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NAU’s Renewable Energy Certificates Explained

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NAU is increasing its purchase of Renewable Energy Certificates (RECs) from 13% to 15% to help move towards climate neutrality and support the renewable energy industry. NAU will be working with 3Degrees to provide us the Certificates from a wind farm in Idaho. Jacob Dottle, Environmental Caucus communication aid, interviews Ellen Vaughan, NAU manager of sustainability, to better understand NAU’s purchase of Renewable Energy Certificates (RECs).

Jacob: So what are RECs?

Ellen: Renewable Energy Certificates (RECs) were created to track renewable energy generation because, no matter how Green Power is produced, once an electron from a renewable facility is delivered to a power grid, that electron is indistinguishable from an electron generated at a fossil fuel plant. RECs represent the environmental attributes associated with the production of one megawatt-hour (MWh) of renewable energy. There are two things happening when a wind, or solar, or other renewable energy installation produces electricity. First, electrons supplied from an installation are sent out over distribution lines to the nearest demand for that energy, like a town or city. These electrons, which again are indistinguishable from other electrons, are sold as grid-average electricity. Second, the Renewable Energy Certificate for one MWh of this green power has the ability to be sold on a national market. The RECs are a legal instrument, and essentially represent the ownership claim to the environmental benefits associated with the generation of renewable energy, which we have no way to convey through the physical electric gird.

Jacob: What does that do?

Ellen: Have you taken an Economics 101 class yet?

Jacob: I have, but a long time ago.

Ellen: That’s ok. Let’s see if you got one of the very basics. What happens when demand for a product starts to rise?

Jacob: The company can charge more money and they can make more money.

Ellen: Yes. Almost all of the time. What happens when other companies see that a product is in demand?

Jacob: They want to get in on it. They start making that product.

Ellen: Exactly, you remember what’s important from Economics 101! Increased demand leads to increased supply. This is exactly what the world needs, an increased supply of renewable energy. REC’s are a market signal to renewable energy developers and investors that there’s this additional source of income attached to renewable energy that will make their development or investment more competitive with fossil fuels like coal and natural gas.

Environmentalists and humanitarians have been fighting for a policy that would act like this at the national level for decades. We know fossil fuels have billions of dollars’ worth of environmental and health related negative externalities so a simple solution would be to tax fossil fuels and use that money to subsidize clean renewable energy. Here at NAU, we recognize our electricity use has an unaccounted for societal cost associated with it so we’re offsetting 15% of our electrical consumption with RECs and remaining the Big Sky Conference Champion in EPA’S College & University Green Power Challenge.

Jacob: So that’s why NAU buy RECs?

Ellen: Definitely. It’s a great thing to do. NAU’s made a commitment to reach climate neutrality and this significantly helps reduce our emissions.

Jacob: So we’re offsetting our emissions, does this have anything to do with those projects that plant trees?

Ellen: No. Not at all. The key words in Renewable Energy Certificates are renewable energy. We are only supporting renewable energy that can be completely verifiable. There is a national standard for verifying RECs that’s called “Green-e Energy” certification. We made sure our RECs were certified, in our national grid, and produced from a specific, new renewable energy source. Specifically, we’re getting our RECs from a 100% wind farm called Meadow Creek in Bonneville, Idaho.

Jacob: Sounds good, why don’t we offset all our emissions with RECs?

Ellen: Well the one bummer about RECs is they don’t have any financial return on investment for the university. Although they provide a lot of positives to the renewable energy industry and climate change, I think it’d be everyone’s preference to invest in energy efficiencies and renewable energies on campus that provide us a financial return. Unfortunately, large scale, on campus projects take a large amount of upfront money that we don’t have right now. RECs are the perfect option for being able to move towards our goals economically.

Jacob: Thanks so much, I’m glad we’re doing it!