Editor’s Note: The is a guest contribution by Edward Fenster, CEO and co-founder of SunRun. This is the fifth post in a series from the CEO’s of major solar companies. You can follow the complete series here.

As solar power and other renewable energy sources grow, so does awareness and debate about the role of renewable energy certificates (RECs). As the CEO of SunRun, which is the nation’s largest provider of solar electricity to homeowners and a recipient of RECs, I strongly support the value that RECs bring to our industry.

RECs are issued by the government to any company that generates renewable electricity, at the rate of one REC per every megawatt-hour (mWh) of electricity produced. Rather than punish companies that produce brown electricity, RECs reward companies that produce green electricity.

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RECs have real monetary value in regional markets. As the renewable energy sector grows, it’s likely that we’ll see markets for RECs nationwide in the near future, along with an increased focus on how RECs work, and whether they are a good incentive for the renewable energy industry.

There are two markets for RECs: compliance, which serves to help utilities meet renewable portfolio standard (RPS) minimums, and voluntary, where individuals and companies can purchase RECs as a substitute to purchasing renewable electricity directly. In most compliance markets, the value of a REC is determined by the “alternative compliance payment,” or tax, that a utility would need to pay the government if it could not purchase enough RECs to meet its mandated green energy goals.

The voluntary market is an easy and efficient way for companies and individuals to contribute to the building of renewable energy. In particular, companies have seized on the opportunity to advertise a strong commitment to the environment by purchasing RECs. But these companies often make no changes to their energy consumption. The claims by these companies are only true if the RECs they have purchased lead to future development of green energy and reduction of pollution. However, RECs by design reward projects that have already been built and are producing electricity. Is this a fatal flaw in the design of the REC system? Not so fast.

RECs reward companies that deliver clean electricity successfully to market at competitive prices. Companies include the future value of the RECs when they do the financial analysis to decide whether to pursue developing a renewable energy project. Without RECs, many of the existing projects would not have been built. Additionally, many solar companies use RECs to lower the price of solar power to become competitive with grid pricing. Since the key to mass market adoption of solar is grid parity, this has the impact of increasing demand for and supply of additional solar power. Lastly, as more renewable energy is created, the market value of RECs will decline. Over time, only the most efficient projects (or those requiring the smallest subsidies) will be built. This will in turn free up taxpayer dollars to fund more clean energy.

That’s not to say the current system for awarding RECs is perfect, and there is vigorous debate about what shape the REC markets should ultimately take. Some argue that each green technology should have its own REC market. Others argue that extra credits should be awarded for distributed generation projects, because they reduce the need for grid repairs and result in less energy being “lost” in transmission. Others still believe that extra credits should be awarded for projects that operate during peak hours because the power they replace is typically dirtier than off-peak power generation. Some have shown frustration at the slow pace of the debate, but it’s a topic that’s worthwhile for everyone who supports renewable energy to investigate.

Learn more about SunRun’s Solar Financing.

Image Credit: david.nikonvscanon via Flickr under Creative Commons license.

It’s easy to think that solar panels can do no wrong— after all, they will help lead us out of our energy crisis, right? Unfortunately, these shining beacons of hope produce toxic e-waste just like cell phones, TVs, and computers. A report released today by the Silicon Valley Toxics Coalition admonishes the solar industry to face its e-waste problem head on or risk “repeating the mistakes made by the microelectronics industry.”

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Solar energy is necessary for our transition to a sustainable economy, but a recent study in Geophysical Research Letters suggests that the industry may be harming the environment. Nitrogen Triflouride (NF3), a greenhouse gas used by the semiconductor industry to clean the chambers where silicon chips are produced, has 17,000 times the globe-warming capacity of CO2. Now researchers believe that emissions of the gas are up to 4 times higher than previously thought—perhaps as high as 16 percent.

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The Solar Electric Power Association (SEPA) has outlined four easy steps to a thirty fold increase in the size of the US solar power industry between 2009 and 2016, leading to over $230 billion worth of investment and the creation of 440,000 permanent jobs.

The influential industry group laid out the plans at this week’s Solar Power International conference in San Diego. The four key recommendations to achieve this goal are as follows:

1. Utility Ownership of Solar Power Projects

“The utility and solar industries must collaborate to find program structures, such as utility ownership of distributed photovoltaics, that provide a winning scenario for both industries, as well as for customers at large. The solar industry can utilize this new market segment as a buffer until home and small business owners are back on more solid economic footing.”

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John Sedgwick is the Co-founder and Vice President of Solaicx, a company that manufactures silicon ingots and wafers for solar electric (PV) panels. They are then supplied to solar panel manufacturers across the globe.

Solaicx began production at their new manufacturing plant in Portland, Oregon at the end of 2007. While current capacity of the plant is 40 MW, production will increase to 180 MW in the future.

CleanTechnica: What kinds of general trends have you seen in the solar industry as a whole?

John Sedgwick: The general objective of the entire industry is to reduce costs. What we see in markets across the world is, as you lower the levelized costs of solar electricity down to the levelized cost of traditional electricity, the markets just go vertical. When you look over time, the industry is doing dramatically well at reducing costs.That’s even when you take into account some significant challenges, things like polysilicon shortages and other shortages that have popped up as a direct result of a market that has been growing at 35%, 40%, and 50% a year have caused shortages that have increased some costs in the chain. Yet, because of manufacturing efficiencies, conversion efficiencies, and economies of scale, the industry has been able to hold the line on any cost increases and has done pretty well at reducing costs.

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