2.5. Renewable Energy Certificates (RECs)

Renewable Energy Certificates (RECs) are a market-based instrument that certifies the bearer owning one megawatt-hour (MWh) of electricity generated from a renewable energy resource. Once the power provider has fed the energy into the grid, the REC received can then be sold on the open market as an energy commodity. Each country has a corresponding institution to track the green energy generation and issue RECs to energy producers.

RECs can and usually are sold separately from the power itself. The end-consumer, typically a power-consuming company, uses the REC as a claim to prove the origin of the power.

For instance, take a wind park operator who fed 1 MWh of power into the grid. The wind park operator receives 1 REC for the injected power. This REC can be sold to a power consumer, who does not necessarily buy power from the same wind park developer. Nevertheless, this REC transaction gives the consumer the claim of the wind park energy, and by buying this claim, the consumer also supports the developer.

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