"Buying a green plan means I am using renewable energy." Not how the grid works.
The most common framing of "100% renewable" retail electricity plans is that the supplier directly sources renewable electricity from a wind or solar farm and delivers it to your home. That mental model is physically impossible.
Electricity is a fungible commodity once it enters the grid. The electrons reaching your service drop are whatever the nearest generators are producing at that moment, weighted by transmission availability. In Atlanta that is largely natural gas and nuclear; in Houston, gas and wind; in Seattle, hydro. No retail product can change the physical mix in real time.
What a "100% renewable" plan actually does is buy RECs from somewhere in the country to match the kWh you consume on an annual basis. In most retail products those RECs are unbundled: bought separately from the electricity, often sourced from oversupplied wind farms in Texas or Iowa, and stripped of any meaningful link to your service territory. The legal claim ("100% renewable") is accurate. The additionality (the answer to "did my purchase cause a new wind farm to be built?") is almost always low.
This is not fraud, but it is a much weaker claim than the marketing suggests, and it is why New York tightened the rules for retail "renewable" claims in 2019 and again in 2023. The rest of this guide explains how the REC market actually works.
Why one wind turbine produces two products at once.
A REC is the accounting answer to a physical problem. Once renewable kWh enter the grid they are indistinguishable from gas or coal kWh. The REC is a separate, tradable certificate that carries the "renewable" attribute and makes the claim auditable.
A wind farm generates 1 MWh
The kWh flow onto the grid and are bought at the wholesale price by the local utility or retail supplier, exactly like power from a gas plant. The kWh themselves carry no special label; they are pooled with all other generation in the market.
A regional tracking system issues one REC
For that same MWh, one of the seven US regional tracking systems (PJM-GATS, NEPOOL-GIS, NYGATS, M-RETS, WREGIS, NC-RETS or ERCOT) issues exactly one REC, tagged with the generator, the technology, the vintage, the location and a unique serial number.
The REC is sold and retired
The REC moves through a broker market until a utility, a retail supplier, a corporation or an individual buys and "retires" it. Retirement is permanent and tracked in the issuing system. After retirement, only the retiring party can claim the underlying MWh as renewable.
The detail that surprises most readers. The wholesale price the wind farm gets paid for its kWh is the same as any other generator on the grid. The REC is incremental revenue. In strong RPS markets the REC can equal 10 to 30% of total revenue; in oversupplied voluntary markets it is closer to 1 to 3%. This is what determines whether the project would have been built without the REC market, and is the heart of the additionality debate.
State RPS targets and the REC prices they produce.
Selected high-volume compliance markets, with approximate Class I or main-tier REC trading ranges and the SREC carve-out where applicable. Sources: DSIRE state RPS database, state PUC filings, REC broker price reports, verified May 2026.
| State | RPS target (final year) | Class I REC range $/MWh | SREC carve-out |
|---|---|---|---|
| Massachusetts | 40% by 2030 (CES caps in 2050) | $30 to $50 | SREC II / SMART (separate) |
| Connecticut | 48% by 2030 | $25 to $45 | No (consolidated) |
| New Jersey | 50% by 2030, 100% by 2050 | $15 to $30 | SuSI / SREC II: $80 to $200 |
| New York | 70% by 2030, 100% by 2040 (CLCPA) | $10 to $25 (Tier 1) | No (NY-Sun blocks) |
| Maryland | 50% by 2030 | $10 to $25 | SREC: $40 to $80 |
| Illinois | 40% by 2030, 50% by 2040 (CEJA) | Procured via IPA (ABP block prices) | ABP blocks: $50 to $80 |
| Texas | Met in 2009, no further mandate | $0.50 to $3 (voluntary-dominant) | No |
| California | 60% by 2030, 100% by 2045 | $5 to $15 (PCC1 in-state) | No (utility-scale procurement) |
! States with no RPS
14 US states have no binding RPS in 2026 (most of the Southeast and parts of the Mountain West and Midwest). In those states the only REC demand comes from voluntary buyers and the few utilities with internal sustainability targets. Compliance-grade REC prices are therefore close to zero, and any "green" retail plan offered in those states is almost certainly backed by unbundled out-of-state RECs.
