Renewable Energy Certificate (REC)

A Renewable Energy Certificate is a tradable instrument representing the environmental attributes of one megawatt-hour of electricity produced by an eligible renewable generator. When a wind farm delivers energy it creates both a physical MWh and a REC that can be sold separately to document ownership of the renewable claim.

Regional tracking systems such as PJM GATS, M-RETS, WREGIS, NEPOOL GIS, and the global I-REC registry assign serial numbers, verify technology eligibility, and prevent double counting. Market participants transfer certificates between registry accounts, bundle them with energy deliveries, or retire them to substantiate marketing statements and compliance filings.

RECs underpin Renewable Portfolio Standards and voluntary corporate procurement programs. Compliance entities hedge exposure through long-term REC strips or indexed PPAs, while corporations often use unbundled RECs as a bridge strategy before committing to 24-7 carbon matching or on-site generation.

International markets operate analogous instruments like Guarantees of Origin in Europe and Large-scale Generation Certificates in Australia, each with distinct additionality tests, aging rules, and cross-border recognition. Harmonizing certificate standards is increasingly important for data centers, hydrogen developers, and utilities executing multinational decarbonization roadmaps.