosures provide decision-useful climate-related data for investors, lenders, and others. They make it clear which companies are prepared to succeed in the transition to a net-zero economy. 

Qualitative climate-related risk and planning disclosure requirements

Transition risks are risks related to a potential transition to a lower-carbon economy on business and profitability.

Examples: Increased costs attributed to changes in law or policy, decreased sales, prices, or profits for carbon-intensive products as a result of lower market demand, the devaluation of assets, etc.

Physical risks refer to potential harm to businesses and their assets arising from acute climate-related disasters,

Examples: wildfires, hurricanes, tornadoes, floods, and heatwaves

as well as chronic risks, which refer to more gradual impacts.

Examples: long-term temperature increases, drought, and sea-level rise.

Transition risks are risks related to a potential transition to a lower-carbon economy on business and profitability.

Examples: Increased costs attributed to changes in law or policy, decreased sales, prices, or profits for carbon-intensive products as a result of lower market demand, the devaluation of assets, etc.

Physical risks refer to potential harm to businesses and their assets arising from acute climate-related disasters.

Examples: Wildfires, hurricanes, tornadoes, floods, and heatwaves.

Chronic risks refer to more gradual impacts.

Examples: Long-term temperature increases, drought, and sea-level rise.

The proposed mandate requires companies to accurately and comprehensively assess and report on their climate-related risks and accompanying plans. The following information is included in the description of climate-related risks:

  • A description of both transition risks and physical risks, and how the risks will play out over the short-, medium-, and long-term.
  • A description of the actual or potential impacts of climate risks; a description of whether and how these impacts are considered as part of the company’s business strategy, financial planning, and capital allocation; and a description of how the risks are likely to affect the line items of the company’s consolidated financial statements.
  • A description of the resilience of the company’s business strategy considering potential future changes in climate-related risks.
  • If the company has an internal price on carbon, disclosure of specific information about the price, including whether and why different prices are used in different circumstances.
  • If the company undertakes climate scenario analyses, details on this process, and the use of the analyses.
  • Climate-related risk management processes
    The company must describe any processes for identifying, assessing, and managing climate risks. If applicable, it must describe its transition plan to address specific focus areas outlined in the rule.
  • Disclosing established climate targets and related progress
    If the company has climate targets, including greenhouse gas reduction targets, it must disclose the targets and progress made towards the targets. This includes reporting on specific details about targets or goals that have been set, the data used to measure progress towards the goal, and details (e.g. source, location, registry, and cost) on any purchases of renewable energy certificates (RECs) or carbon credits.

Mandatory reporting of GHG emissions

  • All companies must disclose scope 1 and scope 2 emissions. These emissions must be disclosed separately in three forms: (1) total greenhouse gas emissions in each scope, disaggregated by constituent greenhouse gas and in the aggregate in carbon dioxide equivalent; (2) greenhouse gas intensity per unit of total revenue; and (3) greenhouse gas intensity per unit of production relevant to the industry.
  • A company must disclose scope 3 emissions if the emissions are material or if the company has a target covering scope 3 emissions, with the exception that small companies do not need to disclose scope 3 emissions. If required, scope 3 must be reported in the three forms described above.
  • Large filers and accelerated filers are required to submit an attestation from a greenhouse gas attestation provider for the calculation of their scope 1 and scope 2 emissions. This requirement is phased in several years after a company first submits an emissions disclosure.

Climate-related financial statement metrics and disclosures

Three categories of climate-related financial metrics are required to be included in a company’s audited financial statements: financial impact metrics, expenditure metrics, and financial estimates and assumptions. This includes the financial impacts of the physical and transition risks identified by the company, expenditures related to mitigating these risks, and the financial estimates of transition activities. These metrics and disclosures are subject to the company’s financial statement audit requirements.

