RECs vs. Renewable PPAs: A Decision Framework for Ohio

Ohio market insight · Renewables & solar

Updated September 27, 2026Ohio Commercial Energy editorial teamHow we review content Book a free 15-min bill review

The short answer

Buy renewable energy certificates (RECs) if you need a credible renewable claim at low cost with short commitments; pursue a power purchase agreement (PPA) if you also want a long-term price hedge or to be able to say your contract helped a specific new project get built. Both can support a market-based Scope 2 claim under today's GHG Protocol guidance, provided the certificates are retired in your name and meet its quality criteria. The main trade-off is cost and flexibility versus additionality and price certainty, and a proposed Scope 2 revision that would add hourly-matching and deliverability requirements is a reason to avoid locking in low-quality certificates for many years.

Two instruments, one claim

A REC represents the renewable attributes of one megawatt-hour of generation. In Ohio and the rest of PJM, RECs are issued and retired in PJM-GATS; retiring a REC in your name is what lets you claim that megawatt-hour. RECs can be bought on their own (unbundled) or come bundled with a supply product or a PPA.

A PPA is a long-term contract tied to a specific project. In a physical PPA, the project's power is delivered to your load, usually through a supplier. In a virtual PPA, you settle the difference between a fixed strike price and the market price while buying power normally. Either way, the project's RECs usually transfer to you. For the PPA structures a mid-size company can actually access, see renewable PPAs for mid-size Ohio businesses.

Side-by-side comparison

Factor	Unbundled RECs	Renewable PPA (physical or virtual)
Upfront cost	Low; pay per certificate	Low upfront, but a long financial or supply commitment
Ongoing cost	REC price times MWh claimed	Contract price; VPPA settlements can be paid or received
Price hedge on electricity	None	Yes, fixed or strike-based over the term
Additionality (did your purchase cause new generation?)	Generally weak	Stronger, especially if your contract helps finance a new project
Contract length	Annual or multi-year, flexible	Commonly 10 to 20 years
Minimum size	None in practice	Large; aggregated deals lower but do not remove the bar
Credit and admin	Minimal	Credit support, legal review, settlement tracking, possible derivative accounting
Geographic and time matching	Depends on what you buy	Defined by the project's location and output profile

How each counts under the GHG Protocol

The GHG Protocol's 2015 Scope 2 Guidance requires companies to report two numbers: a location-based figure using grid-average emission factors, and a market-based figure that reflects the contractual instruments they hold. Under the market-based method, RECs and PPAs count only if they meet the guidance's quality criteria, which in plain terms require that the instrument:

conveys the attribute claim and is the only instrument carrying that claim;
is tracked and retired (in Ohio's case, in PJM-GATS) on your behalf;
comes from a vintage close to the reporting period; and
comes from the same market as your operations.

Consumption not covered by qualifying instruments is reported using a residual-mix factor. That structure lets unbundled RECs and PPA RECs count equally today, which is why RECs are the cheaper route to a market-based claim.

That may change. The GHG Protocol ran a public consultation on Scope 2 revisions from October 20, 2025, through January 31, 2026, proposing hourly matching and deliverability requirements for market-based claims, along with exemption thresholds, a legacy clause for existing contracts and a phased implementation. Publication of the revised standard is expected in 2027. If adopted, annual unbundled certificates from outside your grid region would count for less, while PJM-sourced supply matched to your load profile would count for more. For how to present claims without overstating them, see the green energy and Scope 2 reporting guide.

What changed in Ohio in 2025–2026

The state RPS ends after 2026. Ohio's renewable portfolio standard is 8.5% for 2026 with no requirement after that, which removes a source of in-state compliance demand for Ohio RECs.
New-project economics shifted. Federal credits for new wind and solar now require construction start by July 4, 2026, or service by December 31, 2027. PPAs for projects that missed that window carry higher prices, while REC supply from existing projects is unaffected.
On-site options widened for large users. HB 15 lets mercantile customers host third-party-owned generation behind the meter, making on-site PPAs a clearer option for sites over 700,000 kWh a year.

For REC types, pricing drivers and retirement mechanics, see the green energy certificates deep dive.

A five-question decision framework

Why are you buying? A marketing statement or a customer questionnaire points to RECs or a renewable supply product. A science-based target or a customer requiring project-level additionality points toward a PPA.
How much scrutiny will the claim get? If auditors, lenders or large customers will review it, specify PJM-sourced, current-vintage certificates (Green-e certified if the buyer asks for it) and keep GATS retirement records.
Do you want a price hedge? Only a PPA or a long fixed-price supply contract hedges your electricity cost. RECs do not.
Can you commit for 10 years or more? If the site, lease or business plan is uncertain beyond three to five years, stay with shorter REC purchases or supply contracts.
Can you carry the credit and admin load? PPAs require credit support, legal review and settlement accounting. If that is out of reach, a renewable supply product with bundled RECs is the middle ground.

Typical outcomes:

Small and mid-size single sites: renewable retail supply or unbundled PJM RECs, reviewed annually.
Mercantile sites with daytime load: add an on-site system under a third-party PPA or lease; see the commercial solar ROI model.
Large or multi-site buyers with climate targets: layer an aggregated VPPA for additionality and hedge value, and fill the gap with RECs.

For every renewable option on one page, see the renewable energy options pillar guide.

FAQ

Are unbundled RECs a legitimate way to claim renewable electricity?

Yes, under the current GHG Protocol Scope 2 Guidance, if they meet its quality criteria and are retired in your name. Their weakness is additionality, and proposed hourly-matching and deliverability rules could reduce their value for reporting in the future.

Does a PPA automatically make my Scope 2 emissions zero?

Only for the megawatt-hours whose RECs are retired on your behalf. If the PPA covers part of your load, the rest is reported at the residual-mix rate under the market-based method.

What happens to Ohio REC demand after 2026?

Ohio's renewable portfolio standard requires 8.5% for 2026 and nothing after, so compliance demand for Ohio-sited RECs ends. Voluntary buyers and other states' programs will drive prices after that.

How long are typical PPA terms compared with REC purchases?

PPAs commonly run 10 to 20 years, while RECs can be bought annually or for a few years at a time. That difference in commitment is the main reason smaller businesses start with RECs.