The market for Renewable Energy Certificates (RECs) could triple in size, if a federal Renewable Portfolio Standards (RPS) is created in the US, according to a new report.
Demand for RECS has rapidly emerged in recent years as a significant financial and regulatory instrument to support the growth of renewable energy in the United States.
The REC, which is the environmental attribute associated with the generation of 1 megawatt hour (MWh) of green energy, is considered to have value in the market because the generation of energy from wind, solar, hydropower, geothermal and biomass displace energy that would otherwise be sourced from fossil fuels.
Two distinct markets exist for RECs: the compliance market, mandated by state-level Renewable Portfolio Standards (RPS), and the voluntary market, which includes companies and institutions who purchase certificates to demonstrate environmental commitment.
According to a new report from Pike Research, the REC market is poised for continued growth in the coming years, and the cleantech market analysts forecast in a base-case scenario that REC sales in the compliance market alone will increase more than 50% by 2015, reaching 179 million megawatt hours (MWh).
In a forecast scenario that includes passage of a Renewable Portfolio Standard at the U.S. federal level, the REC market could nearly triple in size to 329 million MWh by 2015.
“The REC market has continued to show strong growth even in the midst of a recession,” says managing director Clint Wheelock. “Our analysis indicates that both the compliance and voluntary REC markets will continue healthy growth rates no matter what happens, but the real game-changer would be federally-mandated targets for power generation from renewable energy sources.”
The report analyzes supply and demand dynamics for the REC market, regulatory and policy factors, key industry issues and challenges, and the key players who are shaping this fast-growing category. It shows that about 115 retail and wholesale companies sell RECS ranging in price from about $1 to $650.
An Executive Summary of the report is available for free download on the firm’s website.
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