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Tradable Renewable Energy Credits (RECs) in California: Continued Complexity

In March 2010, the California Public Utilities Commission (CPUC) issued a long-awaited decision that allows the use of tradable renewable energy credits (RECs) to satisfy certain renewable energy mandates applicable to California utilities and other energy providers.

By allowing RECs to be unbundled from the underlying energy, the CPUCs decision could provide more compliance flexibility and create a more efficient energy market. Both compliance requirements and the market, however, remain subject to complexities imposed by the decision itself and by existing regulatory structures that continue to impact renewable energy eligibility in California. Utilities, energy providers, renewable energy developers, and other market participants who understand the opportunities and limitations created by the CPUCs decision will be in the best position to take advantage of the growing renewable energy market in California.

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