Challenges with RECs

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Marketing/Communication Challenges
Geographical Issues
Tracking System Challenges
REC Liquidity
Environmental Impact
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star Marketing & Communication Challenges with RECs

Renewable Energy Certificate (REC) marketers have a big challenge when it comes to communicating with consumers about RECs. Difficulty lies in mass marketing, especially when it comes to languaging green power. It is also difficult to be concise and accurate

When a marketer is trying to market stand-alone RECS, it means they have to explain the certificates and attributes involved. They must be cautious from making the mistake that consumers will receive electricity from the stand-alone RECs. To resolve this issue, marketers rely on a website for providing more information, but there is still the problem of getting the consumer to go to the website.

star Geographical Challenges with RECs

Besides marketing issues, REC marketers are faced with geographical issues. Although RECs have access to a broader market, that does not make them marketable in other areas. Most marketers tend to focus on regional areas, usually because this can be seen as more tangible than on a broader sense. Consumers in one area may be more willing to support renewable energy than another area, which can be due to many reasons, such as benefits.

star REC Tracking System Challenges

REC Tracking Systems are a means for providing protection against fraud (double use or double sales). Each REC has its own unique serial number. However, what presents a challenge for the REC Tracking System is that the tracking system is not available everywhere. Buyers are cautious about purchasing RECs that are not verified. Those areas that are considering a tracking system are faced with the problem of who should pay for the system. Some feel that users should pay for the system, others feel that those areas that enforce mandatory renewable energy policies should pay.

REC tracking systems also present the challenge of flexibility for supporting broader markets. One particular issue is the lifespan of the RECs. Too short or too long of a lifespan have a negative impact on the market.

Tracking systems also have an issue when it comes to REC imports and exports. Policies often favor local resources instead of imports to encourage local renewable energy development.

star REC Liquidity

Market liquidity can be enhanced with RECs if forward trades can be transacted. "Forward Trades" are those trades where an agreement is reached between generators and suppliers for the purchase and sale of future RECs that have not yet been created.

Broadening the geographic scope can help bring in more participants, which is possible since the RECs can practically be bought and sold anywhere.

Despite this flexibility the REC market is not a single market but rather a multiple/regional market with different pricing.

star RECs and Environmental Claims

Since renewable energy sources tend to have less environmental impact than that of traditional energy sources, marketers try to make environmental claims with RECs. However such claims can be tricky.

RECs generally provide environmental benefits in the region where the actual renewable energy facilities are located. When unbundled RECs are sold in the region where they are generated, the environmental benefits would be exactly the same to the benefits accrued if the RECs were bundled and sold as green power. The problem occurs when unbundled RECs are sold outside the region where they are generated as they do not provide thos purchasers environmental benefits in their region.

Another issue of environmental claims takes place when generators sell their own RECs. These generators only have generic electricity to sell. They cannot claim to be wind electricity or emission-free without creating a situation of double claim.