Explainer: How Credits Work in the New York Clean Energy Standard
Explainer: How Credits Work in the New York Clean Energy Standard

Electricity providers in New York will be required to obtain a targeted number of renewable energy credits (RECs) and zero-emissions credits (ZECs) each year, according to the Clean Energy Standard approved on Aug. 1.

A REC is created each time 1 megawatt-hour (MWh) of electricity is generated by a renewable resource. RECs can then be sold and traded among providers. So solar, wind, and other renewable energy providers can sell their credits to providers in areas that don’t have the means to produce renewable energy.

Thus, each provider can meet its required target of credits, and there is an economic incentive for producing renewable energy.

ZECs, on the other hand, are related solely to the nuclear plants. These credits are created when zero-emission nuclear power is generated. Each electricity provider will also be required to purchase a targeted number of ZECs each year.

RECs can be created by numerous providers, making the economics of RECs competitive. But ZECs can only be created by the two companies that own the four nuclear reactors upstate, Exelon and Entergy. Thus, New York’s Public Service Commission has decided it must administratively set the price for ZECs and not leave it up to the market.

Energy providers will bake the costs of the ZECs into the supply charges on customers’ power bills. This is how consumers will pay for reviving the state’s nuclear plants.

A new program went online in July to keep track RECs and ZECs, called the New York Generation Attribute Tracking System (NYGATS), which will be an integral part of enforcing the Standard.

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