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Renewable Energy Credits (RECs) for ESG-mandated buyers

Commercial

A REC certifies one MWh of renewable generation. Voluntary vs compliance markets, bundled vs unbundled, Green-e certification — the buyer matrix.

Harry Parker

Energy Consultant, Seenra Inc

Commercial11 min readPublished

Featured infographic

REC creation-to-retirement chain

Generator produces 1 MWh → REC issued → buyer purchases → REC retired → market-based Scope 2 claim.

Open graph image · /og/rec-flow.png

A Renewable Energy Credit (REC) certifies one megawatt-hour of renewable electricity generation. Buying and retiring RECs is the standard mechanism for claiming renewable energy use under the GHG Protocol market-based Scope 2 accounting framework. Voluntary RECs (purchased by commercial buyers for ESG goals) trade separately from compliance RECs (purchased by utilities for state mandates). Green-e certification verifies new renewable generation.

Voluntary vs compliance REC markets

Compliance RECs are purchased by utilities to meet state Renewable Portfolio Standards. The price is set by state-specific compliance markets and varies from $5 to $80 per MWh.

Voluntary RECs are purchased by commercial buyers for ESG goals. The price ranges from $1 to $15 per MWh depending on Green-e certification, generation vintage, and bundled vs unbundled.

Green-e certification matters

Green-e Energy is the gold standard for voluntary REC verification. Green-e certified RECs represent new renewable generation (built within the past 15 years) and are tracked to prevent double-counting.

Non-Green-e RECs may represent existing generation or have weak chain-of-custody. ESG buyers prioritize Green-e certified RECs for additionality and audit defensibility.

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Common questions

Quick answers from the editorial desk

Who certifies RECs?
Green-e Energy (gold standard for voluntary). State PUCs (compliance market). Bundled RECs come with the electricity supply; unbundled RECs trade independently.
Can I claim 100 percent renewable with RECs only?
Yes under the GHG Protocol market-based Scope 2 method. Match your annual consumption with retired RECs and you can claim 100 percent renewable energy use.
What is the difference between REC and PPA?
REC is a tradable certificate. PPA (Power Purchase Agreement) is a contract to buy electricity from a specific generator. PPAs typically include bundled RECs as part of the deal.
Will SBTi accept REC-only claims?
Yes for Scope 2. SBTi accepts REC retirement for market-based Scope 2 calculation. The buyer must retire RECs in the same accounting year as the consumption being matched.

Further reading

Pillar guide, cluster siblings, and state pages cited above

Sources

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