Who Actually Buys Renewable Energy Credits And Why

The $10 billion market you’ve never heard of, explained.

Every year, billions of dollars change hands in a market most people don’t know exists. Renewable Energy Credits (RECs) allow companies to claim they’re powered by clean energy—even when the electricity flowing through their wires comes from the same grid as everyone else.

It’s not a scam. It’s not greenwashing (mostly). It’s a financial mechanism that’s quietly reshaping how corporations think about energy. Here’s how it actually works.

What is a REC?

When a wind farm or solar installation generates one megawatt-hour (MWh) of electricity, two things are created:

1. The electrons — actual electricity that flows into the grid
2. The certificate — a REC proving that 1 MWh of renewable energy was generated

These two products are sold separately. The electricity goes to the grid. The REC goes to whoever wants to claim that clean energy.

One REC = 1 MWh of renewable generation = the right to say “we used clean energy.”

The Buyers: Who’s Spending Billions?

The REC market is dominated by a handful of corporate giants. In 2025, the top 10 buyers accounted for over 40% of total voluntary purchases.

Source: Company sustainability reports, RE100 disclosures, Gridvara analysis

Why They Buy

Corporate REC purchases are driven by three factors:

1. ESG Reporting Requirements

Institutional investors now demand climate disclosures. BlackRock, Vanguard, and State Street collectively manage over $20 trillion and require portfolio companies to report Scope 2 emissions—the category that covers purchased electricity.

Buying RECs lets companies report lower Scope 2 numbers without physically changing their energy infrastructure.

2. RE100 Commitments

Over 400 major corporations have joined RE100, pledging to source 100% renewable electricity. Most can’t build enough solar panels on their rooftops to meet this goal. RECs fill the gap.

3. Customer and Employee Expectations

Tech workers, in particular, care about their employer’s environmental footprint. A 2025 survey found that 68% of software engineers consider a company’s climate commitments when evaluating job offers.

The Price: What Do RECs Cost?

REC prices vary dramatically by geography and type:

The US market has been in oversupply due to massive wind buildout in Texas and the Midwest, pushing national prices down. Europe, with tighter supply and stronger demand from regulation, has seen prices rise.

The Criticism: Paper Energy vs. Real Electrons

Not everyone thinks RECs deliver real environmental value.

The problem: When Google buys a REC from a Texas wind farm, Google’s California data center still runs on California grid power—which is roughly 50% natural gas. The wind farm would have operated regardless of whether Google bought the certificate.

Critics call this “paper energy”—a financial transaction that doesn’t change physical electricity flows.

The counterargument: REC revenue improves wind and solar project economics, enabling more renewable construction than would otherwise occur. Over time, this shifts the entire grid toward clean energy.

The debate remains unsettled. What’s clear is that RECs alone won’t decarbonize the grid—but they’re channeling billions toward renewable projects that might not otherwise get built.

What Comes Next

The REC market is evolving. Three trends to watch:

1. Hourly Matching Companies like Google are moving beyond annual REC matching to “24/7 carbon-free energy”—ensuring clean energy supply matches their consumption hour by hour, not just across a full year.

2. Additionality Requirements Some buyers now demand RECs only from new projects (built within the last 3-5 years), ensuring their purchase directly enabled new renewable capacity.

3. Regulatory Tightening The EU is implementing stricter rules on what counts as “renewable” for corporate claims. The US SEC’s climate disclosure rules may follow.

Key Takeaways

• RECs are certificates representing 1 MWh of renewable generation, sold separately from physical electricity
• Big Tech dominates the market—Google, Microsoft, and Amazon are the top three buyers
• US prices are falling (~$3.85/MWh) due to oversupply; EU prices are rising (~€2.90/MWh)
• RECs enable corporate clean energy claims but don’t directly change grid electricity flows
• The market is shifting toward hourly matching and additionality requirements

This is the first in a series on energy credits and carbon markets. Next: How EU Guarantees of Origin differ from US RECs.