During last fall’s budget discussions, Newark’s city council considered converting parts or all of the city’s electricity to renewable sources. To do that, the city would buy so-called RECs. So, what are RECs? Is this just a trick to look green on paper, or can they have a real impact on the fuel sources of our energy supply?
Renewable energy sources, like hydroelectric, wind, and solar, offer many environmental benefits and work quite differently from conventional electricity generating sources like coal, natural gas, and nuclear. They have large (but rapidly decreasing) initial costs to build, but unlike conventional sources, they have no fuel costs and very low maintenance costs. Major advancements in technology and scale have brought prices down to the point where they are now cost-competitive, and sometimes even cheaper, without subsidies. Not all localities have the right conditions to produce sufficient electricity from locally available renewable resources. In that case, they have to purchase it from elsewhere. Since electricity looks the same no matter the origin, renewable energy comes with a certification of its sources to identify it.
That’s what RECs are for. For each kilowatt hour of renewable energy that a supplier generates, a Renewable Energy Certificate (REC) is produced to account for it. By buying a REC, a customer directs the electricity payment to the renewable energy company instead of a conventional utility. As companies sell more RECs, they can invest more into their renewable infrastructure. This way, purchasing RECs is a form of direct participation in the renewable energy market, that will speed the transition of the national electric grid to become cleaner and less expensive.
In 2018, renewables made up almost 17 percent of the U.S. electricity supply. Their share will almost surely increase in the coming years as generation prices continue to drop, existing solutions to intermittency issues are implemented, and especially as explicit demand rises in the form of REC sales. Large commitments from municipalities to buy 50 percent or even 100 percent of their electricity with RECs give renewable energy investors confidence in their future market and accelerate the energy transition, driving down prices even further. That’s great for the environment and for people’s pocketbooks.
The long-term benefits are clear, but in the short-term, buying RECs increases the base cost of electricity. That can be controversial. An alternative, currently under consideration by Newark’s city council, is to give residents the choice whether to participate in the investment into a cleaner and more sustainable energy supply. Those wishing to join that conversation can contact their council member and the mayor or share their views with the Conservation Advisory Commission at its regular meetings on the second Tuesday of every month. (Note that April’s meeting will be on the third Tuesday due to municipal elections.)
The Conservation Advisory Commission was created in 1977 to advise the city of Newark in the development, management and protection of its natural resources, with appropriate consideration of Newark’s human and economic resources. It meets the second Tuesday of each month at 7 p.m. in council chambers. The public is invited to attend and provide input. Commission members provide this monthly column to inform area residents on conservation issues.