Are Renewable Energy Certificates (RECs) a valuable tool for encouraging the development of alternative energy projects--like wind farms--or are they the Pet Rocks of the green energy movement? My answer is an unequivocal yes!
Here is a link to a Wikipedia article on the subject.
en.wikipedia.org/wiki/Rene...rtificates
My understanding of the Wikipedia article is that if I'm a wind farm owner, I can sell directly to electrical utilities, where the electricity that I produce is comingled with electricity from other sources. Then, in a completely separate transaction, I can sell RECs to corporations and government agencies who want to make unrealistic claims about their low 'carbon footprints'.
My relatively small income from this second source could make a marginal site for a second wind farm look more attractive. In that sense, the RECs may be doing some good in the long term.
The problem is that there is a nearly complete decoupling between the electricity that I'm pumping into the grid, and the sale of the RECs. (The main restriction is that I can't sell RECs for more electricity than I actually produce.) If I had zero customers for my RECs, I'd still be selling electricity to the utility company. Although the prices of RECs are highly variable, they are still relatively low, compared with the actual production costs for green energy.
The corporations are already getting electricity from their utility companies. So what are they actually getting when they buy RECs? PR points.
Here's a bittersweet story in BusinessWeek, about an environmentalist, who is trying to make a difference in the corporate world, and who is having second thoughts about RECs.
www.businessweek.com/magazin...6001.htm
Here is a link to a Wikipedia article on the subject.
en.wikipedia.org/wiki/Rene...rtificates
My understanding of the Wikipedia article is that if I'm a wind farm owner, I can sell directly to electrical utilities, where the electricity that I produce is comingled with electricity from other sources. Then, in a completely separate transaction, I can sell RECs to corporations and government agencies who want to make unrealistic claims about their low 'carbon footprints'.
My relatively small income from this second source could make a marginal site for a second wind farm look more attractive. In that sense, the RECs may be doing some good in the long term.
The problem is that there is a nearly complete decoupling between the electricity that I'm pumping into the grid, and the sale of the RECs. (The main restriction is that I can't sell RECs for more electricity than I actually produce.) If I had zero customers for my RECs, I'd still be selling electricity to the utility company. Although the prices of RECs are highly variable, they are still relatively low, compared with the actual production costs for green energy.
The corporations are already getting electricity from their utility companies. So what are they actually getting when they buy RECs? PR points.
Here's a bittersweet story in BusinessWeek, about an environmentalist, who is trying to make a difference in the corporate world, and who is having second thoughts about RECs.
www.businessweek.com/magazin...6001.htm
