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Renewable Energy Certificates (REC's) or "Green Tags"
A REC (Renewable Energy Certificate) or Green Tag is the clean environmental "attribute" associated with the production of a kilowatt-hour (kWh) of electricity from a renewable source of energy, such as the sun, wind or water. Owners of renewable energy systems can now sell the RECs associated with the electricity produced by their solar electric system.
RENEWABLE PORTFOLIO STANDARD (RPS): A policy that requires utilities who sell electricity to have a certain percentage of renewable power in their mix. These policies often start around 1-5% in the first year and require an increasing percentage of renewables in each year following, often aiming for a goal of 4-20% in about 10 years. RPS policies typically involve a credit trading mechanism so that producers of renewable power can sell the extra "credits" to suppliers to help utilities meet their RPS requirement.
In New Jersey
In NJ these RECs are referred to as SRECs (Solar Renewable Energy Certificates).
The market for RECs has come about because suppliers of electricity in New Jersey are required to acquire an increasing percentage of the electricity they supply in the state from clean renewable sources of energy. This requirement is embodied in New Jersey’s Renewable Portfolio Standard. Suppliers of electricity can either build their own renewable energy systems (solar, wind, hydro) or they can buy the RECs from individuals and businesses that install or own renewable energy systems. Homeowners who purchase solar electric systems can now expect to receive annual payments of hundreds of dollars when they sell the RECs associated with the electric production of their system. The average price in New Jersey has recently been almost $0.20/kWh. The Solar Center is now aggregating the RECs from its solar customers and will enter into contracts on their behalf.
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