If you’ve been keeping an eye on the clean energy market, you’ve probably seen the term ‘RECs’ popping up everywhere. RECs stand for Renewable Energy Certificates—a term you may recognise but might not fully understand. Even if you know what the acronym stands for, the deeper meaning and mechanics might still be a mystery.
But don’t worry, we’re here to break it down for you and explore the significant impact they have right here in Singapore. Let’s dive into the details of this key player in the saga of sustainable energy.
Renewable Energy Certificates, commonly known as RECs, are proof that electricity has been produced from renewable resources such as solar, wind, hydro, or geothermal sources. Each certificate represents the environmental benefits of generating one megawatt-hour (MWh) of electricity using these sustainable methods.
RECs hold significant value in the energy marketplace because they can be traded independently from the actual electricity. To put it simply: When you purchase Renewable Energy Certificates, it’s more than purchasing electricity; you’re investing in the future of green energy development, and encouraging more sustainable practices.
There are other forms of RECs, including Guarantee of Origin (commonly used in Europe) or Energy Attribute Certificate (EAC), which serve similar purposes and are often used interchangeably.
Renewable Energy Certificates come with a variety of attributes, each highlighting a different aspect of their value and utility. Here’s an overview of the core attributes that define every Renewable Energy Certificates, along with along with additional characteristics that may vary on specific market demands and regulatory requirements:
If you’ve been wondering about the difference between RECs and carbon offset, you’re not alone. Let’s take a closer look at how RECs compared with carbon offsets across several important areas:
Essentially, carbon offsets are about compensating for emissions after they’ve been produced like cleaning up a mess they already made. RECs, however, focus on promoting the use of renewable energy and helping to reduce the carbon intensity of electricity consumption, much like preventing the mess in the first place. While both strategies are vital to climate action, yet they operate differently and address unique aspects of environmental responsibilty.
At FOMO Energy, we support Renewable Energy Certificates because they actively contribute to clean energy production. Rather than simply offsetting emissions, RECs offer a direct, forward-looking approach by helping remove carbon emissions from the energy supply altogether.
Now let’s take a look into types of Renewable Energy Certificates. There are two categories: bundled and unbundled, which serve different needs and goals within the renewable energy landscape.
A bundled REC includes both the renewable electricity generated and the associated environmental attributes. This usually happens through a Power Purchase Agreement, where the buyers directly contract with renewable energy providers. A common example of this is rooftop solar installations, where a business used the solar power produced on-site and retires the linked RECs to reflect their clean energy use.
Unbundled RECs are sold independently from the physical electricity they represent. They provide flexibility for consumers who looking to purchase just the environmental benefits. This allows them to support renewable energy without directly purchasing or consuming the power. It offers flexibility and consumers can choose the timing or amount, to match their preferences.
When you buy electricity, you’re essentially paying for the right to draw a certain amount of energy from the grid. While it’s not possible to trace an individual unit of energy from generation to your consumption, book-and-claim accounting makes this process manageable.
Under this system, renewable energy producers record the amount of electricity they generate and supply into the grid. They are then issued certificates as verification. These certificates, which are issued based on data from their metering equipment, can be traded and cancelled by others to claim the environmental benefit of that energy. Importantly, once issued, the certificate’s trade and use (redemption/cancellation) are independent of the associated electricity.
Understanding Renewable Energy Certificates is simpler than it seems. Here’s a breakdown of their lifecycle, from production to retirement:
The process begins at renewable energy source, such as wind farms and solar panels, where clean electricity is produced and delivered into the general power grid, contributing to the overall energy mix.
For every megawatt-hour (MWh) of renewable energy generated, the facility is awarded with a REC. These certificates are verified by accredited tracking system to ensure they are authentic and traceable.
RECs can be purchased by businesses, organisations, or individuals looking to claim the use of renewable energy and substantiate their renewable energy claim. Regardless of the actual energy source powering the location, they still can support green energy even if their direct power supply is connected to the grid which contains a mix of renewables and non-renewables.
Once REC is purchased, it is retired by permanently removed from circulation. This step confirms the buyer’s contribution to renewable energy development and serves as credible evidence of their environmental responsibility.
Singapore, widely recognised as a leading green city, continues to champion sustainability and eco-friendly development. As part of its push towards a greener future, Renewable Energy Certificates (RECs) play a vital role in this transformation. RECs align closely with Singapore’s environmental goal, serving as a key instrument in its commitment to low-carbon growth and responsible energy use. Across various sectors, Singapore is increasingly turning to RECs to achieve their sustainability targets:
Businesses in Singapore are adopting Renewable Energy Certificates to strengthen their environmental responsibility, meet international sustainability standards, and minimise their carbon footprints. This strategic use of RECs not only enhance their green reputation but also helps them comply with stringent regulations, attracting eco-conscious consumers and investors.
In Singapore, RECs are important mechanism for tracking renewable energy adoption and assessing the success of sustainability policies utilised by the Singaporean government. These certificates also support key programmes under the Green Plan 2030 by encouraging the deployment of clean energy solutions across multiple sectors.
One notable example is the Singapore Green Building Masterplan (SGBMP), where the Building and Construction Authority (BCA) introduced the GMIS-EB 2.0 scheme in June 2022. This scheme aims to transform 80% of Singapore’s buildings into green, energy-efficient structures by 2030, offering financial incentives of up to S$1.2 million or 50% of qualifying costs for energy-efficient upgrades in buildings that achieve high performance standards.
