What are the differences between compliance and voluntary markets for RECs?
Policies that require electricity service providers to incorporate a minimum level of renewable energy in their electricity supply create compliance markets or mandatory markets for RECs. These energy policies, such as state Renewable Electricity Standards (RES) and Renewable Portfolio Standards (RPS), specify the eligible energy resources or technologies that can be utilized and describe how electricity service providers must comply. (For more information on RES/RPS, see Issue 5 of The Bottom Line.) Electricity service providers must produce or obtain RECs in an amount suffi cient to meet their renewable energy obligations under an RES/RPS.
Voluntary markets for RECs, while not mandated by law, have developed in response to energy user preferences for green electricity. Retail, commercial, and industrial energy users can meet voluntary renewable energy goals and support the deployment of green power through the purchase of RECs.