Renewable Energy Certificates
Renewable Energy Certificates or RECs for short is the name given to the digital certificates which hold details of exactly how a unit of electricity was made, by whom and finally who bought and used it. These RECs are traded separately from the actual electricity itself and work as a bonus premium on top of the price paid for the unit.
Kyoto's emissions targets and associated feed-in tariffs are now encouraging Energy Companies to generate a minimum of 10% of their electricity output from sustainable sources. If they have not managed to produce the required amount of green energy themselves they must buy RECs on the open market to make up the shortfall. If they fail to buy the required amount fines can be imposed.
RECs are good news for renewable energy as they ensure a certain minimum percentage of Green Electricity is produced nationally and provide the financial incentive to encourage generators to invest in Renewable Energy Schemes of their own.
What are Renewable Obligation Certificates?
Renewable Obligation Certificates or ROCs is the UK's name for its REC scheme.
What are Green Tags?
The US use the term Green Tags to describe their equivalent to European RECs.