Why compliance RECs cost 10x more than voluntary RECs.
The same MWh of wind generation can produce either a compliance REC or a voluntary REC depending on who buys it. The price difference reflects what each market is willing to pay.
A Compliance market
Utility buyers under a legally binding state RPS, an Alternative Compliance Payment ceiling (often $50 to $80/MWh) acting as a price cap. Demand is fixed by statute. Prices clear at whatever level induces the marginal MWh to be built. Range: $5 to $50/MWh, with NJ SRECs at $80 to $200.
B Voluntary market
Corporations, retail suppliers, individual subscribers, with no legal obligation to buy. Demand is elastic. Supply is whatever is left over after compliance demand is met, plus oversupplied wind from non-RPS states. Range: $0.50 to $5/MWh unbundled; $5 to $15/MWh for Green-e certified.
C Solar RECs (SRECs)
Compliance RECs from solar generators in states with a solar carve-out (NJ, MA, MD, DC, PA, DE, OH, IL). Prices reflect the gap between the carve-out target and installed solar capacity. NJ peaked above $600/MWh in 2009; today NJ SuSI / SREC II trades $80 to $200/MWh. MA SMART, MD SREC and DC SREC are similar order of magnitude.
D Bundled vs unbundled
Bundled: the REC moves with the underlying electricity (a corporate PPA where Google buys wind output + RECs together from a specific farm). High additionality. Unbundled: the REC is bought separately from the electricity, often years after the generator was built. Low to zero additionality. Most residential "green" plans use unbundled RECs.
The takeaway: REC price is a fairly clean signal of whether the underlying generation would have been built anyway. A $0.50/MWh REC says the wind farm is profitable without the REC market. A $200/MWh NJ SREC says the rooftop solar would not exist without the carve-out.
The regulatory crackdown on misleading "renewable" retail products.
Until 2019, retail suppliers in most states could sell a "100% renewable" plan backed by the cheapest available out-of-state unbundled RECs, often at a premium of $5 to $15/month. NY moved first to police the practice. Other states are watching.
NY Reset Order
NY Public Service Commission's December 2019 Reset Order requires ESCO "renewable" products to source NY-sourced or NY-deliverable RECs only.
NY Reset reaffirmed
NY PSC reaffirms and expands the Reset framework with stricter enforcement for marketing claims taking effect after April 2026.
US voluntary market 2024
EPA Green Power Partnership tracking shows corporate PPAs and utility green tariffs dominate; residential retail RECs are a small slice.
share of voluntary REC sales that are Green-e certified
Green-e is the only nationally recognised certification for additionality, vintage and double-counting in the voluntary market.
Three lessons from the NY enforcement experience
- A Geographic sourcing matters. A NY consumer subscribing to a "100% renewable" plan that retires Texas wind RECs is funding wind farms that would have run anyway. NY rules now require deliverable RECs, which lifts the price the retail supplier pays and tightens the link to local generation.
- B Certification is currently the consumer's only check. Where state rules do not police REC sourcing (most states), the only verification a consumer has access to is whether the product carries a Green-e certification, plus whatever a state consumer-advocate office publishes. Beyond Green-e, retail suppliers self-report.
- C Corporate PPAs do the real additionality work. The 12 to 15 GW/year of new US wind and solar built since 2020 is overwhelmingly funded by long-term corporate PPAs (Google, Meta, Amazon, Microsoft) and state RPS procurement, not by residential green plans. A residential green plan is at best a marginal demand signal; the real builder funding is on the corporate side.
What sets the price of a REC, and why it varies 400x.
The same MWh of wind energy can produce a REC worth $0.50 in one market and $200 in another. Four structural reasons explain the spread.
