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Houston expert: Why higher REC prices are good for the future of renewables

P.J. Popovic, CEO of Houston-based Rhythm, explains Renewable Energy Certificates work and their impact on Texas. Photo courtesy of Rhythm

We all know what renewable energy is — wind, solar, biomass, geothermal, hydropower — but how do you purchase it? It's invisible. Not to mention when energy from any source enters the electricity grid, there's no way to track all those electrons.

Renewable Energy Certificates have made it possible

Renewable Energy Certificates, or RECs, allow us to track your clean energy. Each individual REC represents one megawatt-hour of clean energy generated. And while a REC isn't technically electricity, it represents the clean energy going into the electricity grid—meaning homes and businesses claim their commitment to renewable energy if their electricity is supported by RECs.

It's also important to understand what a renewable energy certificate is not: an offset. An offset represents a metric ton of emissions avoided and a REC represents 1 MWh of clean energy generated. While each have similar goals, they are not quite the same thing.

Not all RECs are created equally

The market for RECs is fluid. Due to the growth of the renewable energy market, RECs have been oversupplied for years. This has created low prices and little-to-no financial advantage for the facilities that generate clean electricity (e.g., wind facilities, solar farms, hydro plants).

In Texas, the retail electricity market is inundated with renewable electricity claims said to be supported by RECs. The energy plan you sign up for might come from solar, wind, biomass, or even trash incineration, but the renewable energy facilities likely are coming from outside Texas, located in places like California, Canada, or elsewhere. While there's no wrong way to switch to renewable energy, supporting renewable energy sources inside Texas helps Texans move closer to being a more sustainable state.

Choosing Texas renewable energy plans and your actions do have a true, real-world impact more than ever before

Some critics have argued that REC-supported renewable energy plans don't meet the highest standard of sustainability arguing RECs are not foundational to the existence of renewable energy assets. In other words, they argue that RECs don't provide a material revenue source for renewable projects because they don't incentivize new developments of renewable facilities to be built.

When RECs were trading for less than a dollar, this was a valid argument. But that was then, and this is now.

In the last year alone, voluntary renewable energy certificate prices have skyrocketed and are now between $7 and $10 per MWh. This means RECs can now contribute up to 30 percent of a renewable facility's revenue. Naturally, this encourages more and more clean-energy facilities and clean-energy jobs to be created. A win-win.

What about Power Purchase Agreements?

A Power Purchase Agreement, or PPA, is a tad different than a REC. In a PPA, the developer of a renewable project (solar arrays at a solar farm, or turbines at a wind farm) can sell the actual energy it produces over a 10-to-20-year contract.

While the sale of this renewable energy still contributes to a larger portion of project revenues, the revenue mix has clearly shifted, and RECs cannot be considered an immaterial incentive anymore. Sure, PPAs are a stronger market signal for renewable project development, but only a couple of hundred organizations globally utilize PPAs. This makes them very challenging for businesses to access.

Through PPAs, various risks, credit needs, and long-term commitments create challenges for many organizations to meet their sustainability goals. So, while RECs do not provide as material of a market signal as PPAs, with the recent changes in market prices, RECs can now be considered a meaningful, profitable market signal for renewable projects.

Making the future of renewable energy in Texas even brighter.

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P.J. Popovic is the CEO of Houston-based Rhythm.

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Building Houston

 
 

Conroe is tops in Texas and No. 3 in the nation's list of boomtowns. Photo courtesy of Visit Houston

Working remotely is increasingly part of the modern lifestyle, and a new report cements a Houston neighbor as one of the top places for remote workers.

Apartment search website RentCafe ranks Conroe No. 15 in its Top 50 Cities for Remote Workers, released in November.

The study looked at 150 U.S. cities, comparing them across five main categories: leisure, affordability, comfort, rental demand, and remote work readiness. Scores were based on 19 metrics, from cost of living, availability of apartments with short-term leases, and rental demand to coworking spaces, percentage of remote workers, and internet speed.

"With remote work migration on the rise, we uncovered the most desirable cities to move to across the nation if you work remotely," the website says. It suggests that remote workers on the move "look toward the South and Southeast, where we identified several cities that offer the perfect balance between comfort, value, leisure and remote work-readiness."

Conroe ranks best for:

  • Number of high-end units
  • Share of new apartments
  • Number of apartments with access to sports amenities

Three other Texas cities join Conroe in the top 15. College Station (No. 9) makes the cut for remote workers due to its high availability of short-term rentals, large population of rentals, and access to sports amenities.

In the Austin metro area, both Austin (No. 13) and Round Rock (No. 11) appear, thanks in part to access to internet connection, average download speed, and the number of remote workers.

Lower on the list, but still in the top 50, are: Plano (No. 23), Lubbock (No. 27), Houston (No. 35), Amarillo (No. 36), San Antonio (No. 41), Dallas (No. 42), and Fort Worth (No. 46).The top city for remote workers, according to RentCafe, is Greenville, South Carolina.

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This article originally ran on CultureMap.

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