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Tradable renewable energy certificates (TRECs) are an innovative solution to the world’s energy problems, providing new incentives for homeowners and businesses to invest in renewable energy projects and helping to reduce harmful greenhouse gas emissions worldwide. But how do they work? What are the benefits of trading these certificates? And how can you get started with your own renewable energy project? This guide will help you understand everything about tradable renewable energy certificates so that you can take advantage of this amazing opportunity to help fight climate change and make money simultaneously!

How TRCs Work

Renewable energy certificates (RECs) are a tradable commodity in the United States that represents the environmental, social, and other non-power attributes of renewable electricity generation. One REC is equivalent to one megawatt-hour (MWh) of renewable electricity generated and delivered to the grid. The demand for RECs has risen due to the growing number of states with renewable portfolio standards requiring utilities or companies to generate or purchase certain percentages of their power from eligible sources such as wind, solar, geothermal and hydroelectric power. Some states require utilities or companies to have all or part of their power come from these qualifying resources, while others allow them to purchase credits on an open market.

Why Do TRCs Exist?

TRCs exist because renewable energy generators need a way to monetize their renewable attributes, and purchasers want a way to offset their emissions. TRCs provide a market-based mechanism that creates value for renewable energy and allows it to compete with other forms of generation. They also allow purchasers to support clean electricity in the electricity marketplace without bearing the cost or responsibility of installing solar panels or wind turbines on their property. TRCs are issued by an entity called a Qualifying Facility (QF) which must generate at least 50% of its power from renewables such as solar, wind, biomass, and geothermal.

Who Issues TRCs and Where Are They Traded?

Renewable energy certificates (RECs) are created when one megawatt-hour (MWh) of electricity is generated and delivered to the electric grid from a qualifying renewable energy resource. RECs represent renewable electricity generation’s environmental, social, and other non-power attributes and may be sold separately from the underlying commodity. Recertification guidelines for RECs vary by state; in many states, RECs can be resold up to three years after the certification date. In others, such as Minnesota, there is no time limit on their use or sale.

The Companies Involved in Creating TRCs

There are two types of companies involved in the creation of TRCs: those that generate renewable energy and those that purchase it. 

The former are obligated entities under the law, and the latter are called voluntary purchasers. 

Obligated entities include utilities, load-serving entities, and other companies that are required by law to purchase a certain amount of renewable energy.

The Future of TRCs

As more and more businesses and individuals are looking for ways to reduce their carbon footprint, tradable renewable energy certificates (TRCs) are becoming an increasingly popular option. TRCs are a way for businesses and individuals to offset their emissions by investing in renewable energy projects. TRCs work by creating a market for green power that lowers the cost of these types of projects. They also allow consumers who don’t have the means or expertise to invest directly in green power themselves the opportunity to do so by buying tradable renewable energy certificates on the open market.


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