What are renewable energy credits (RECs)?

Renewable energy credits (RECs) are indeed certificates that serve as proof that 1 megawatt-hour of electricity was generated from a renewable energy source. Each REC corresponds to a specific quantity of renewable energy produced and can be sold or traded, allowing businesses and individuals to support renewable energy generation even if they are not directly using that energy themselves. This mechanism helps to create a financial incentive for the development of renewable energy projects by allowing the owners of these projects to monetize the environmental benefits associated with their energy production.

In many regions, RECs play a vital role in helping organizations meet regulatory requirements or voluntary sustainability goals, as they can be used to demonstrate compliance with renewable portfolio standards. They are a crucial component of the renewable energy market, promoting investment and encouraging the growth of renewable energy sources, which are essential for transitioning to a more sustainable energy future.