Building Your ESG Narrative: Using Renewable Energy Certificates (RECs)

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The push toward renewable energy grows increasingly urgent with each passing day, not just within the cryptocurrency industry but in a holistic sense for the long-term good of the planet. In recent months and years, we have seen many businesses, energy providers, and even homeowners shift their focus in the direction of a greener and more sustainable means of operation.

But for those without the ability to access or generate their own renewable energy, achieving a cleaner existence presents a significant challenge. More and more companies are turning to renewable energy certificates (RECs) to address this challenge and to demonstrate their commitment to investing in renewable energy, even when it’s not feasible to connect to it directly.

Here is a closer look at what RECs are, how they work, and how they can benefit the ESG narrative of organizations throughout the world.

What are RECs?

REC stands for renewable energy certificate and each certificate issued equates to 1 MWh of renewable energy generated. Per the Environmental Protection Agency, RECs are a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. In short, they allow those without direct access to renewable energy sources like wind and solar to pay for renewable electricity to be generated.

How do RECs work?

Because the electricity we receive throughout the grid contains little to no information as to its origin or source of generation, we are left to wonder if it was produced via renewable sources or through high-emission sources like coal or natural gas. RECs help address this mystery by accounting for, tracking, and assigning ownership to renewable energy generation.

RECs are issued when 1 MWh of electricity is generated and delivered to the electricity grid from renewable energy resources. For example, for every 1 MWh a wind turbine generates, that turbine’s owner receives a REC they can either keep or sell. If you were to buy the REC generated by that wind turbine, you would then own the rights to that 1 MWh of wind-generated power, even if you never use the physical energy produced by the wind turbine. This is how RECs allow you to claim the power you use came from renewable resources with low or zero emissions. You never need to have used the physical energy produced by that renewable energy asset. If you own it as a REC, you can claim you are powered by renewable energy.

recs infographic

Why are RECs important?

RECs are important not only because they allow those without access to renewables to pay for renewable electricity, but their purchase helps grow the renewable energy market. They are also the proof consumers must use in order to substantiate claims of renewable electricity use, effectively serving as the currency of the green energy market.

RECs also require a low level of effort for consumers to build their ESG narrative. This helps with a company’s independent ratings that help investors assess behavior and policies when it comes to their environmental performance, social impact, and governance issues. RECs are an indication to the energy market that there is demand for renewable energy today and that drives continued development for green energy projects in the future.

Through the use of RECs, organizations can claim renewable energy use without having to alter their colocation logistics, which also has a positive impact on public image. If you buy enough RECs equal to the non-renewables you consume, you can state that you are powered by renewable energy – even if you are not plugged directly into a renewable power source.

Build your ESG narrative with Compute North

Compute North is playing a leading role in the industry-wide shift toward sustainability and renewables. Colocating your equipment with us means leveraging our renewable-heavy energy mix, which is 64% carbon-free. Investing in renewables is not only good for the sustainability of the planet, but it also looks good to ESG investors and the greater public audience.

Our TIER 0™ data centers are ideal solutions to the next-generation energy grid because of its ability to participate in demand response. Renewable energy is intermittent, and because our type of compute work at a TIER 0™ data center is fully interruptible around the clock, it may be curtailed by grid operators managing less dependable energy sources like wind turbines and solar panels.

This ability to curtail power is a significant advantage in the crypto mining marketplace. During Q2, we entered into a 40 MW hosting agreement with Bit Digital to expand the firm’s bitcoin mining operation in North America for an additional 13,000 ASIC miners. The core of that agreement included demand response programs between Compute North and select energy suppliers so we could ramp up or ramp down depending on low supply or peak demand.

Contact us today to start exploring hosting solutions for your operation.

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