A brief introduction to D-RECs

Clean, safe, and affordable energy is crucial to empowering communities and improving the lives of those most vulnerable to the impacts of climate change. Increasing access to finance for decentralised renewable energy solutions will enable homes, hospitals and schools to be supplied with reliable sources of electricity.

The D-REC Initiative is a multi-stakeholder platform launched in January 2021 by South Pole and Positive.Capital Partners, that is working to create a new global mechanism for the certification of distributed renewable energy generated near to the point of use and not connected to larger grids. Shell Foundation is supporting the initiative, with co-funding by UK aid from the UK government.

Decentralised Renewable Energy Certificates (D-RECs) are electronic records that verify the source of electricity used, allowing electricity buyers to make reliable claims about this energy. Investments using D-RECs are, in essence, investments into renewable energy projects with high climate impact and social benefits.

A new brief developed by coalition member South Pole explains how D-RECs work and presents their transformative potential. The brief presents the background concept, used by the likes of Microsoft and Google, runs through a theoretical example, explores finance structures and expands on how D-RECs can help achieve and measure the UN Sustainable Development Goals.

As the sector looks ahead to 2030, the D-REC concept represents a game-changing new market instrument for achieving clean energy access (SDG7) and prevention of climate change (SDG13), limited only by the corporate appetite in renewables.

Read the brief