REC Procurement and Purchasing Strategies

This is Week 4 of Innovo’s six-part educational series on environmental assets, following our deep dives into RECs and carbon offsets. There’s more than one way to buy renewable energy, from purchasing Renewable Energy Certificates (RECs) directly, signing a power contract, or generating your own electricity. Each approach fits a different buyer profile, geography, and energy goal. Innovo makes REC procurement faster, more transparent, and fully auditable. 

What does it mean to buy renewable energy?

When a company buys renewable energy certificates, they are purchasing the proof that clean electricity was generated and added to the grid. These certificates carry the environmental attributes of renewable generation. Owning and retiring RECs is how organizations can credibly claim renewable electricity use under frameworks like the GHG Protocol and RE100.

The way you obtain RECs will be shaped by your organization’s scale, access to relevant energy markets, and appetite for contractual or market risk. Different strategies,  ranging from purchasing unbundled RECs on the open market to entering into long-term power purchase agreements or leveraging aggregation programs,  offer varying degrees of complexity, price certainty, and impact on your sustainability goals. The following are the primary procurement approaches utilized by corporate buyers today.

What are unbundled RECs?

Unbundled RECs represent renewable energy certificates that are sold independently from the physical electricity. When an organization purchases unbundled RECs, it allows them to match their conventional grid electricity consumption with renewable energy generated elsewhere on the grid. This mechanism is widely adopted by buyers seeking to demonstrate environmental commitment irrespective of their energy supplier, physical location, or access to utility-specific green programs.

Organizations can acquire unbundled RECs through a variety of channels—including established brokers, energy suppliers, and directly from renewable project developers—providing flexibility and competitive market access. This procurement route is especially attractive for entities needing to make credible, immediate renewable energy claims, while avoiding long-term infrastructure commitments or the operational complexities of on-site generation. For many, unbundled RECs serve as a streamlined pathway to support sustainability targets, verify compliance with sustainability frameworks, and enhance public decarbonization strategies without delay.

What are Power Purchase Agreements (PPAs)?

Power Purchase Agreements (PPAs) are long-term contracts established between a renewable energy project, such as a wind or solar facility, and a buyer, typically a corporation, university, or municipal entity. Through a PPA, the buyer commits to purchasing both electricity and its associated Renewable Energy Certificates (RECs) produced by the project over a fixed duration, often ranging from 10 to 20 years. This enables buyers to lock in predictable energy prices, hedge against market volatility, and make a direct, traceable impact on new renewable capacity.

PPAs have become a cornerstone strategy for organizations seeking to achieve ambitious sustainability objectives and demonstrate market leadership in decarbonization. These agreements are particularly attractive to entities with large energy loads or significant carbon reduction commitments, offering the dual benefit of long-term price stability and a meaningful connection to renewable energy generation.

Due to the long-term financial obligations and operational complexities involved, structuring a PPA requires a high degree of creditworthiness, robust internal risk management, and expert legal and financial guidance. As renewable procurement models evolve, PPAs continue to support the acceleration of the clean energy transition at scale, enabling buyers to align energy strategy with corporate ESG goals and regulatory frameworks.

What’s the difference between a physical PPA and a virtual PPA?

A physical Power Purchase Agreement (PPA) is a contract where a corporate buyer receives actual electricity generated by a renewable project, typically delivered over a regional transmission network or the local utility grid. With a physical PPA, the buyer assumes delivery of electrical energy at a specific interconnection point and is responsible for arranging transmission or retail supply as needed. Alongside the electricity, the buyer also receives the associated Renewable Energy Certificates (RECs), enabling both renewable energy use and credible reporting for sustainability frameworks.

In contrast, a virtual PPA (VPPA),  also referred to as a financial PPA or contract for differences, functions entirely as a financial contract rather than a physical energy delivery mechanism. Under a VPPA, the renewable project sells all generated electricity into the local wholesale market at the prevailing market price. Importantly, the buyer does not take physical delivery of power but does receive the RECs, preserving the renewable energy claims associated with the agreement. This structure simplifies participation for organizations operating distributed loads, managing facilities in both regulated and deregulated regions, or seeking to support renewable projects without altering their existing utility arrangements.

