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Renewable Energy Certificates

What are Renewable Energy Certificates (RECs)?

Renewable energy, such as solar, has two components that are valuable to society—the electricity itself and the environmental benefits.

State law has created “certificates” that equate to or represent the environmental benefits of an energy source. These are known as Renewable Energy Certificates or “RECs.” Under state law, these certificates can actually be sold in a marketplace. A buyer of RECs can use them to offset their carbon footprint. A single REC generally equates to or represents 1 megawatt-hour of renewable energy generation.

For example, the electricity from a solar power system on a home in California is sold to the homeowner. The RECs from that system can be sold to a company or individual in an entirely different region or state.

What’s the purpose of RECs?

In most places, RECs are used to fulfill mandatory renewable portfolio standards (RPS). An RPS is a way for state policy makers to move a state toward greener energy sources. All energy providers must meet these standards. They do so by purchasing RECs, which, depending on state law, represent, reflect or equate to the environmental attributes associated with 1MWh of renewable energy. By tracking RECs, the state can see how much renewable energy it’s generating and ensure it’s meeting its renewable targets.

The RECs from your system go to meet these state renewable goals. This directly benefits you by reducing the cost of your solar system and indirectly benefits your neighbors and community by reducing the CO2 emissions.

What do RECs mean for you as a SolarCity customer?

You benefit because selling RECs allows us to install your solar power system at a lower price. We don’t sell RECs to third parties for every system. In fact, in most areas, we offer the option to buy the RECs yourself.

If you don’t own the RECs, you won’t be able to sell, use or claim them—and a third party may have the right to claim they’re using clean, green or renewable energy based on their purchase of the RECs from your system.

Learn more about how RECs work: