How RECs can help expand renewable energy generation at home and abroad

Renewable Energy Certificates, or RECs as they’re known, can help both nations and organisations around the world meet their climate targets, while encouraging the generation of energy from renewable sources. They are also sometimes referred to as Energy Attribute Certificates (EACs). These certificates don’t only aid the environment: they can have social benefits too, such as helping to support local communities and increasing their access to affordable energy.

But what actually are RECs and how do they work?

One REC usually represents one megawatt hour (MWh) of renewable energy. As all energy enters the same grid, RECs are used to establish ownership of energy from renewable sources. They enable the ownership of such energy to be tracked – independent of the invisible electrons, ensuring that the use of renewable energy can only be claimed once and in turn preventing double counting. When purchased, end-users are able to account for the energy they have used and prove it’s from a renewable source. RECs have been helping to differentiate renewable energy for over 20 years.

So, RECs help to account for the renewable energy entering the grid, but how can they encourage the development of renewable energy generation?

RECs provide financial incentives for electricity generation from renewable sources, as generators are not only able to create revenue from the energy that they produce, but also from the RECs that they can sell. Renewable energy is becoming ever-more valued by end-users as they seek to transition to NetZer, but they need to be certain of claims they make – RECs provide the trusted evidence for these claims. Many governments also use RECs as evidence within incentive programmes, further supporting renewable energy development. As energy producers can receive additional revenue from the issuing of RECs, either from markets or government programmes, they provide a clear incentive to invest further in renewable energy assets above fossil energy sources. The revenue from the trading of RECs helps fund the development of new renewable energy capacity, such as wind turbines and solar systems, accelerating the transition away from fossil fuels.

But RECs are not just about promoting energy transition in mature, stable markets – they have a direct and significant impact by increasing access to energy. Peace-Renewable Energy Certificates (P-RECs) are one such form of REC which have additional benefits, directly driving investment into renewable energy projects in developing countries and areas of conflict. They are sold in the same way as conventional RECs, representing one MWh, and traded to enable corporations to meet their NetZero targets.

However, P-RECs not only allow renewable energy generators to make money from the trading of RECs, but they allow corporate buyers to directly support the renewable energy projects from which they are buying from. This enables further investment into renewable energy infrastructure, reducing greenhouse gas emissions from traditional energy sources and increasing energy access to local communities.

Earlier this year, Microsoft worked with project developer Nuru to purchase P-RECs from solar projects in Gomo, Democratic Republic of Congo (DRC). It was the largest P-REC deal to date. The purchase helped to fund first-time electricity connections in the Ndosho neighbourhood, through the deployment of streetlights, which improved safety and security in the area. It also helped directly finance the local energy grid, which aims to serve close to 20,000 beneficiaries. Only 19.1% of DRC’s population have access to energy, so the further use of P-RECs will help to improve this percentage, while in turn helping raise living standards, all while supporting clean energy goals.

Energy poverty is a global issue - over 750 million people globally do not have access to energy. This is roughly equivalent to around 12 times the population of the United Kingdom based on ONS data from last year. Investment in renewables is key to increasing this access while protecting the planet. Ultimately, RECs can serve a double purpose, helping the world meet its NetZero goals, while actively helping the fight against energy poverty.