The Dreaming of the Emerald

Use less gas new jersey

May 19th, 2008 by thedreamingoftheemerald

Impending Carbon Policy will increase REC pricies

With renewable energy becoming more of a required part of the mix in order to reduce greenhouse gas emissions (GHG), there will be more widespread use of renewable energy credits (RECs) as a national GHG reduction policy takes shape in the U.S.. Currently we do not have a national renewable portfolio standard (RPS) that mandates the percentage of energy generation that will come from renewable energy sources (i.e. wind, solar, hydro, etc). However, to date, 28 states and the District of Columbia have renewable portfolio standard requirements. By the year 2015, these 28 states will only represent 8% of the total U.S. electricity load.

It’s inevitable that the with regional independent system operators (ISOs) driving the cost of electricity serving load centers throughout the U.S., coupled with varying degrees of regulation by region, that the REC market will be regionally based with, as an example, the cost of a REC in the North East being much higher than the cost of a REC in the South West. There is also the argument that a company that is based in New Jersey should be buying its RECs from that region rather than less expensive RECs through development in North Dakota, as an example. Needless to say, with states jumping on the RPS bandwagon and the pressure on the U.S. to reduce GHGs, the demand for renewable energy will outpace supply and drive the price of RECs higher.