What is a Renewable Energy Certificate (REC), and do I need one?
RECs represent the environmental attributes of renewable electricity. They matter for emissions reporting and corporate sustainability claims.
A Renewable Energy Certificate (REC) represents the environmental attributes of one megawatt-hour (MWh) of electricity generated from a renewable source. One MWh generated equals one REC. One REC retired (used) means one organization can claim that MWh as renewable in their emissions reporting.
The electrical grid is physically fungible — you cannot route "solar electrons" to a specific building. Renewable energy attributes are tracked separately from physical power delivery through the REC system.
Bundled RECs come paired with physical electricity delivery. An on-site solar PPA that transfers RECs to you, or direct ownership of a solar system, generates bundled RECs. You receive both the electricity and the environmental attribute.
Unbundled RECs are purchased separately from your electricity supply. You continue buying grid power normally and purchase RECs to "cover" your consumption. This is cheaper than a PPA but provides no electricity cost savings — only the environmental claim. Important note: unbundled RECs from existing renewable projects face increasing scrutiny from frameworks like SBTi and RE100, which may not accept legacy RECs.
Do you own the RECs with on-site solar? With an all-cash purchase, yes. With a PPA, it depends on the contract — confirm whether RECs transfer to you or are retained by the provider. With community solar, you typically own them but should confirm in your subscription agreement.
About SRECs: Solar Renewable Energy Certificates are RECs specific to solar generation in states with solar carve-outs. Illinois, New Jersey, Maryland, and Massachusetts have active SREC markets. If you own your system in an SREC state, you can sell SRECs for additional revenue beyond electricity savings.