Physical PPAs are often favored by energy-intensive operators, such as data centers, manufacturers, and large campuses, that can manage their electricity use at scale and operate within deregulated market territories. Conversely, VPPAs are designed for corporations with more distributed operations (multiple sites, states, or countries), those seeking geographic or project diversity, or entities prioritizing rapid alignment with renewable energy and decarbonization commitments across varied regulatory jurisdictions.

Both agreement types serve as critical tools for advancing renewable deployment and providing organizations with predictable REC supply, improved budget certainty, and demonstrable progress toward sustainability objectives.

What is self-supply?

Self-supply refers to when an organization directly generates renewable electricity.  The most common ways are through on-site assets like rooftop solar PV systems, ground-mounted solar arrays, or wind turbines, but also via off-site renewable projects the company owns or operates. In this approach, the business retains the Renewable Energy Certificates (RECs) associated with the energy produced, thereby enabling verified claims of renewable consumption and direct impact on emissions reduction.

Companies pursuing self-supply typically value a high degree of operational control, end-to-end traceability, and the assurance that their sustainability actions provide tangible, location-based environmental benefits. Self-supply strategies are often implemented by organizations with suitable land or facility assets, stable long-term energy requirements, and strong commitments to decarbonization and Environmental, Social, and Governance (ESG) goals.

This model also supports compliance with leading carbon accounting frameworks by ensuring transparent REC tracking and minimizing exposure to grid-related uncertainties. As regulatory expectations and market standards for sustainability claims become more rigorous, self-supplied renewable energy continues to be viewed as a gold standard for demonstrating authentic climate leadership and enabling robust, auditable GHG emissions reporting.

What are utility green tariffs?

In regulated electricity markets, direct participation in PPAs is often not available to buyers. Instead, utilities may offer green tariff programs which are  regulator-approved pricing structures that enable customers to procure bundled renewable electricity sourced from designated projects. These programs are vetted through state utility commissions to ensure alignment with local energy policies, compliance standards, and consumer protection protocols.

Green tariff offerings are tailored for organizations seeking to support renewable energy procurement without taking on the contractual complexities or wholesale market risks typically associated with PPAs. This option streamlines procurement and provides operational simplicity, as utilities handle project sourcing, integration, and ongoing administration.

Availability and structure of green tariff programs vary by utility and service territory, and participation is generally subject to program capacity or enrollment windows. Still, for many organizations, green tariffs represent an accessible, reliable route to advance clean electricity goals, meet sustainability commitments, and demonstrate environmental leadership within the regulatory bounds of their electricity market.

How do organizations choose between these options?

It depends on goals and constraints. The optimal procurement strategy is shaped by an organization’s sustainability objectives, energy portfolio size, operational footprint, and market landscape. Many companies with diversified operations deploy a mix of approaches, utilizing unbundled RECs for distributed or smaller facilities, pursuing Power Purchase Agreements (PPAs) to secure renewable supply for energy-intensive sites, and leveraging green tariffs where direct market access is limited or where local regulations mandate utility involvement.

The common denominator is data. Across all procurement models, robust, auditable data is foundational. Organizations require full transparency into the origin of their RECs, clear records of ownership, and precise generation timestamps. This level of data integrity underpins credible renewable claims, ensures regulatory and voluntary compliance, and forms the basis for accurate Scope 2 greenhouse gas reporting. 

Why does this matter? 

Corporate renewable energy demand is at record highs, fueled by ambitious net-zero commitments, stakeholder pressure, and evolving regulatory expectations. Yet, the journey from goal-setting to verified clean energy procurement remains challenging. Fragmented electricity markets, an array of contract structures can make execution slow and resource-intensive for even the most sophisticated teams.

Organizations must navigate regional market rules, shifting REC pricing, contract risk profiles, and varying data requirements for frameworks like GHG Protocol and RE100. Managing these layers places a heightened burden on internal resources, increases compliance risks, and can delay the achievement of climate goals.

Innovo’s goal is simple: make credible clean energy accessible to every organization, regardless of procurement method, portfolio size, or geographic reach.

By digitizing access to all major REC tracking systems, streamlining data for compliance, and connecting buyers with verified supply, Innovo enables any organization to participate confidently in renewable electricity markets, reducing friction at every step.