The future of climate-related disclosure and resiliency planning

This preliminary proposal gives us a sense of what information investors seek in order to make informed decisions on the impact of climate change on their investments. We expect the SEC to receive significant comments on the proposed rule, both from those in favor of increasing the stringency of rules and from those opposed to the requirements. It is not clear where the final rule will land or what is a reasonable timeline for adoption. The earliest the rule could apply to any company is in 2024 for fiscal year 2023 reporting.

It is clear, regardless of the final details of the SEC mandate, that investors expect companies to take meaningful measures to integrate climate impact analysis and resiliency planning into their operations and company strategy. Incorporating related disclosures into annual financial filings will safeguard investments and provide critical information on what companies are doing to assess and mitigate climate-related risk. 3Degrees will remain at the forefront of SEC proposal developments and will follow up with noteworthy updates as they become available. 

For questions on how your organization can begin preparing for the pending SEC climate-related disclosure mandate contact us.


1How the CDP is aligned to the TCFD –
2 Moody’s Analytics webpage; (SEC proposal summary table on p.315)


Why COP26’s endorsement of carbon credit markets is a positive move

One world sign

COP26 negotiations surfaced both praise for and criticism of the role carbon markets can play in achieving the Paris Agreement climate objectives. Some environmental advocates at the recent meeting, including Greenpeace, made clear their strong disapproval of carbon credits and warned that these markets could undermine global climate goals. Such positions can result in either/or assumptions—either carbon markets or carbon reductions. However, such framing presents a false dichotomy and risks abandoning a powerful emissions mitigation tool at a time when we must be maximizing all options in the ‘climate change toolbox.’ The evidence shows that carbon markets have the potential to significantly accelerate and reduce the costs of global emissions reductions. That understanding led negotiators in Glasgow to finalize rules to enable international trading of carbon credits. Despite the challenges facing carbon credit markets, we believe that, properly implemented, they are a critical component of any credible climate strategy that’s committed to achieving global net zero emissions. This blog outlines the value that carbon credits and markets have for reaching that goal.

Carbon Credits Will Be Necessary to Achieve Net Zero Emissions

Avoiding the worst impacts of climate change will require that, after maximizing emissions reductions, all residual emissions must be balanced with carbon removals annually by 2050. The SBTi Net-Zero Standard has made clear that corporates setting net zero targets must also commit to neutralizing residual emissions with carbon removals. In short, reducing emissions alone won’t get us to the ultimate goal. Naturally, ensuring adequate neutralization of remaining emissions will require scientifically rigorous methodologies for quantifying and verifying removals, which will build off of existing carbon credit frameworks.

Carbon Credits Must Complement a Strategy to Reduce Absolute Emissions

Just as emissions reductions alone won’t achieve the net zero goal, neither will carbon credits. Environmental NGOs, including Greenpeace, governments, and other members of civil society are right to be skeptical of organizations using carbon credits to avoid aggressively reducing their internal emissions. A credible and adequate net zero strategy must prioritize operational and value chain emissions reductions before pursuing external emissions reductions. Purchasing carbon credits to address unabated emissions is not on its own a climate strategy, for countries or corporates. Investments in external emissions reductions projects must always be part of a larger strategy that prioritizes internal emissions reduction.

Carbon Credits Align Corporate Strategies with Global Climate Needs

Conversations ahead of and during COP26 emphasized that achieving global net zero requires scaling up financing to support nature-based emissions reductions and developing carbon removal technologies. The release of SBTi’s Net-Zero Standard in the lead-up to COP26 clarified the pivotal role that private companies should play in providing this finance by investing in “beyond value chain emissions reductions,” including in the form of carbon credits. It makes clear that corporate climate leadership means seeking opportunities to invest in mitigation beyond an organization’s own carbon footprint. The standard states: 

Decarbonizing a company’s value chain in line with science and reaching net-zero emissions by 2050 is increasingly becoming the minimum societal expectation on companies. Businesses can play a critical role in accelerating the net-zero transition and in addressing the ecological crisis by investing in mitigation actions beyond their value chains.

