How Much Is A Renewable Energy Certificate Worth?

How much is a renewable energy certificate worth?

A renewable energy certificate (REC), also known as a renewable energy credit, green tag, or tradable renewable certificate, is a market-based instrument that represents the environmental attributes of 1 megawatt-hour (MWh) of renewable electricity generation. RECs are issued when a renewable energy facility like a wind farm or solar installation generates 1 MWh of electricity and feeds it into the grid. The REC embodies all of the environmental benefits of that 1 MWh of renewable energy and can be sold separately from the underlying electricity.

The purpose of RECs is to provide a revenue stream for renewable energy projects and create a market-driven incentive for new renewable generation. Entities can purchase RECs to offset conventional electricity use, meet renewable energy targets, or make renewable energy claims. Because the environmental attributes are sold separately from the power itself through RECs, purchasers gain the right to claim usage of renewable energy. This makes RECs a flexible and tradable way to track, verify, and monetize renewable electricity generation and its environmental benefits.

REC Pricing

The price of renewable energy certificates (RECs) is primarily driven by supply and demand dynamics in REC markets. Some key factors that influence REC prices include:

Supply – The amount of new renewable energy capacity coming online affects REC supply. More renewable energy projects creating RECs can lead to oversupply and lower prices. Lack of new projects can lead to undersupply.[1]

Demand – State renewable portfolio standards (RPS) requiring utilities to acquire RECs create baseline demand. Higher RPS targets increase demand. Voluntary corporate and individual purchasers also affect demand.[2]

Energy prices – Higher fossil fuel energy prices make renewables more cost competitive, increasing REC prices. Lower conventional energy prices decrease REC prices.[1]

Market dynamics – Speculation, lack of transparency, and lack of liquidity can exaggerate booms and busts in REC markets.[2]

Regional pricing differences

There is significant variability in REC prices across different regions of the US. According to the EPA, REC prices range from $0.75-$35/MWh across states with renewable portfolio standards (RPS), while voluntary REC purchase prices range $0.5-$35/MWh across the country (EPA). The main drivers of regional REC price differences include:

– Supply and demand – States like Texas have an abundance of wind power and thus lower REC prices, while states with high RPS targets and limited renewable resources have higher prices due to scarcity. Supply outpacing demand can crash REC prices.

– RPS eligibility – Whether a REC can be used for compliance under a state’s RPS greatly impacts its market value. Compliance RECs demanded under RPS consistently fetch higher prices.

– Market structure – States with “voluntary” markets driven by green power purchases have lower REC prices than “compliance” markets driven by RPS demand. According to EnergySage, voluntary RECs average under $1/MWh while compliance RECs range $1-$35/MWh (EnergySage).

– Vintage – Newly minted RECs are worth more than older vintage RECs.

Understanding regional dynamics is crucial for REC market participants to maximize value.

Pricing over time

Renewable energy certificate (REC) prices have experienced significant fluctuations over the past decade as the market has evolved. According to S&P Global, the average REC price in 2011 was around $1.20/MWh. Prices remained relatively low through 2015, averaging under $1/MWh in most major REC markets like PJM.

However, prices began climbing steadily from 2016-2019. In PJM, average REC prices reached historic highs of over $5/MWh in 2019. This massive price increase was driven by state renewable portfolio standards requiring larger amounts of renewables. Supply struggled to keep up with rising demand, resulting in shortages and price spikes for RECs.

More recently, average PJM REC prices dipped back down to around $2/MWh in 2020. But prices are on the rise again, with PJM averaging over $3.50/MWh in Q2 2022 according to OPISnet. Factors like higher renewable energy targets, transmission constraints, and load growth continue to place upward pressure on REC pricing.

Overall, REC prices have experienced significant volatility over the past decade. After remaining depressed from 2011-2015, prices have trended upwards dramatically as demand has outpaced supply. Pricing is likely to remain elevated and volatile in the years ahead as RPS targets ratchet up.

Future pricing predictions

Expert projections indicate that REC prices will likely continue to increase over the next decade. According to S&P Global Market Intelligence, the US renewable energy credit market size is expected to double to $26 billion by 2030.[1] Rising demand from corporations and states with renewable energy mandates is driving growth in the REC market. In competitive markets like PJM, REC prices are projected to increase from around $2 per MWh currently to $15 per MWh by 2030.[1]

However, REC price growth may begin to slow down after 2030 as renewable energy becomes more widespread and REC supply increases. The EPA predicts more modest REC price increases after 2030, to around $5-10 per MWh on average nationally.[2] Regional differences will continue to exist based on local renewable energy policies and demand. Overall though, most experts anticipate steady, but slower REC price appreciation over the long-term as renewables mature.

REC pricing models

There are different models used to determine REC prices. Two main approaches are fixed price and variable price models.

