The Point of RECs and Solar Incentive Programs

Solar power in CaliforniaSolar power and renewable energy are a big part of the California culture. It’s common to see entire blocks, or even neighborhoods using some sort of alternate power sources. The partial reason for this is the high levels of environmental awareness that most Californians seem to be raised with. Most of the encouragement, however, comes from renewable energy credits.

This part of the new Energy Rebate Programs has been a law since 2009, but there are still some parts of the country that are still a bit fuzzy on the whole thing. The idea of it is pretty simple: residential and commercial customers lump sum cash rebates for their use of alternative sources of energy.

Rewarding Savers

These programs are the biggest reason why companies like Canopy Energy are quickly breaking into the mainstream. The devil is in the details, however, and that’s where these rebates can get confusing. The American Recovery and Reinvestment Act of 2009 has eight different allocations under Section 3. So, we’ll focus on the tax incentives for individuals.

The total allocation for this part of the program – at least in 2009 – was $237 billion. The government divided that money into several sections, and set $4.3 billion aside for home energy credits. These credits allowed homeowners to recoup 30% of the cost up to $1500 in getting their homes to become more energy efficient.

The Point of Renewal

This, of course, is completely different from the Renewable Energy Certificate, which are non-tangible trading commodities. These certificates serve as proof that one megawatt-hour of electricity was generated from an eligible renewable energy source.

Companies can trade, sell, and barter these certificates; either way, the company needs to produce electricity from renewable sources first. The good thing about this program is that it incentivizes the use of alternative power sources instead of penalizing people for not reducing their carbon emissions. This way, people will actually want to reduce their energy consumption, rather than hide their bills from the government.