The demand for Renewable Energy Certificates (RECs) continues to rise as an ever-increasing number of corporations aim to lower their carbon footprint. A record 114 million megawatt-hours of Green-e Certified RECs were procured in retail transactions in 2022, a number that is expected to be surpassed when 2023 data becomes available. The expenditure is minimal on a per kWh basis, $.002-$.0035, but the cost can add up quickly dependent on need. This is where REC Arbitrage can assist.
The first way to use this strategy is the installation of solar panels or wind turbines. The business, as owner, can choose to either hold onto and claim the RECs associated with the on-site generation or sell them off. The selling of these RECs can come at a high price in regions, like the Northeast, with escalating green energy requirements for their electric generation mix. For example, New York’s Climate Leadership and Community Protection Act mandates a zero-emission grid by 2040. The funds received from the sale of the generated RECs can then be used to purchase lower-cost national wind RECs; the business can still claim they’re 100% green but may also realize a revenue stream.
The up-front cost of solar panels or wind turbines can be prohibitive for many corporations. Fortunately, an alternative way to achieve this goal is through the use of Community Solar. These types of projects have gained significant popularity in the last five years and allow for the offset of costs, both the delivery and supply of electricity, by 5-15% dependent upon location and industry type. There is no cost to sign onto these projects and it allows for dual benefits: The end user is funding the creation of in-state green energy infrastructure while also channeling the savings into the purchase of Green-e RECs, supporting existing green energy infrastructure nationwide.
There are many routes available for businesses to reduce their carbon footprint and Power Management looks forward to helping them navigate the landscape.