Compliance demand is statutory, voluntary is elastic
A state RPS creates a hard floor under REC demand: utilities must buy or pay the Alternative Compliance Payment. Voluntary demand is sensitive to price; when RECs get expensive, corporate buyers shift to lower-impact options or just pay less. That is why compliance RECs trade at $5 to $50 and voluntary RECs trade at $0.50 to $5.
RPS carve-outs and tier definitions fragment the market
A NJ Class I SREC and a NJ Class I REC are not interchangeable: SRECs satisfy only the solar carve-out, generic Class I RECs satisfy the broader main tier. MA SMART, MD SREC, DC SREC and IL DG block prices all operate as separate sub-markets, each with its own supply-demand balance. The fragmentation is what produces the $200+ SREC prices when a carve-out is in deficit.
Geographic eligibility rules trap RECs in regions
CA accepts Bucket 1 (in-state delivered), Bucket 2 (firmed-and-shaped imports) and Bucket 3 (unbundled out-of-state) RECs at different compliance weights. NY post-2019 requires NY-sourced or deliverable RECs for retail renewable claims. These rules prevent the cheap Texas wind RECs from clearing into the high-priced compliance markets, which is why the price spread exists at all.
Vintage and certification gate the voluntary premium
A 12-year-old REC from a fully-amortised Texas wind farm trades near $0.50/MWh. A current-vintage Green-e certified REC from a built-this-year solar project trades at $5 to $15/MWh. The premium is what the buyer is paying for the additionality story to be credible. The fact that most retail green plans buy the $0.50 product is what fuels the additionality critique.
The honest summary: the REC market is functioning exactly as designed, but consumers consistently misread what they are buying. The cheap unbundled REC is a legally valid claim; it is just a much weaker environmental claim than the marketing implies.
Six checks if you actually want renewable impact, not just the label.
Check for Green-e certification
The Green-e Energy seal verifies vintage, additionality and no double-counting. About 1 to 5% of retail green plans carry it. If the plan does not, the supplier is buying the cheapest available unbundled REC.
Ask where the RECs are sourced from
Reputable suppliers will tell you. RECs from in-state or in-RTO generators are more meaningful than out-of-state unbundled wind. If the supplier will not answer, walk away.
Prefer utility green tariffs to ESCO products
About 50 US utilities offer green tariffs where the utility procures specific new renewable projects on behalf of subscribers. The link to specific generation is stronger than a retail green plan with unbundled RECs.
If you live in NY, the rules now favour you
Post-2023 NY ESCO "renewable" products must be backed by NY-sourced or NY-deliverable RECs. The price premium is higher but so is the environmental impact. Verify the supplier is listed on the NYPSC ESCO compliance list.
Consider community solar instead
In one of the 24 community solar states, a subscription typically beats a retail green plan on both price and impact. The project is local and the link to specific generation is direct.
If you own and can afford it, install rooftop solar
The 30% IRS Section 25D credit runs through 2032. Owned rooftop solar with net metering is the highest-additionality residential option, and it is also the cheapest per kWh in most retail-rate net-metering states.
Common questions about US Renewable Energy Credits.
A REC is a tradable certificate that represents the environmental attributes (the "green" claim) of one megawatt-hour of renewable electricity. When a wind turbine generates 1 MWh, two products result: the kWh itself, which flows onto the grid, and one REC, which can be sold separately. The REC is what gets retired against a state Renewable Portfolio Standard target or claimed against a "100% renewable" product. Without owning the REC, no one is allowed to claim the underlying kWh as renewable. This is the rule that prevents double-counting between the generator, the utility and the end user.
Compliance RECs are bought by utilities to meet their state RPS obligation. Prices reflect the compliance demand minus available supply; they range from about $5/MWh in oversupplied markets (much of MISO) to $30 to $50/MWh in tight markets (MA Class I, CT Class I), with NJ Class I SRECs in their own category at $80 to $200/MWh. Voluntary RECs are bought by anyone, usually a retail supplier offering a "green" plan or a corporation meeting a sustainability pledge, with no compliance obligation behind them. Voluntary RECs trade at $0.50 to $5/MWh, often from oversupplied wind in Texas and Iowa. Source: NREL voluntary green-power tracking.
