FAQ Category: RECs and Other Global EACs

What is a Renewable Energy Certificate (REC) or Energy Attribute Certificate (EAC)?

  • A Renewable Energy Certificate (REC) is a market-based instrument that is issued when a renewable energy source produces one megawatt hour (MWh) of electricity and delivers it to the grid in North America. As a type of Energy Attribute Certificate (EAC), a REC is a tool that provides authorized documentation, allowing the buyer to claim consumption of that specific energy and its various benefits, but is typically traded separately from the underlying electricity. 
  • To qualify as an EAC, the renewable energy must be generated by wind, solar, biomass, geothermal, or certain hydropower sources. For wind power generation, turbines are used to transform the wind’s kinetic energy into electricity. Biomass energy is plant-derived material that is used (typically burned) to produce heat or electricity. Geothermal energy is derived from heat within the earth that is captured to generate electricity. Hydropower harnesses the force of flowing water by capturing kinetic energy, which can be converted into electricity using turbines and generators. Solar power is energy from the sun that is converted into thermal or electrical energy. Solar RECs or SRECs are certificates that are distinctly designated for electricity that comes from solar technologies. SRECs can be sold separately from the electricity they produce, which means producers with rooftop solar arrays can use the electricity on-site, then sell the SRECs to utilities. This is more common in states that have passed renewable portfolio standards (RPS).
  • There are new categories of EACs that have been developed to signify the environmental, social and other non-power attributes associated with renewable energy generation, like Peace RECs or P-RECs. P-RECs support emerging renewable energy projects in poorly electrified, climate-vulnerable countries where renewable energy investment remains limited. More specifically, a P-REC is an International Renewable Energy Certificate (I-REC) with a supplementary label from Energy Peace Partners certifying the project’s co-benefits. Issued under the I-REC standard, each P-REC represents 1 MWh of renewable energy generated, while also delivering social and economic co-benefits in the same community. To learn more about the benefits of P-RECs, read our case study.

Can every renewable power plant receive EACs?

  • EAC products vary by country, region, and state, and each renewable energy market has its own qualification requirements. EACs can be created from almost all renewable generation, but the EAC’s value is determined by its eligibility for specific markets depending on technology, location, generation period, etc. 
  • To avoid disputes over environmental benefit claims and to allow ownership to be transferred, RECs are typically tracked in electronic tracking systems. These databases assign a unique serial number to each REC based on generation data provided by the renewable facility. Tracking systems typically record the renewable facility location and owner, technology and fuel type, commercial online date, and the month and year the associated MWh was generated. As tracking systems are a requirement of many state RPS programs, it is beneficial for renewable generators to register their facilities. 3Degrees works with a variety of tracking systems and can accommodate facilities across the U.S.

What is the lifecycle of an EAC once it’s in the registry?

  • In order to register an EAC, the renewable energy operator has to apply to the EAC Register. Once that’s approved, they’ll receive an EAC for every MWh that is produced. The EAC Authority then goes through a verification process, prior to adding the EAC to the registry and issuing a certificate. 
  • After an EAC is registered, the EACs have a maximum life cycle that varies for different certificates and markets, and there are a couple of things that can be done—one, the EAC can be transferred, or purchased, by a buyer, and two, the EAC can be canceled, expired, or withdrawn, and deleted from the registry. Both of these actions will effectively retire the EAC as it can no longer be sold from the registry.

Besides RECs, what are some other types of EACs?

  • As RECs only cover North American markets, many buyers must look beyond RECs to meet their energy needs:
  • First, we will touch on what they often refer to as the European equivalent to North American RECs, Guarantees of Origin (GOs or GoOs). A GO represents the environmental attributes associated with one MWh of energy produced from a specific resource – this is not limited solely to consumption of renewables, but all types of energy. Over 25 countries in Europe can purchase GOs from the list of Association of Issuing Bodies (AIB) members, and are governed by the European Energy Certificate System (EECS).
    GOs are issued by the competent national authority to each renewable energy producer that owns eligible power plants. Since GOs represent all types of produced energy, a Renewable Energy Guarantees of Origin (REGO) shows that electricity has been generated from renewable sources. Typically, electricity suppliers will use REGOs to show consumers the proportion of renewable electricity they have been given.
  • International renewable energy certificates (I-RECs) represent transferable proof that one MWh of electricity was produced from renewable energy sources—wind, solar, ocean energy, biomass, hydropower, landfill gas, aerothermal, geothermal, and landfill gas projects—and added to an electrical grid. I-RECs grant corporate buyers in over 30 countries a credible tool to support renewable energy. 
  • Tradable Instruments for Global Renewables (TIGRS) are generally used in Asia and Central America and are exchanged on the tracking and trading platform for global EACs, called the TIGRs Registry. Typically, I-RECs are also used where TIGRs are available. 
  • Large-Scale Generation Credits (LGCs) are used to comply with Australia’s renewable energy target, and represent the generation of large-scale solar, wind or hydroelectric projects. 
  • Used in Japan, J-Credits are tradable emission reduction instruments recognized for renewable energy claims by the CDP and RE100 when issued from qualifying facilities. 
  • New Zealand Energy Certificate System (NZECS) is a recently established option that helps companies operating in New Zealand go the extra mile to reach their renewable energy targets. 

Who can sell RECs and other EACs?

  • Renewable energy producers, project developers, licensed wholesale retailers like 3Degrees, or anyone with rights to the EACs from a renewable asset (sometimes small business owners or even individual residences) are able to sell environmental commodities like RECs and other EACs. 

What does it mean for RECs and other EACs to be certified?

  • EACs make it possible for entities to make reliable claims about their energy usage. They play an important role in tracking and assigning ownership to renewable electricity generation and use. Since electricity is not tangible and tracing specific electrons through the grid is not possible, it is important to use EACs as an accounting instrument to certify the factual characteristics of how, where, and when a MWh of electricity was produced. Standards bodies like the Center for Resource Solutions define baseline criteria for renewable energy generation, which adds value to RECs that qualify for certification. Clear, credible REC and EAC specifications support a robust voluntary market. 
  • There are additional labels that can inform purchasers about the quality of the EACs, beyond what is legally required in verification compliance. An assortment of labels exist across global markets, which include third party audits, verified social impacts, and verifiable environmental protection criteria. 
  • Examples of third party standards that independently audit EACs are Green-e® and EKOenergy. These labels verify the chain of custody for EACs to ensure that only one customer claims credit for the renewable energy and environmental attributes created. Eco labels often record the type of power plant, the vintage, project site, technology used, and its unique operational focus. Green-e® is the most stringent and widely used voluntary REC certification program in the U.S. that sets buyer protection and environmental standards for REC products. EKOenergy is an internationally recognized, nonprofit eco label for renewable electricity, gas and heat. Consuming renewable power that meets national or international standards is imperative.