Generally, the process begins with the generator attesting to the number of RECs created, periodically truing up through meter readings the amount of electricity produced with the number of RECs sold. A tracking and verification system (main story) gives each REC a unique number that stays with it throughout its life and in the end creates confidence that the REC is retired just once.
After it is born, a REC can be sold and resold, often by brokers like Evolution Markets or Bonneville Environmental Foundation (BEF), before it is retired and taken completely out of the market. Using RECs generated at FPL Energy's 300 MW Stateline Wind project as an example, Rob Harmon of BEF says the green tags that it buys and sells from that project were first sold by FPL to energy marketer PPM Energy or the Bonneville Power Administration. These utilities package and resell the power, but sell the green attributes to BEF, which resells the green tags to retail customers or to utilities. Once these sales are completed, the life of each tag sold ends, he says, and that is the moment the REC assumes its true value.
"If you assume the value of the green tag is the ability to comply with something -- a compliance program like a renewable portfolio standard, a voluntary target or a feel good goal -- you don't get any of those things until you own and retire the tag," Harmon says.
The Electric Reliability Council of Texas and the Northeast Power Pool have REC tracking systems in place, and the Western Governors Association and the Center for Resource Solutions (CRS) have proposed systems, the former for western states and the latter a national system. A system can also be voluntary like CRS's Green-e program or like the services offered by the Bonneville Environmental Foundation in the US Northwest. While these tracking and verification systems vary, all seek to create a stronger, more efficient and more liquid market for RECs.