Choosing Green Energy Plans: Understanding Renewable Energy Credits (RECs) in Illinois
When suppliers offer "100% renewable" or "green" electricity, what exactly are you buying? The answer involves Renewable Energy Credits (RECs)—tradable certificates that represent the environmental attributes of renewable energy generation. Understanding RECs helps you make informed decisions about green energy purchases and verify that your sustainability claims are legitimate.
In This Article
What Are RECs? The Secret Ingredient Fueling Illinois' Green Energy Movement
Renewable Energy Credits are the currency of the green energy marketplace. Understanding them is essential for anyone wanting to support renewable energy or claim green energy usage.
The Basic Concept
When a renewable energy facility—a wind farm, solar installation, or hydroelectric plant—generates electricity, it creates two things:
- Physical electricity: Electrons that flow into the grid and are indistinguishable from electrons generated by any other source
- Environmental attributes: The "greenness"—the fact that this generation displaced fossil fuel generation and avoided emissions
A REC represents the environmental attributes of one megawatt-hour (MWh) of renewable generation. These attributes can be separated from the physical electricity and sold independently.
Why RECs Exist
The electricity grid doesn't allow you to choose which specific electrons reach your meter—all power mixes together. RECs solve this problem by creating a tracking system that ensures:
- Renewable generation is verified and documented
- Environmental claims are backed by actual generation
- Each unit of renewable generation is only claimed once
- Buyers can support renewable energy regardless of location
REC Types in Illinois
Compliance RECs: Used by utilities and suppliers to meet Illinois' Renewable Portfolio Standard requirements. Higher value due to regulatory demand.
Voluntary RECs: Purchased by businesses and individuals who want to exceed minimum requirements or make green claims. Often lower cost than compliance RECs.
Solar RECs (SRECs): Specifically from solar generation. Illinois' solar carve-out creates additional demand for solar-specific RECs.
The REC Lifecycle
- Generation: Renewable facility produces electricity
- Certification: Independent registry verifies generation and issues RECs
- Trading: RECs are bought and sold in markets
- Retirement: End purchaser "retires" RECs to claim environmental benefit
Once retired, a REC cannot be resold—this prevents double-counting of renewable generation.
From Wind Farm to Your Bill: How RECs Actually Work for Your Illinois Business
Understanding the mechanics of REC purchasing helps you evaluate green energy offers and understand what you're actually getting.
Bundled vs. Unbundled RECs
Bundled RECs: The REC is sold together with the physical electricity from the same generation source. More common with Power Purchase Agreements (PPAs) and on-site generation.
Unbundled RECs: The REC is separated from the electricity and sold independently. The generator sells electricity into the grid at market rates and separately sells RECs. Most "green" retail electricity products use unbundled RECs.
How Green Electricity Products Work
When you purchase a "100% renewable" electricity product from an Illinois supplier, typically:
- You receive physical electricity from the grid (same as any customer)
- Your supplier purchases RECs equal to your consumption
- RECs are retired in your name or on your behalf
- You can claim your electricity usage is "matched" by renewable generation
What this means: You're not receiving different electrons—all grid electricity is mixed. You're paying extra to ensure that renewable generation equal to your usage exists somewhere and its environmental attributes are allocated to you.
REC Pricing
REC prices vary based on several factors:
- Type: Compliance RECs cost more than voluntary RECs
- Technology: Solar RECs may command premiums over wind
- Location: In-state Illinois RECs may cost more than national RECs
- Vintage: RECs from recent generation typically cost more
Typical costs:
- National wind RECs: $1-5 per MWh
- Regional RECs: $5-15 per MWh
- Illinois-specific RECs: $10-30+ per MWh
- Illinois SRECs: Variable, historically $50-150+ per MWh
Additionality: The Quality Question
A key concept in REC purchasing is "additionality"—does your purchase cause new renewable generation to be built?
High additionality:
- Long-term PPAs that finance new projects
- Illinois Shines RECs (support new Illinois solar)
- RECs from projects that needed the revenue to be built
Lower additionality:
- RECs from older, already-depreciated facilities
- Cheap national RECs from projects that would exist regardless
- RECs purchased after the fact on spot markets
If your goal is environmental impact (not just claims), prioritize higher-additionality options even if they cost more.
The Smart Buyer's Checklist: How to Verify Authentic Green Energy Plans in Illinois
Not all "green" products are created equal. Use these criteria to evaluate and verify renewable energy offerings.
Questions to Ask Suppliers
About the RECs:
- What type of renewable generation do the RECs represent?
- Where are the generating facilities located?
- What is the vintage (when was the energy generated)?
- Are RECs certified by Green-e or another recognized standard?
- How are RECs tracked and verified?
About retirement:
- Are RECs retired in your company's name?
