Renewable energy credits- amass them to protect environment

To understand what renewable energy credits are, we first have to get a grasp on what is renewable energy. Renewable energy is basically energy which is harnessed from solar, wind, geothermal, hydro (water), biomass and biofuel and this market is continuously on the upswing because of growing environment consciousness. In order to encourage this market and stabilize it, renewable energy credits have been formed to give a value to the energy which has been produced using the afore-mentioned sources.
These energy credits are also called renewable energy certificates and they encourage sustainable energy- generation methods for companies while simultaneously giving them a source of income. These credits are non-concrete energy commodities which are nonetheless tradable and can also be purchased. Renewable energy credits prices are regulated by each individual energy credit representing one megawatt hour of electricity coming from a renewable energy source. The value of each energy credit also gives benefits like increased grid reliability, decreased dependence on imported fossil fuel and the reduction of pollutants like carbon dioxide.

The process of collecting renewable energy credits begins with being certificated by state agencies or other proper authorities and then the plants have to get registered with the requisite regional tracking systems. As renewable energy credits begin to get generated, each individual credit may be retained by the generating plant or sold or traded in the market. The market can be either the compliance market or the voluntary market. In voluntary markets, households, private investors, corporations or government organizations buy renewable energy credits either for utilizing renewable energy or for trading purposes. In compliance markets a percentage of electricity to be sold or purchased has to come from renewable sources and this helps in the development of renewable energy projects which are also heavily subsidized. Trading in renewable energy certificates also helps in building energy projects in areas which may not necessarily have the required population to support them.

Although renewable energy credits may seem a bit complicated because of their value being separate from the electricity generated, it is actually quite simple. Since sustainable energy is close to the area where it is produced, delivering it to the electricity grid can be quiet a challenge. What this implies is that the excess energy produced (after the area has been supplied) is added in the grid for use in other areas. The energy is given to the local electrical grid at the standard rate for that area. The value of the energy credit depends upon the supply and demand of the electricity market. So, it does not necessarily have to be located near the service area because the energy credit can be bought by the local grid.

Although the electricity generated from renewable energy is exactly the same as from the grid, it does have less of a negative impact on the environment. Renewable energy is generated from renewable sources like geothermal, biomass, solar, water or biofuel unlike traditional forms of energy which are non-renewable and hence impacts the environment negatively.


Solar Bros is a proudly South Australian company of Campbell & Partners, a member of the Clean Energy Council—the peak body representing solar photovoltaic (PV) accreditation.