Renewable Energy Credit Aggregation FAQs

Renewable Energy Credit Aggregation: Frequently Asked Questions (FAQs)

Q1. What is a REC?

REC stands for Renewable Energy Credit. Per Michigan’s Public Act 295 enacted in 2008, one megawatt hour of electricity generated from a renewable resource also generates one renewable energy credit (1 MWh = 1 REC). In order to sell these renewable energy credits, a system owner must be registered in an online certification registry. Michigan’s registry is called the Michigan Renewable Energy Certification System (MIRECS).

Q2. Why is 5 Lakes excited to start Michigan’s REC aggregation program?

Earlier this year the Michigan Public Service Commission (MPSC) approached 5 Lakes Energy because although thousands of homeowners across Michigan have either small-scale wind or solar systems on their property, they were not accessing the REC market. To fill this need and offer a service to the industry, 5 Lakes is offering aggregation services to small residential and commercial system owners in our online registry account.

Moreover, our team has the relationships across the state required to facilitate REC sales on behalf of our clients.

Q3. Why is aggregation better than registering the system myself?

Many people do not even know where to begin. Moreover, it can be cost and time prohibitive to register a system online because many small-scale systems do not generate enough RECs to overcome MIRECS’ upfront registration and recurring, annual fees.

Aggregation works just as the name describes. By combining multiple systems in our registry, 5 Lakes is able to spread out those registration and time costs over a portfolio of renewable systems so each system incurs a much smaller portion of the costs — keeping more revenue for each system owner.

5 Lakes can also more effectively sell a large bundle of RECs to a utility or other purchaser in larger quantities than one system owner acting on his or her own trying to sell a handful of RECs.

Q4. Why is 5 Lakes focusing on Michigan?

We have already started marketing our clients’ RECs to Michigan utilities because they need to meet interim targets for purchasing RECs as required by PA 295. Some Michigan companies also have a need to purchase RECs for their voluntary business goals. Projections indicate that the REC market will strengthen in the coming years as more and more utilities need to meet their compliance targets, and more and more Michigan companies adopt voluntary goals. Finally, ‘bonus’ incentive RECS (IRECs) are only eligible to be generated and sold in Michigan.

Q5. So how are IRECs different?

We feel the Michigan REC market is more advantageous than other markets because almost all system owners in the state are eligible to receive additional, ‘bonus’, REC(s) for each MWh of electricity generated depending on their type of renewable technology, the source of the labor/materials and time of electricity generation. 5 Lakes works with you to easily determine which of these incentive credits you are eligible to receive. (We can list the different IREC categories here.)


Q6. How can I get started?

Currently, we are starting our pilot run of the aggregation process. Please to see how you can be involved or if you would like more information.


Additional Resources

Breakdown of renewable energy registry markets from the United States Department of Energy

Michigan Public Service Commission: Net Metering & Solar Pilot Program Report for Calendar Year 2011 (August 2012)

Michigan Renewable Energy Certification System (MIRECS)