US Renewable Energy Credit (REC) Markets
The cornerstone of the US renewable energy compliance programs is in individual states passing Renewable Portfolio Standard (RPS) requirements. RPS rules require from Load Serving Entities (LSE) to service a gradually increasing percent of their load from renewable sources. Similar to cap-and-trade programs, LSEs can meet their compliance targets using tradeable Renewable Energy Credits (RECs). One REC corresponds to the environmental attributes of 1 MWh of energy produced by a renewable generator. RECs are unbundled from the underlying physical power.
Each state has different eligibility requirements for RECs. The requirements typically depend on the technology type and vintage of the renewable generators, delivery requirements etc.
A growing number of states has passed RPS requirements in the past few years. Issuance and tracking of RECs is done typically on a regional basis, for a group of RPS states, corresponding to a Regional Transmission Operator (RTO):
- NEPOOL GIS: New England states (ISO NE area)
- PJM GATS: Northeast and mid-Atlantic states (PJM area)
- M-RETS: Midwestern states (Midwest ISO area)
- WREGIS: Western states (WECC area)
The following map shows the most recent status of state-level RPS in the US.