Renewable Energy Certificates (RECs): What They Are and Why Your Business Needs Them

As the global focus on sustainability intensifies, businesses are under increasing pressure to reduce their environmental impact. One powerful tool in this journey is the Renewable Energy Certificate (REC). But what exactly are RECs, and how can they benefit your business? Moreover, how can trading companies help you access these valuable certificates?

What Are Renewable Energy Certificates (RECs)?

A Renewable Energy Certificate (REC) represents proof that one megawatt-hour (MWh) of electricity has been generated from renewable energy sources. These certificates allow businesses to substantiate their claims of using clean energy, even if they are not directly purchasing energy from renewable sources.

When an energy provider generates electricity from wind, solar, or other renewable sources, they earn RECs for each MWh produced. These RECs can then be sold or traded to businesses looking to offset their own carbon emissions. Purchasing RECs is a way for companies to meet sustainability goals and demonstrate their commitment to renewable energy.

Why Does Your Business Need RECs?

1. Meet Sustainability Goals: Many companies today are under increasing pressure from consumers, investors, and regulatory bodies to demonstrate a commitment to reducing their carbon footprint.
2. Enhance Brand Image and Corporate Responsibility: Companies that invest in renewable energy are often viewed more favourably by consumers and stakeholders who are concerned about the environment.
3. Compliance with Regulations: In some regions, businesses are required to meet specific renewable energy quotas.
4. Energy Diversification: Investing in RECs allows companies to diversify their energy portfolio.
5. Accessing Financial Incentives: In some jurisdictions, companies that purchase RECs may be eligible for financial incentives or tax benefits.
6. Improving Investor Relations: Investors are increasingly looking for companies that prioritize sustainability and corporate responsibility.

Development of the Guarantees of Origin Market in Bulgaria

In Bulgaria, Guarantees of Origin (GOs) are issued as proof that the electricity has been generated from renewable energy sources. The Sustainable Energy Development Agency (SEDA) plays a pivotal role in managing the Guarantees of Origin in the country.

In 2024 SEDA introduced several key changes  which facilitate the trade of GOs locally and at the European market.

On 2^nd of April 2024  a new Ordinance No. E-RD-04-2 was issued. It details the processes for the issuance, transfer, revocation and recognition of guarantees of origin. It introduces guarantee options for electricity produced from biogas and green hydrogen. The electronic guarantee register synchronized with the CEN-EN 16325 standard is also improved, ensuring transparency and efficiency in data management and trading.

Following amendments to the Energy Act, as of February 2023 the Independent Bulgarian Energy Exchange (IBEX) has launched the organization of a specialized market for trading in guarantees of origin. This allows manufacturers to generate additional revenue by selling the warranties, both locally and internationally and also promotes the manufacturing and selling of green energy in Bulgaria.

On 1^st of October 2024 VertiCer signed an agreement with SEDA for the recognition of GOs issued in Bulgaria for the needs of declaring the origin of electricity in the Netherlands, This means that from this date VertiCer accepts GOs in the SEDA registry in relation to electricity consumption the Netherlands. VertiCer is the institution in the Netherlands that issues Guarantees of Origin (GoO) and certificate of origin (CoO) for all sustainable energy carriers.

Inclusion in the European registry will increase Bulgaria’s visibility in the international market. The introduction of a single regulation on guarantees of origin is part of the efforts for Bulgaria’s full integration into the European energy market. This facilitates the transmission and trade of electricity between Member States, improving the liquidity and affordability of green energy.

How Trading Companies Can Streamline Access to RECs

With Bulgaria’s integration into the European registry, the trade in Renewable Energy Certificates (RECs) is poised for substantial growth in the coming years. VIP Energy aims to take a leading role in this evolving market by aligning its expertise with clients’ sustainability goals and regulatory needs.

Navigating the complexities of the renewable energy certificate market can be challenging. Trading companies like VIP Energy play a crucial role in bridging the gap between businesses and access to RECs, offering the following key services:

1. Simplifying the Process
   We simplify the REC acquisition process by identifying certificates that best align with a company’s sustainability goals and compliance requirements. Our tailored approach ensures an efficient and informed purchasing experience.
2. Cost-Efficiency through Bulk Purchasing
   For businesses seeking large-scale environmental impact, we facilitate bulk purchasing of RECs, optimizing costs and streamlining transactions to enhance economic efficiency.
3. Ensuring Transparency and Verification
   Trust is essential in REC transactions. VIP Energy provides fully verified and traceable certificates, ensuring that businesses can confidently demonstrate the authenticity of their sustainability commitments.
4. Navigating Regulatory Compliance
   Renewable energy regulations vary across regions and industries. Our expertise in tracking and adapting to these requirements ensures that REC purchases are compliant, simplifying the process for our clients.
5. Strategic Planning
   As the REC market grows more complex, VIP Energy offers strategic guidance to help businesses plan REC acquisitions, manage renewable energy portfolios, and capitalize on emerging market trends and incentives.
6. Facilitating International REC Trading
   For businesses with a global presence, we streamline international REC transactions, addressing regulatory variations and supporting cross-border renewable energy commitments.

Empowering Sustainability with VIP Energy
RECs are a powerful instrument for companies committed to reducing their carbon footprint and advancing sustainability. By partnering with VIP Energy, businesses gain a trusted advisor to simplify REC acquisition, enhance environmental credentials, and contribute to the global transition toward renewable energy.