"RECs markets have been growing rapidly during the past several years and they hold the potential for significant expansion," say Ed Holt and Lori Bird, authors of Emerging Markets for Renewable Energy Certificates: Opportunities & Challenges. RECs, they say, are increasingly used to comply with renewables portfolio standards (RPS) and other government imposed requirements for purchase of renewable energy, as well as to supply retail green power.
The study estimates that RECs representing the production of eight million MWh were used for RPS compliance in both New England and Texas last year, while three million MWh of RECs were used to supply voluntary green power purchases. By 2010, it says, "compliance" REC markets -- in which electricity retailers must comply with minimum standards for REC purchases -- could reach 45 million MWh a year and voluntary markets could grow to 20 million MWh.
Given REC prices, which the report says range from $0.70-$49/MWh in compliance markets and $2-$6/MWh in voluntary markets, the combined market could reach a value of $900 million a year by 2010. "This represents significant revenue to support the development of renewable energy generation," the study says.
But for REC markets to continue to grow, the study warns, a number of issues need to be resolved, including matching the generally short term RECs market with the long term financing needs of project developers, defining what RECs are and verifying and tracking REC sales.