Who Owns Renewable Energy Certificates: An Exploration of Policy Options and Practice

Renewable energy certificates (RECs) are increasingly important, especially in states that accept them as evidence of compliance with renewables portfolio standards (RPS). The emergence of RECs as a tradable commodity has made utilities, generators, and regulators increasingly aware of the need to specify who owns the RECs in energy transactions.

This April 2006 report provides information and insight to state policy-makers, utility regulators, and others about different approaches to clarifying the ownership of RECs. The report focuses on three areas in which REC ownership issues have arisen:

• Qualifying Facilities (QFs) that sell their generation under PURPA;
  
• Customer-owned generation that benefits from state net metering rules; and
  
• Generation facilities that receive financial incentives from state or utility funds.

The report finds that the issue of REC ownership most often arises in states that have established an RPS. States have adopted a variety of positions regarding REC ownership, often assigning QF RECs to the utilities for older contracts and sometimes assigning them to the generators in new contracts. States most often assign RECs from net metering to the customer-generators, but there are exceptions. A few states have also clarified ownership of RECs from small generators that receive financial incentives.