Renewable Energy Certificates or Credits (RECs)

Renewable Energy Certificates or Credits (RECs)

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tradable, non-tangible energy commodities that represent proof that 1 MWh of energy was generated by a qualified renewable energy resource.

Pros

They increase the number of RE projects developed by guaranteeing a revenue stream that reduces the risk of investment.

Cons

They are a form of subsidy, which is naturally limited. Can be view as disproportionately beneficial to RE investors as compared to nonqualified resources like nuclear or natural gas.

Real Talk

While it would be ideal for market conditions to drive the necessary investments to achieve 100% RE, markets have been designed around large centralized generation. Absent a complete market overhaul, strong financial support is needed to fully activate RE investment in the short term.

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