In today’s world, concerns about climate change are at an all-time high. Individuals and businesses alike are seeking ways to reduce their environmental impact. While switching to 100% renewable energy sources like solar or wind power may seem onerous, there is a simple but efficient solution: Renewable Energy Certificates (RECs).
What is REC, Anyway?
Imagine this: every time a wind turbine spins or a solar panel generates electricity, a unique certificate is created – a Renewable Energy Certificate (REC). This certificate represents 1 megawatt-hour (MWh) of electricity produced from that renewable source. Think of it as proof that clean energy was generated and injected into the grid. RECs are a market-based instrument that certifies the generation of renewable energy.
While the term “Renewable Energy Certificate” is common in the United States, similar schemes exist globally. In Europe, they are called Guarantees of Origin (GOs), while in Latin America, Africa, and Asia, they are known as International Renewable Energy Credits (I-RECs). Other examples are the Renewable Energy Guarantee of Origin (REGO) in the United Kingdom and J Credits in Japan. All of these certificate methods are together referred to as energy attribute certificates (EACs).
How Do RECs Work?
When a wind or solar farm generates electricity, they also create an REC. This REC proves that 1 MWh of renewable energy was produced. The producer can then sell both the electricity and the REC separately. While the electricity enters the grid and mixes with electricity from other sources, the REC stays with the producer.
Businesses and providers may buy Renewable Energy Certificates to claim they use or supply renewable energy. Even if their electricity originates from a variety of sources, the REC indicates that an equivalent quantity of renewable energy was created and sent to the grid. Companies may claim 100% renewable energy use when they “retire” enough RECs to match their consumption quantities.
RECs in Sustainability Accounting
RECs play a crucial role in sustainability reporting. Voluntary reporting schemes like RE100 and the Carbon Disclosure Project (CDP) encourage businesses to declare their electricity emissions and demonstrate environmental leadership publicly. Moreover, mandatory schemes like the Corporate Sustainability Reporting Directive (CSRD) in Europe are coming into force, requiring large, publicly listed companies to report on their sustainability, including energy emissions.
When reporting to these schemes, RECs and other EACs are essential. Disclosing businesses must match their electricity consumption volume with the same volume of valid RECs or other EACs globally to claim to be 100% renewable. This ensures transparency and accountability in sustainability reporting.
Managing Your REC Portfolio
For global companies, managing clean electricity can be a complex undertaking. Tracking consumption, production data, invoices, RECs/EACs, and contracts across different locations and suppliers can be a daunting task. Spreadsheets may seem like a solution, but they often fall short in providing the necessary oversight and control for global electricity portfolios.
Effective data management is crucial for accurate billing, compliance with disclosure schemes like RE100 and CDP, and ultimately, achieving sustainability goals. Flexidao, for example, simplifies REC and energy management by serving as a “registry of registries.” They work with both online and offline registries to aggregate all REC and other worldwide EAC data onto a single platform. This improves visibility for enterprises, enabling them to more efficiently prepare and comply with disclosure regulations. Flexidao further streamlines REC allocation by automating difficult calculations, resulting in optimum, audit-ready outcomes for worldwide clean energy reporting.
The Power of Choice: Green Your Grid
Purchasing RECs empowers you to make conscious choices about your energy consumption. You’re not just a passive consumer; you’re an active participant in the transition to a cleaner energy future. By supporting the development of renewable energy sources, you’re contributing to a more sustainable energy landscape.
In conclusion, RECs offer a powerful tool for individuals and businesses to reduce their environmental impact and support the growth of renewable energy. By embracing RECs and actively engaging in sustainable energy practices, we can all play a part in greening our grid and building a more sustainable future.