Though still gaining traction, some electricity retailers in Singapore now offer RECs to individual consumers. This initiative gives residents the opportunity to choose renewable energy sources actively and contribute to national sustainability goals. As consumer awareness and demand increase, more households are expected to participate to play a direct role in shaping Singapore’s clean energy future.
In Singapore, several reporting frameworks recognise and accept the use of Renewable Energy Certificates (RECs) to demonstrate commitment to renewable energy and sustainability goals.
In Singapore, more companies are stepping up to publish their own sustainability reports. These reports, often produced voluntarily, serve as a platform for companies to allow businesses to highlight their commitment to environmental responsibility and share their sustainability strategies.
RECs play a significant role in these sustainability reports by providing tangible proof of a company’s investment in renewable energy. By purchasing and disclosing RECs, companies can demonstrate how they offset their electricity use with clean energy and contribute to the wider shift towards low carbon technologies. This practice underscores a company’s proactive role in reducing its environmental impact and contributing to the global fight against climate change.
Now that you understand what Renewable Energy Certificates are and how they are secured, the next question would be “How do I trade RECs?”. We’ll take a look below!
Before diving into the trading process, it’s useful to understand some key terms:.
Overall, the REC procurement and trading process can be complex, with differences between registries, but don’t worry, we’ll break it down into six simple steps:
Start by signing up with the REC registry of your choice. This gives you access to the platform, and it’s usually free.
Next, register your solar energy system with either I-REC or APX. You can do this yourself or let a third party handle it (with a declaration letter). Registration is valid for a period of 5 years.
You’ll need to prepare the following:
Moreover, you’ll need to submit:
These documents are required basically for the registries to be able to verify your asset, but have also been expanded over time for more thoroughness. For example, with I-REC, if the data cannot be corroborated, a site inspection might be needed as well. A periodic permissions will be required for the issuer to inspect your solar PV system and to authenticate energy generation data.
Once your registrant account is set up and your renewable energy asset is validated, you are ready to start working with RECs! These certificates are usually registered periodically (monthly or yearly), depending on how much clean energy your system produces. At the end of each production period, you’ll need to apply for a new batch of RECs.
To get RECs issued, submit your renewable energy asset’s electricity production data to be audited by an issuer. REC issuers regularly review this data to ensure accuracy. Some registries require a revenue-grade meter (also known as an Advanced Metering Infrastructure/ AMI meter) to track generation. The price of these meters typically cost between $300 to $800 for a residential solar system.
If you don’t have this revenue-grade meter you can still use your electricity bills as proof of energy generation. However, the downside to this will be that you’ll only be able to register for RECs based on exported clean energy, and not for all the renewable energy generated by your solar panel system.
Pro Tip: Many corporate buyers purchase RECs in bulk at the end of their financial year, which means RECs are usually purchased within the first quarter of the following year. So it’s best to sell your RECs before demand drops later in the year. Keep in mind that RECs can only be registered for electricity produced within the past 2 years.
Once your data has been verified, RECs will be issued and added into the registry system. You’ve finally gotten your RECs!
You can store them with a trading account. If you decide to open a trading account with a registry, you’ll be able to hold, trade and subsequently redeem the issued RECs on your own. But note that managing your own trading account can be expensive if you’re only planning to sell a small number of RECs. For example, I-REC charges S$725 to open an account and S$2,900 annually to maintain it.
Now, let’s talk about the main reason people getting RECs: selling them. Once you’ve set up your own trading account, you’re free to transfer, trade, or sell your RECs as you like.
RECs price vary based on demand and supply, but as of mid-2024, small to medium size asset owners in Singapore can expect to sell RECs for around S$30 to S$40 per certificate. If you sized your solar system well, selling RECs can be one of the most profitable ways to maximise your solar investments.
That being said, it’s important to understand the RECs market in Singapore is still developing. Prices are not always transparent, and many transactions are made over-the-counter (OTC). This means that REC trading is still subject to price swings and potential regulatory changes as the market matures.
If you’re using a REC programme that handles trading for you, you don’t have to worry about this step! But if you’re doing it independently, redemption is a simple process. Once purchased, RECs will be transferred into a redemption account and then retired to remove them from circulation so they can’t be reused.
Retiring RECs gives the buyer the right to claim that they’ve used a volume of renewable energy, which helps companies to meet their sustainability goals.
Note: Redemption fees applied. For example, I-RECs charges S$0.12/MWh, while APX charges S$0.04/MWh.
Selling Renewable Energy Certificates can be an extremely lengthy & troublesome process, particularly for landed homeowners. At FOMO Energy, we help all our customers handle their renewable energy certificates from start to finish, ensuring a smooth and fuss-free process. Our proprietary REConnect programme also ensures that your renewable energy certificates’ potential is maximised – by providing complimentary services such as solar panel maintenance, 24/7 fault monitoring for your system & much more. Have a solar system & are interested to find out more? Feel free to contact our team here! We’re happy to walk you through how RECs work and how your system can qualify. Whether you’re looking to monetise your clean energy or support Singapore’s green goals, our experts are ready to assist.
