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REC Sweeping: The Loophole Undermining the Renewable Portfolio Standard

The cornerstone of clean energy policy in New Hampshire is broken. But this legislative session, SB72 presents an opportunity to fix it.


New Hampshire is one of twenty-nine U.S. states that have implemented a Renewable Portfolio Standard (RPS). These state-level policies have been responsible for roughly half of all growth in U.S. renewable electricity generation and capacity since 2000.[1]


New Hampshire’s RPS is a policy that obligates electricity suppliers (e.g., distribution utilities like Eversource, Unitil, and Liberty Utilities) to acquire a certain percentage of their electricity mix from renewable energy sources every year. Renewable obligations are divided into four categories:


· Class I – New Renewable Energy

· Class II – New Solar

· Class III – Existing Biomass / Methane

· Class IV – Existing Small Hydro


The table below depicts the annual obligations of electricity suppliers across these categories.


RPS Obligations 2008-2025


RPS Compliance


There are three ways electricity suppliers can comply with renewable energy obligations under the RPS:


1. Buy Renewable Energy Credits (RECs): Every megawatt-hour of electricity generated from a renewable energy system produces a REC: a certificate acknowledging its potential contribution to the RPS. Electricity suppliers can purchase RECs from homeowners, businesses, municipalities, or any other owners of renewable energy systems to comply with RPS obligations through the REC market.

2. Pay Alternative Compliance Payments (ACPs): Instead of purchasing RECs, electricity suppliers can pay into the state Renewable Energy Fund. The Public Utilities Commission uses money generated by ACPs to fund rebate programs for residential commercial, municipal, and low-income renewable energy projects.

3. Build renewables: due to hefty regulatory challenges, this option is scarcely utilized.


The REC Sweeping Loophole – A Vicious Cycle


Graphic displaying the cycle of REC Sweeping


Not all owners of renewable energy systems follow the necessary bureaucratic protocols to register and sell their RECs. “REC Sweeping” is a loophole in the RPS that allows electricity suppliers to “sweep up” unregistered RECs without paying the owners of the systems that generated them. This surplus of “free” RECs distorts the market by causing REC prices to collapse.


REC prices in New Hampshire are incredible low right now (less than $10, if not less than $5). The low price of RECs is both a symptom of REC sweeping, and the cause of REC sweeping. Because prices are so low, many residential and small-scale systems do not bother to register and sell their RECs, which lead to an even greater surplus of free RECs and even lower REC prices. Figure 1 depicts the vicious cycle of REC sweeping.


The Solution – SB72


SB72 closes the REC sweeping loophole that allows utilities to take unregistered RECs from renewable energy system owners at no cost. Contact your legislator and urge them to support SB72 in order to fulfill the original intent of the RPS and allow the market to function as designed!

[1] Barbose, L. (2018). “U.S. Renewable Portfolio Standards: A 2018 Update.” Berkley Lab: Electricity Markets Policy Group. Retrieved from: https://emp.lbl.gov/publications/us-renewables-portfolio-standards-1

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