These investments absolutely cannot replace or delay setting and pursuing deep emissions cuts, but they do ensure that corporate strategies support the global objective of net zero.

Credible, Transparent Accounting Is Critical to Carbon Markets’ Success

The Article 6 negotiations at COP26 laid the groundwork for robust accounting associated with international carbon trading. Any country that exports an emission reduction must “correspondingly adjust” its own emissions inventory to ensure no double-counting of emissions reductions. A “Supervisory Body” has been designated the responsible party for approving carbon credit methodologies, and it must create a high standard for which projects will be allowed in the market. These details are critical to addressing the criticism that carbon markets do not deliver the stated emission reductions due to inadequate accounting regimes. 

The voluntary carbon market is also on track to continue its trend of consistent improvements in credit quality and accounting. Scientific advances around greenhouse gas quantification allow project developers to consistently improve the monitoring, reporting, and verification of credits. Stakeholder demands for more transparency in the use of carbon credits to achieve climate targets also encourages companies to publicize the details of their carbon investments. Transparent climate strategies send long-term demand signals for high-quality credits, which builds market certainty and allows project developers to make the necessary investments to bring high-quality credits to market.

Both/And Solutions Offer Near-Term and Long-Term Benefits

COP26 negotiations made clear that carbon credits will play a role in achieving our global climate objectives. While carbon removals are needed to meet net zero, the robust quantification methodologies offered by carbon credit standards are essential to ensuring that emissions are adequately neutralized around the globe. Well-designed carbon markets can leverage near-term governmental and private sector climate targets to support long-term emissions reductions in hard-to-abate sectors, particularly over the coming decades. These investments must be within a comprehensive strategy that is underpinned by robust accounting and complemented by public reporting on progress toward internal reductions.

Green-e® Energy certification provides important market value

Green-e energy

Green-e® is the leading independent certification and verification program for renewable energy in the North American retail electricity market. The program aims to uphold the integrity of renewable energy and climate products and advance clean energy policy and technology. At 3Degrees, we are committed to ensuring all renewable energy certificate (REC) sales help support a robust voluntary renewable electricity market, and therefore always advise our voluntary buyers to purchase Green-e® Energy certified RECs in North America. Recently, as the price of Green-e® Energy certified RECs has increased, it has become more common for some suppliers to offer RECs that do not meet Green-e® Energy standards to buyers.     

In this blog, we’ll explore how and why Green-e® Energy certification was developed and the role the certification continues to play in supporting strong standards for the voluntary renewable energy market.

Background about Green-e® Energy certification

When retail marketing of certificates started gaining popularity in 2000 and 2001, the risk of consumer confusion and the potential for misleading advertising quickly became apparent. In response, the NGO Center for Resource Solutions incorporated RECs into The Green-e® Energy Standard in 2002. From the start, Green-e® Energy has been based on a stakeholder-driven standard and guided by an independent governance board with representatives from environmental NGOs, renewable energy project developers, and other industry experts.  

Since 2002, the standard has been updated numerous times (at least every three years) to maintain relevance to voluntary market needs. This rigorous commitment to public process has led to the standard being referenced or required by a number of certification standards and reporting frameworks. 

Throughout this evolution, the mandate of Green-e® Energy has always remained the same: maintain credible standards for renewable energy products that support the growth of renewable energy development above and beyond state mandates, while also ensuring consumer protection and transparency. To do this work, Green-e® Energy requires:

  • Chain-of-custody audits of the REC supply chain to prevent double counting
  • Facility-level review of potential double claims 
  • Verification of the accuracy and transparency of suppliers’ marketing messages
  • Validation that the renewable energy is incremental to any government mandates for renewable energy, which also helps customers maximize their impact
  • Additional steps to address potential interactions with state policies that could limit the ability of voluntary customers to claim custody of purchased RECs

Clear, credible REC specifications support a robust voluntary market

3Degrees firmly believes that markets have the power to lead meaningful environmental change. The Greenhouse Gas Protocol reaffirms this concept of change by including a market-based methodology in its Scope 2 Guidance. Demand for specific attributes of electricity generation — in this case, renewable attributes — push up prices and can stimulate supply.