With a fixed price model, the price per REC is set for the duration of the REC contract. This provides price certainty but does not account for changing market conditions over time. As noted in Estimating Forward REC Price Curves (, fixed price contracts can result in misvaluation if REC prices change significantly during the contract period.

Variable pricing models tie the REC price to an index that reflects market prices. As discussed in ComEd’s comments on Illinois’ draft long-term plan (, variable pricing reduces risk by allowing the REC price to adjust based on market conditions. However, it can also lead to uncertainty, as the final price is not known at the outset.

In determining which model to use, buyers and sellers must evaluate their risk tolerance and desire for price certainty versus flexibility. Hybrid models that blend fixed and variable components are also an option. But in general, REC pricing continues to evolve as markets mature.

Benefits of RECs

Purchasing RECs offers significant benefits for organizations and businesses looking to increase their sustainability and meet environmental goals. Some key benefits include:

Added Brand Value

RECs enable companies to make credible sustainability claims and demonstrate a commitment to using clean energy. This enhances brand image and reputation, satisfying environmentally-conscious consumers and stakeholders.

Promoting renewable energy usage makes brands appear more ethical and progressive. Studies show consumers are more likely to switch to brands committed to fighting climate change.

Meeting Sustainability Goals

RECs provide the most flexible and cost-effective way for organizations to use more renewable energy. Buying RECs directly enables companies to meet clean energy or carbon-neutral commitments.

Large companies with climate pledges can purchase RECs at scale to offset their non-renewable power use. This helps them achieve net-zero emissions or 100% renewable electricity goals.

Marketing Claims

RECs substantiate environmental marketing claims with an accredited proof of purchase. Companies can accurately state they support clean electricity generation.

Prominent logos like Green-e certified and LEED verified validate renewable energy claims. Clear certification gives credibility to sustainability messaging.

Criticisms of RECs

Some criticisms have been raised about the effectiveness of renewable energy certificates (RECs). One major concern is around the issue of additionality – that is, whether the purchase of RECs actually leads to additional renewable energy generation capacity being built.

Critics argue that many REC purchases, especially by corporations, are for existing renewable energy projects that would have been built anyway. Therefore, the REC purchase doesn’t drive any additional renewable capacity, but rather just allows the corporation to claim they are using green energy [1]. This has been termed “buying indulgences” – paying for absolution without changing behavior.

There are also concerns around double counting and re-selling. Since RECs are tradable instruments, there is the potential for the same REC to be sold to multiple buyers or for generators to sell more RECs than they have actually generated renewable energy [2]. This can undermine the credibility of RECs.

These issues have led some critics to argue that RECs allow companies to engage in “greenwashing” without meaningfully supporting new renewable energy development [3].

REC Trading Platforms

Renewable energy certificates (RECs) are tradable commodities that represent the environmental attributes of 1 megawatt-hour of renewable electricity generation. There are a variety of platforms that facilitate the buying and selling of RECs between generators, utilities, and other parties:

Some of the major REC trading platforms include:

  • APX – Founded in 1999, APX operates the largest REC registry in North America and offers both spot market and futures trading of RECs.
  • Evolution Markets – Founded in 2000, Evolution Markets runs online auctions for RECs and carbon offsets in both the voluntary and compliance markets.
  • GreenX – GreenX operates an electronic platform for REC trading in both the voluntary and compliance markets across North America.
  • Midwest Renewable Energy Tracking System (M-RETS) – M-RETS provides REC tracking and trading services focused on the Midwest region of the United States.

These online exchanges and registries allow REC buyers and sellers to efficiently find counterparties, settle transactions, and transfer ownership of RECs. They provide price transparency and help spur liquidity in REC markets.


In summary, renewable energy certificates provide an innovative market-based approach to increasing renewable energy usage and funding clean energy projects. While pricing varies regionally and over time, the overall value proposition of RECs is clear – they incentivize renewable energy production and reduce carbon emissions. The future outlook for RECs is bright, with growing corporate and government demand driving continued growth. Platforms like those developed by Hedera and EDF will also help increase REC trading efficiency and transparency. Though not without valid criticisms, RECs represent an important tool for achieving sustainability that will only increase in significance. By driving the renewable energy transition, RECs can help lead us to a cleaner energy future.

Overall, renewable energy certificates are a valuable mechanism for accelerating the adoption of renewable energy sources. By providing an additional revenue stream for wind, solar, and other renewable projects, RECs make these projects more financially viable. Greater deployment of renewable energy displaces fossil fuel generation, directly reducing greenhouse gas emissions. While pricing fluctuates, the economic incentives of RECs will continue driving investment in renewables. With increased corporate and government renewable energy commitments, demand for RECs is poised for steady growth. Despite criticisms about additionality and transparency, RECs remain an important tool for achieving sustainability goals. By incentivizing the renewable energy transition, RECs can help lead us to a cleaner energy future.

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