How companies buy RECs to meet their sustainability goals

How companies buy RECs to meet their sustainability goals

What the heck is a REC? Renewable Energy Certificates allow a factory in North Carolina to reduce carbon emissions to zero

When the manufacturer UPM Raflatac wanted to eliminate carbon emissions, it didn’t have the luxury of building a solar or wind farm at its Henderson County, N.C., plant.

But it did have another option: It could buy the ownership rights to the amount of energy its Mill River factory and its 170 employees would use in a year. By buying Renewable Energy Certificates (REC), the plant went from 4% carbon free to zero carbon emissions in less than a year. The company also bought RECs for its plant in nearby Fletcher.

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Neil Bland, left, general manager of UPM Raflatac's Mills River factory.

The path to 100% renewable energy involved buying RECs through Duke Energy. To renewable energy insiders, a REC (pronounced “wreck”) is a common term. RECs can be bought, sold and traded. One REC is issued when 1 megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy source. It can be from a rooftop solar array, large wind farm or other sources.

It’s an attractive commodity for companies looking to increase the amount of renewable energy they use. It can also help utilities satisfy renewable energy mandates in states like North Carolina and Ohio, both served by Duke Energy.

UPM Raflatac is a worldwide manufacturer of sustainable labels for industry, packaging and consumer goods with plants in western North Carolina. The company plans to reduce CO2 emissions 30% by 2030 as part of its sustainability commitments, which are aligned with the United Nations’ Sustainable Development Goals.

“One of our goals is to reduce our carbon emissions, and we can make substantial progress toward that goal by using electricity generated from renewable sources,” said Neil Bland, general manager of UPM Raflatac’s Mills River factory. “We are proud that our Mills River factory is North Carolina’s first manufacturing facility to utilize 100 percent renewable electricity through Duke Energy RECs.”

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UPM Raflatac's Mills River, N.C., factory.

Many companies cannot change the sources of electricity delivered by the local energy grid. But by purchasing RECs, they can claim the ownership rights to renewable energy.

Call it a virtual swap. Buying a wind REC from Texas doesn’t mean wind power is being delivered to your doorstep. But in an accounting sense, it is. Duke Energy is buying and selling RECs at its trading floor in Charlotte.

Currently, a REC can cost from 75 cents to $8 in Duke Energy’s regulated service territories depending on geography and state regulations. In some areas of the Northeast U.S., a REC can cost as much as $400.

“We can act as a broker on behalf of our customers for any type of RECs – wind, solar, hydro, biomass – in any geography,” said Kim Austin Lee, associated business development manager at Duke Energy. “If a company is interested in buying locally generated RECs, we can do that, too.”

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An REC represents 1 megawatt-hour of electricity generated and delivered to the grid from a renewable energy source.

The service is operated through an unregulated subsidiary – Duke Energy Clean Energy Resources. Lee said Duke Energy had been approached over the years, and recently by large customers, who asked if the company could arrange the purchase of RECs to help them meet their sustainable energy goals.

Initially, Duke Energy was not set up to offer the service. Lee said the company realized it had the experience and capacity in house to offer the service to customers.

“We continue to get inquiries from companies looking to secure RECs and enhance their renewable and sustainability presence,” said Lee. “For Duke Energy, we consider it a value-add service we can offer these companies, partnering to help them meet their sustainability goals and challenges.”

So as companies seek to meet their sustainability goals, buying RECs might be a growing part of that strategy.

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