Renewable Energy Markets 101
All across the United States, legislative action and consumer choice are growing demand for renewable energy. In some states, electric utilities must procure renewable energy to fulfill legal requirements (the “compliance market”). Meanwhile, many individual consumers and companies are choosing to go above and beyond these state and regional requirements through the voluntary purchase of green power products (the “voluntary market”). Both approaches are vital to bringing online new sources of clean, renewable energy.
Voluntary Market Facts
- In 2010, total retail sales of renewable energy in voluntary markets exceeded 35.6 million MWh, enough electricity to power more than 3 million homes for a year.1
- Consumers can voluntarily support renewable energy through several options, including purchasing Renewable Energy Certificates (RECs), participating in utility green power programs, or installing generation equipment on-site.
- More than 860 US utilities offer their customers Green Power Pricing programs. The overall price for renewable electricity has consistently dropped over the past seven years, resulting in an average added cost of only $5.40 per month to a household’s electric bill for clean, renewable energy.2
- In 2010, commercial (non-residential) customers accounted for 73% of total renewable energy sales in the voluntary market. Large commercial purchasers of renewable energy include Fortune 500 companies like Dell, Whole Foods, Intel, and Kohl's.3
Compliance Market Facts
- As of 2010, 29 States and the District of Columbia have enacted legislation requiring utilities to include renewable energy generation in their service grids. (This is commonly known as a Renewable Portfolio Standard, or RPS).4 Numerous other states have non-binding RPS goals.
- State requirements for RPS-eligible renewable energy sources vary by renewable resource definitions, date first online, state import vs. export quotas, REC ownership, the total RPS target itself, and any special carve outs for selected technologies (such as solar).
- Regional programs like the Regional Greenhouse Gas Initiative (RGGI), Midwestern Greenhouse Gas Reduction Accord (MGGRA), and the Western Climate Initiative (WCI) have enacted multi-state compacts to reduce carbon emissions and promote renewable energy generation.
- Renewable generation from state RPSs accounted for 55 million MWh in 2010 (surpassing the voluntary market for the first time, see figure above). For 2014, compliance markets call for an increase to more than 100 million MWh. 
Key Terms and Definitions
- Renewable Energy Certificate (REC) – A REC represents the generation of one MWh of electricity from an eligible renewable source. RECs allow owners to claim the environmental attributes associated with renewable energy generation. Read REMA's recent press release on RECs here>>
- Green Power - Electricity supplied in whole or in part from renewable energy sources, such as wind and solar power, geothermal, hydropower, and various forms of biomass.7
- Renewable Portfolio Standard (RPS) – In regulated markets, electric utilities can purchase renewable energy certificates from producers of renewable energy in order to fulfill mandated renewable generation mixes. Generation percentages and source eligibility requirements vary by state.
- Green Power Pricing – Program operated by an electric utility where a rate-paying customer elects a surcharge to support added renewable energy generation.
- Megawatt Hour (MWh) – A measurement of electricity equivalent to running 1000 hundred-watt light bulbs for 10 hours. Another example: the 2008 average annual electricity consumption for a U.S. residential utility customer was about 11 MWh, an average of less than 1 MWh per month.8
 L. Bird, J. Heeter, Status and Trends in U.S. Compliance and Voluntary Renewable Energy Certificate Markets (2010 Data), Golden, CO: National Renewable Energy Laboratory, pg. 5, Oct. 2011, 18 Nov. 2011. The home-electricity equivalent was found using the U.S. Environmental Protection Agency’s Greenhouse Gas Equivalencies Calculator, http://www.epa.gov/cleanenergy/energy-resources/calculator.html, Accessed 18 Nov., 2011.
 Op. Cit. Bird et al, pg. 10.
 L. Bird, E. Holt, J. Sumner, C. Kreycik. Voluntary Green Power Market Forecast through 2015. National Renewable Energy Laboratory, May 2010.