What are "renewable energy credit" (REC) markets?

Renewable Energy Credit (REC) markets are designed to facilitate the trading of credits that represent proof that energy was generated from renewable sources. When a renewable energy facility generates electricity, it not only produces energy but also earns RECs. Each REC typically represents one megawatt-hour (MWh) of energy produced.

These credits can be sold or traded, which allows utilities and other entities to meet regulatory requirements or voluntarily support renewable energy. By purchasing RECs, buyers can claim that they are using renewable energy, even if they do not directly generate it themselves. This creates a financial incentive for the development of renewable energy projects and helps expand the overall market for clean energy.

In contrast, other options do not accurately describe REC markets. The sale of used solar panels pertains to a completely different sector within renewable energy and does not involve credits for energy generation. Markets dictating the pricing of solar components focus on the physical hardware aspect of solar energy systems rather than the trading of credits tied to energy production. Lastly, discussions around trading non-renewable energy sources lie outside the scope of renewable energy credits and would not contribute to the support and growth of renewable energy production.