1) A producer gets a REC for putting 1 MWh into the grid from renewable generation. This energy mixes in with all the other energy on the grid, it doesn't go anywhere in particular.
2) The producer sells this REC on the market.
3) The consumer who buys the REC is considered to have purchased renewable energy, either to meet renewable energy requirements or just for their own personal reasons because it's a good thing to do.
In 29 states, DC, and PR, they have "Renewable Portfolio Standards" which require electric suppliers to have a certain amount of renewable energy in their production portfolio. They can own this production capacity and make the RECs themselves, or they could burn natural gas and buy a bunch of RECs from a third party, or even a bunch of people with solar panels on their roofs.
Beyond those 29 states, people also buy them just to say "We run on clean energy." A friend of mine has an electric car and buys renewable energy to go with it. Did the actual electrons in his car come from a wind turbine? No, but he's helping make wind power more economically viable through the renewable energy credits.
A short summary:
1) A producer gets a REC for putting 1 MWh into the grid from renewable generation. This energy mixes in with all the other energy on the grid, it doesn't go anywhere in particular.
2) The producer sells this REC on the market.
3) The consumer who buys the REC is considered to have purchased renewable energy, either to meet renewable energy requirements or just for their own personal reasons because it's a good thing to do.
In 29 states, DC, and PR, they have "Renewable Portfolio Standards" which require electric suppliers to have a certain amount of renewable energy in their production portfolio. They can own this production capacity and make the RECs themselves, or they could burn natural gas and buy a bunch of RECs from a third party, or even a bunch of people with solar panels on their roofs.
Beyond those 29 states, people also buy them just to say "We run on clean energy." A friend of mine has an electric car and buys renewable energy to go with it. Did the actual electrons in his car come from a wind turbine? No, but he's helping make wind power more economically viable through the renewable energy credits.