At the moment, the renewable energy credit (REC) price is relatively high across the world, and New England states are no exception. However, that might change soon due to two key drivers. First, there is the growth of the region’s developer interest, and secondly, multiple states have also committed to offshore wind. The wholesale power economics are changing thanks to projects from the S&P Global Market Intelligence. On the other hand, expanding offshore wind energy is increasing its contribution to the power grid. Under such circumstances, there are high chances that the New England REC market will be affected adversely. Consequently, the prices are likely to drop in the future.
According to S&P Global Market Intelligence research director for energy Steve Piper, RECs have helped various companies. They are helpful due to the increase in green energy minimum requirements for organizations. Energy markets are doing away with fossil fuels and instead embracing clean energy in almost every part of the world. Consequently, there are strict mandates, and that’s where the RECs come in handy. If the organization can’t reach the minimum requirement, they have no choice but to buy them to be compliant.
Renewable energy production is increasing with an increase in RECs purchases. The number of RECs might be relatively high given the fact that for every single megawatt-hour (MWh) of electricity, one is created. It only applies to the energy transmitted into the power grid. With the RECs, companies generating electricity from renewable sources sell them, whereas organizations producing power from other sources buy them. Such a measure encourages companies to reduce their carbon emissions. It is also a way of discouraging firms from fossil fuels and instead moves towards 100% clean energy.
In the US, RECs make it easy to identify the producers and users of renewable energy. According to the EPA, it is the only way of telling the origin of specific power since once it enters the grid, there is no telling that for obvious reasons. The bottom line is RECs will help in assigning that ownership. It also facilitates the accounting and tracking of the generators and users of this renewable electricity. People consuming electricity will need RECs to support a claim that their power is from a renewable source.
An excellent beneficiary of RECs is Fenix. As far as the Port of Lost Angeles is concerned, it is among the most extensive terminal facilities. It is abiding by the laid down energy policies and regulations by buying RECs. In 2020, not even a single MWh used in the facility didn’t cost it a REC. Bunge also plans to buy RECs for its facility in Fort Worth, Texas.