While a REC is created for each MWh of renewable energy generated, the type of renewable energy generation, the age or location of the facility, and other information about renewable energy represented by a REC can vary considerably. Green-e® Energy certification defines baseline criteria for renewable energy generation, which adds value to RECs that qualify for certification. For example, the certification stipulates that facilities supplying a certified product must be newer than 15 years old and that RECs must be generated close in time to a buyer’s electricity consumption. When RECs that meet these criteria increase in price, it signals to the market that more buyers value the attributes defined in the Green-e® standard and more generation that meets this standard should be built. This is the outcome that NGOs, 3Degrees, and most voluntary buyers want to support.     

A supplier offering non-certified RECs significantly below Green-e® market price is likely offering RECs that are not eligible to be Green-e® certified, which undermines the integrity of the market. Many factors can contribute to ineligibility, including the facility being older than Green-e® Energy online date requirements, the facility not meeting sustainability criteria for hydro and biomass, or double claims issues that arise when multiple parties aren’t clear in public statements about REC ownership. RECs that are not eligible for Green-e® and are not eligible for a renewable portfolio standard (RPS) are typically thought to have little to no environmental value and have not been salable. Buyers and sellers who insist on Green-e® Energy certified RECs will ensure this continues to be true.    

Occasionally, there may be older projects that warrant voluntary market support, such as when a project requires funding in order to continue to operate or to complete upgrades to key generation equipment. If a supplier is marketing RECs in this way, we recommend that clients ask the supplier to substantiate the claim that REC revenue is needed to properly maintain the facility. 

Voluntary renewable energy markets can have an even greater positive impact

Voluntary REC buyers support the development of renewable energy projects of all sizes and types across the country. As a leading supplier of Green-e® certified RECs, 3Degrees has sent tens of millions of our customers’ dollars to project developers. As the price of energy from new renewable generation has declined and an increasing percentage of new projects represent the lowest-cost option, many voluntary buyers are thinking about how to ensure their purchase remains meaningful beyond simply reducing their Scope 2 emissions.     

The good news is that there are many options. One recent paper we recommend reading was authored by Megan Lorenzen and Max Scher at Salesforce. Entitled More than a MW: Embedding social and environmental impact in the renewable energy procurement process, this paper discusses a list of values, such as being located in regions with higher-than-average emissions, that can be supported by projects which also generate RECs. The REBA Institute has since launched a program to further explore the findings of this paper. 

3Degrees is doing its part to push the market toward higher impact REC products. We continue to expand our portfolio to include products that improve the integrity and impact of renewable energy purchases, including products that are certified through the Green-e® Energy, EKOenergy, and Peace REC programs.  Even as we focus on product differentiation, our commitment to helping maintain clear, credible standards for the majority of voluntary RECs purchased remains unwavering.

Supporting the longevity of Green-e® Energy Certification and other global ecolabels is vital to safeguarding these standards and promoting the continued growth of the renewable energy market in North America and around the world.


Translating the NREL Voluntary Green Power Market Report


With the release of NREL’s 2017 U.S. Voluntary Green Power Market report, and most of 2018 in the rear view mirror, we can now safely look back on a few of the prevailing trends in the market with confidence and clarity as we gear up for 2019. The year of 2017 was a bumper year for the U.S. voluntary green power market: MWh sales grew almost 28% from 2016 levels – the largest YoY growth since before 2010 1 – and total sales eclipsed the 100 million MWh mark for the first time on record. Here are a few key takeaways to help explain this marked growth and keep an eye on going forward.

