RECs Explained — Are "Green" Plans Actually Green?

What a REC is

A Renewable Energy Certificate (REC, pronounced "reck") represents 1 megawatt-hour (1,000 kWh) of electricity that was generated from a renewable source and delivered to the grid. It's a tradable certificate. It can be bought and sold separately from the electricity it represents.

When a wind farm generates 1 MWh, two things happen: the electricity goes onto the grid, and the farm receives 1 REC. The farm can then sell the electricity to the highest bidder AND sell the REC to someone who wants to claim the renewable attribute.

Why RECs exist

Electricity is fungible. Once it enters the grid, there's no way to tell whose electrons came from what source. If you want to claim "I used renewable electricity," you need a separate tracking mechanism. RECs are that mechanism. They ensure one MWh of renewable generation can only be claimed by one buyer — so the environmental benefit isn't double-counted.

RECs are also how renewable projects get financed. The project sells the electricity and the RECs separately; REC sales add 10-20% to the project's revenue. For the marginal project that wouldn't pencil out on electricity sales alone, REC demand is what tips it into "gets built."

The scrutiny

RECs have legitimate critics. The main concerns:

1. Additionality

Did your REC purchase cause new renewable capacity to be built? Or did it just cover a project that was going to happen anyway? The honest answer for most Texas RECs today is "mixed." Texas wind is so economically competitive that much of it would get built without REC revenue. But REC demand influences marginal projects and enables voluntary market sustainability.

2. Geographic mismatch

If you're in Texas and your plan buys RECs from a solar farm in Georgia, you're funding renewables — just not Texas renewables, and the grid benefit doesn't accrue locally. Texas-sourced RECs are what you want if local impact matters.

3. Price collapse

Voluntary REC prices in ERCOT have been under $1/MWh for years — essentially rounding error. Critics say this means RECs aren't meaningfully funding generation. Supporters say it means Texas renewables are already cheap enough that expensive subsidies aren't needed.

What "100% renewable" plans really deliver

Under Texas rules, if a plan advertises 100% renewable, the REP must retire RECs equivalent to your full usage. It's audited. So the accounting is real: your billed kWh are matched 1:1 to renewable generation somewhere on the grid.

What you're not buying: green electrons specifically to your outlet. What you are buying: the environmental claim, the voluntary demand signal to renewable markets, and (often) Texas-specific investment at the margin.

How to spot real vs. marketing-only "green"

• Plan says "100% renewable" in its EFL. Check the EFL, not the marketing page.
• REC source specified — bonus if it's "Texas" or "ERCOT."
• Total cost is within ~5¢/kWh of comparable non-renewable plans. If a "green" plan is dramatically more expensive with no other differentiator, you're paying for marketing.

What moves the needle more than a green plan

If the carbon impact is your goal, here's the ordered list of effective residential actions:

1. Install rooftop solar — directly displaces grid generation.
2. Electrify gas appliances (heating, water heater, stove) — large emissions reductions as the grid decarbonizes.
3. Switch to an EV — large reduction vs. gasoline.
4. Sign up for a 100% renewable plan — smaller, but easy and no upfront cost.

Green plans are the easy first step. They're not pretending to be more than that when written honestly.