Green Power Purchasing Frequently Asked Questions (FAQ)
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If more companies purchase RECs and GOs, then won’t this increased demand eventually cause more renewable energy investment and generation?

Short Answer

Highly unlikely. Research has shown that supply of RECs and GOs from existing generation vastly exceeds demand. The long-running low price for these certificates plainly exposes this oversupply.

Long explanation

There are currently no expectations of a near- or long-term scarcity in voluntary REC or GO markets. Therefore, the financial influence of these voluntary certificate markets on investments in renewable energy generation capacity is negligible.[1] It has been shown empirically that the existing (baseline) supply of RECs and GOs for voluntary purchases exceeds both existing and projected demand (i.e., there is no expectation of future scarcity).[2] If voluntary certificate market scarcity were to emerge – for example, through the imposition of a national renewable energy portfolio standard on electric utilities in the USA that removed certificate supply from the voluntary market – then it would clearly be reflected in a significant increase in REC or GO prices (including forward price curves). For example, we see no supply of voluntary market RECs coming from jurisdictions in the USA with aggressive RPS mandates on electric utilities.


[1] For additional literature on the topic, visit: https://www.bccas.business-school.ed.ac.uk/impact-and-collaboration/renewable-energy-purchasing/.

[2] Gillenwater, M. (2013). Probabilistic decision model of wind power investment and influence of green power market. Energy Policy.