Product Differentiation:

The proliferation of differentiated products within the voluntary green power market has helped fuel sales growth by creating a more robust market capable of supplying a wider range of customer segments. Indeed, 2017 saw customers buying a more diversified mix of green power (all backed by RECs) than ever before.2 PPAs and Utility Contracts (green tariffs and bilateral contracts) accounted for their highest combined share of sales on record (>20%), while Unbundled RECs, Competitive Suppliers and Utility Green Pricing programs continued to make up the majority of the market. Declining costs of renewables and enabling market conditions together helped catalyze this growth in product differentiation.

Corporate Target Setting:

The trend in corporate renewable energy and emissions reduction target setting is picking up pace and driving demand in the voluntary green power market. One out of five North American headquartered companies reporting to CDP now has a renewable energy target in place and that number is even higher for companies setting broader emissions reduction targets.3 Moreover, the number of renewable energy targets reported by North American headquartered companies reporting to CDP grew 35% in the 2017 reporting year. This trend is even more exaggerated at the global scale; since 2015, the number of science-based targets has grown at a compound annual growth rate of 62%, marking a concerted and strategic effort by the private sector to work towards a shared goal.4 We see this trend continuing to strengthen as more companies learn of the benefits of setting and meeting renewable energy targets.

Unbundled RECs:

Heading into 2018, the market for national Unbundled RECs experienced a sustained uptick in prices for the first time in almost five years. Many in the industry had wondered where the floor was for this market and early 2017 prices appeared to be the answer. Unbundled REC prices have since rebounded and we can now safely attribute this market adjustment to higher voluntary demand.

Unbundled REC sales in 2017 totaled over 51 million MWh, representing 14% growth over 2016 levels. Despite the significant growth in MWh sales via PPAs over the same period, demand for Unbundled RECs does not appear to be stunted. In fact, in addition to the 14% growth in sales, the number of buyers participating in the unbundled REC market grew 78% in 2017, by far the highest YoY growth on record.5 We believe the bulk of this growth in participation came from the residential and small commercial sectors; however, it may be that PPAs have played a part in the spike in Unbundled REC participation by generating awareness and attracting first time buyers to the green power market. Either way, we expect continued growth in the unbundled REC market, especially as many corporate renewable energy and emissions reduction targets have deadlines due up in 2020.6

A Paradox of Choice and the Risk of Customer Confusion:

As with many markets, more customer choice can bring the potential for more customer confusion. Several green power products on the market today run a higher risk of not being backed by RECs, thus not counting as green power. For instance, in 2017 less than 25% of sales through Community Solar offerings were backed by RECs.7 This is because RECs from Community Solar projects are often sold separately in state RPS’. Community Choice Aggregations and Competitive Supply contracts also run a higher risk of not being backed by RECs, or supplying RECs from non-local projects without an explicit disclaimer. Consumers can guard against this by ensuring that the purchase agreement in place between buyer and seller explicitly include and disclose the source of the RECs, or by seeking out certified products.

The diversification of the renewable energy product mix marks a decidedly positive evolution in voluntary green power markets: it allows different customer segments to satisfy specific needs by tailoring products to those needs. It also highlights the need for strategy and discernment on the part of buyers to ensure internal needs are met by the product and to avoid unintentional shifts away from green power.

The U.S. voluntary green power market continues to grow and mature. Catalyzed by falling costs, a more diverse set of available products and an increasing appetite from corporations needing to meet sustainability targets, we believe the market is primed for strong future growth and is well equipped to meet a growing set of customer needs, while making significant contributions to the decarbonization of the U.S. power grid.

(1) NREL data, going back to 2012,  (2) NREL data, going back to 2012 (3) 2017 CDP climate change questionnaire (4) Science Based Targets, Nov 2018 (5) NREL data, going back to 2012 (6) 2017 CDP climate change questionnaire (7) Figure 38 in NREL’s 2018 report