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Renewable Energy Credit

Tullett Prebon’s Renewable Energy Credit (REC) team represents buyers and sellers in the complex unbundled REC markets. With over 40 years of combined energy market experience, members of the team were involved in many of the first REC transactions in various states.

The team also helps renewable project developers and owners structure medium and long term off-take agreements through unbundled REC deals or bundled PPA’s.

Renewable Energy Credits represent the environmental and social benefit of generating 1MWh (1,000 KWh) of electricity from a renewable resource.

A REC, and its associated attributes, can be sold separately from the underlying physical electricity associated with a renewable-based generation source, simplifying the REC transaction.

A REC can be traded an infinite amount of times, but retired only once. The entity that "retires" the REC is the entity that can claim its attributes.

Tracking and transfer platforms as well as the Center for Resource Solutions (Green e) are responsible for protecting the market from double counting issues. There are two active markets in the Renewable Energy Credit Markets.

This is a market where corporations, institutions or individuals can "voluntarily" purchase RECs to support renewable energy. Typically voluntary ,arket participants are interested in specific resource types (wind and solar) versus a geographic location.

These are the markets that are created by state legislation commonly referred to as Renewable Portfolio Standards (RPS). There are over 26 states with RPS's, each with differing eligibility, pricing, penalties and requirements.

In general the concept of a compliance REC market is to mandate that a certain percentage of the load sold in its state comes from renewable resources as defined by its legislation. If the LSE is unable or unwilling to purchase RECs they will be penalised a dollar per MWh charge referred to as an Alternative Compliance Payment (ACP). This penalty price is an alternative way to gain compliance and is viewed as a cap on pricing.

Typically in compliance REC markets the focus is on geographic location rather than technology of the resource other than for specific "Solar Markets Carve-Outs"

As a success based fee group, Tullett Prebon’s team of brokers focus exclusively on the quality of information, price discovery and trading liquidity it brings to each client.

For further information please contact:

Anthony Farinacci
Tel: +1 201-557-5270
Email: afarinacci@prebon.com