- Can you receive documentation of retirement?
- What registry is used for tracking?
Green-e Certification
The Green-e program provides third-party certification of renewable energy products:
- Verifies environmental and consumer protection claims
- Ensures RECs aren't double-counted
- Requires disclosure of generation sources
- Provides recognized standard for green energy claims
Prioritize Green-e certified products for maximum credibility in sustainability reporting.
Red Flags to Watch For
- Vague claims: "Clean" or "green" without specifics about REC sources
- No certification: Products without Green-e or similar verification
- Old vintage: RECs from generation many years ago
- Distant sources: Claims of "local" green energy using RECs from across the country
- Unclear pricing: Inability to explain how the green premium is used
Documentation for Sustainability Reporting
If you plan to report renewable energy use for ESG, CDP, or other frameworks:
- Obtain certificates showing REC retirement
- Confirm RECs meet Scope 2 guidance requirements
- Maintain records of purchase dates, quantities, and sources
- Verify RECs were retired for the correct reporting period
Unlocking Your ROI: The True Financial & Marketing Value of RECs for Illinois Companies
Beyond environmental benefits, REC purchases can deliver business value through reputation, customer relations, and stakeholder satisfaction.
Marketing and Brand Value
Consumer preferences: Research consistently shows consumers prefer businesses that demonstrate environmental responsibility. Renewable energy claims, when authentic, can differentiate your brand.
B2B requirements: Many large companies require suppliers to demonstrate sustainability commitments. REC-backed renewable energy can help meet these requirements.
Employee engagement: Sustainability commitments can improve employee satisfaction and aid recruitment, particularly among younger workers.
Calculating Cost vs. Benefit
Direct costs:
- Green product premiums: Typically $5-20/MWh above standard rates
- For 1,000 MWh annual usage: $5,000-20,000 premium
Potential benefits:
- Marketing value of sustainability claims
- Access to sustainability-focused customers
- Meeting supply chain requirements
- Employee recruitment and retention value
- Potential regulatory positioning if carbon pricing emerges
Alternatives to REC Purchases
RECs aren't the only way to support renewable energy:
On-site solar: Generate your own renewable energy with Illinois Shines incentives. Direct ownership provides both energy savings and environmental attributes.
Community solar: Subscribe to community solar for bill savings and renewable energy support without installation.
Power Purchase Agreements: Large buyers can contract directly with renewable projects for long-term, bundled renewable electricity.
Making the Decision
Consider RECs if:
- You have sustainability reporting requirements
- Customers or stakeholders value environmental commitments
- You want green claims without capital investment
- On-site generation isn't feasible
Consider alternatives if:
- Maximum environmental impact is the priority (higher additionality)
- Long-term cost reduction is equally important
- You have suitable facilities for on-site generation
- You can commit to long-term agreements
For many businesses, a combination approach works best—on-site solar where feasible, community solar for other locations, and RECs to cover remaining consumption.
Explore your options at our Illinois electricity comparison page or learn more about renewable energy options available in Illinois.
Frequently Asked Questions
A REC represents the environmental attributes of one megawatt-hour of renewable electricity generation. When you purchase RECs, you're buying the "greenness" of renewable energy—the fact that it displaced fossil fuel generation—separate from the physical electricity itself. RECs allow you to claim renewable energy use even though all grid electricity is mixed.
Most are legitimate, but quality varies. Look for Green-e certified products, ask about REC sources and retirement practices, and verify claims through documentation. Be cautious of vague "green" marketing without specifics. Licensed Illinois suppliers are regulated, but that doesn't guarantee REC quality—you need to evaluate the renewable energy claims separately.
Green premiums typically range from $5-20 per MWh ($0.005-0.02 per kWh) above standard rates. For a typical business using 10,000 kWh monthly, this adds $50-200/month. Costs vary based on REC type—national wind RECs are cheapest, while Illinois-specific or solar RECs cost more.
Yes, you can purchase unbundled RECs through brokers or directly from generators while buying electricity from any supplier. This gives you flexibility to choose your preferred REC type and source. For large purchases, working with an energy broker can help access wholesale REC markets.
Conclusion
Renewable Energy Credits are the mechanism that enables green energy claims in today's electricity market. Understanding how RECs work empowers you to evaluate green products critically, avoid greenwashing, and make purchases that align with your environmental goals and budget.
Whether you choose bundled green electricity products, direct REC purchases, or on-site generation, the key is matching your approach to your objectives. For sustainability reporting and stakeholder claims, ensure proper documentation and certification. For maximum environmental impact, prioritize high-additionality options that support new renewable development.
Illinois offers multiple pathways to renewable energy, from REC-backed supply products to community solar to on-site installation with Illinois Shines incentives. The right choice depends on your specific situation, goals, and resources.