The electrons flowing into your home are whatever the grid is sending at that moment, which depends on the local generation mix. What the plan does is purchase enough RECs to match your annual consumption. In most cases those RECs are unbundled: the supplier bought them separately from the underlying electricity, often sourced from oversupplied wind farms in Texas, Iowa or the Dakotas. The renewable claim is legally accurate; the additionality (the question of whether your purchase caused new renewable generation to be built) is usually low. See our guide on the impact of green contracts for the deeper analysis.
An SREC is a REC issued for solar generation in states that carve out a separate solar requirement inside their RPS. NJ, MA, MD, DC, PA, DE, OH and IL have SREC markets. Prices are driven by the shortfall between the solar carve-out target and actual installed solar capacity, and can swing dramatically: NJ Class I SRECs peaked above $600/MWh in 2009 and crashed below $100 by 2013 as oversupply hit. NJ has since closed the legacy market and replaced it with the SuSI / SREC II program, where SREC II prices currently sit in the $80 to $200/MWh range.
Look for the Green-e Energy certification from the Center for Resource Solutions. Green-e verifies that the RECs are sourced from facilities built within the last 15 years, that they are retired in a tracking system, and that they are additional to (not the same as) what utilities buy for RPS compliance. About 1% to 5% of US voluntary REC purchases are Green-e certified. If a plan does not carry the Green-e seal or an equivalent state certification, the supplier is free to buy the cheapest unbundled RECs available, and many do.
Until 2019, NY ESCOs (retail suppliers) selling "100% green" products were buying unbundled RECs from Texas wind farms at $1 to $2/MWh and marketing the product to NY customers at a meaningful premium. The NY Public Service Commission concluded in the 2019 Reset Order, reaffirmed in 2023, that this misled consumers. New rules require any NY retail product marketed as "renewable" to be backed by NY-sourced or NY-deliverable RECs (RECs from generators inside the NYISO control area, or generators with a contract to deliver into NYISO). The rules are part of the broader NY Clean Energy Standard framework.
Seven regional tracking systems: WREGIS (West), M-RETS (Midwest), NEPOOL-GIS (New England), PJM-GATS (mid-Atlantic), NYGATS (New York), ERCOT REC system (Texas), and NC-RETS (North Carolina). Each MWh of renewable generation gets issued exactly one REC in its regional system; when the REC is used (for RPS compliance, voluntary retirement or end-user claim) it is permanently retired. Cross-system trading is allowed only where two tracking systems have an import agreement.
If your goal is to lower personal emissions, the cheapest path is energy efficiency (a heat pump replacing a gas furnace, an EV replacing a gasoline car, LED lighting) which has measurable, near-immediate effect. A retail plan with unbundled voluntary RECs costs you ~10 to 20% more per month for a claim with low additionality. A Green-e certified product or a utility green tariff offering NREL-tracked verified-new generation is closer to the real thing. The best-leverage option for a consumer is rooftop solar where economics allow, then community solar in states with strong programs, then targeted voluntary REC products where neither is possible.
Keep learning about US energy markets
The impact of green contracts
Does buying a green retail plan cause a new wind farm to be built? The additionality argument explained.
Community solar
Subscribe to a shared solar project and earn a bill credit, no roof installation required.
Demand response
Getting paid to use less. The other way households earn revenue from the wholesale market.
What is a wholesale electricity market?
PJM, ERCOT, CAISO and the rules that decide your supply rate.
Deregulated states map
State-by-state status of electricity retail choice in the US.
New York energy market
NYISO, the Reset Order and the post-2023 enforcement of REC sourcing for retail products.
Illinois energy market
ComEd, Ameren, the Adjustable Block Program and the CEJA 50%-by-2040 trajectory.
Electricity prices per kWh
EIA-verified state-by-state residential prices, May 2026.
Distributed energy
Rooftop solar, batteries and EVs as wholesale resources under FERC Order 2222.