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REC Purchase Agreements UK: Guide for Buyers & Sellers

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Written by Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
If your business generates renewable power or wants to back renewable generation elsewhere, Renewable Energy Credit purchase agreements are likely to come up at some point. They sit at the heart of how environmental benefits are traded separately from the electricity itself, and the contract terms can have a real commercial impact on both sides. In the UK, this area overlaps with the Renewables Obligation regime and the certificates that flow through it, so the paperwork can look technical quickly. This page walks through what a REC purchase agreement typically covers, the commercial and legal issues to think about before signing, and the steps most parties follow when putting one in place. It is written for developers, corporate buyers, energy suppliers and in-house teams who want a plain-English view before speaking to an adviser.

What this document is

A Renewable Energy Credit, often called a REC, represents the environmental attributes associated with a unit of electricity generated from a renewable source. One megawatt hour of qualifying generation typically produces one certificate, which can then be sold independently of the electricity it relates to.

In the UK market, the closest equivalent under domestic legislation is the Renewables Obligation Certificate (ROC), issued to accredited generators, and there are also international schemes such as Guarantees of Origin that perform a similar function. A REC purchase agreement is the contract that governs the sale of these certificates from the generator, or an intermediary, to a buyer who wants to claim the environmental benefit.

Buyers are often corporates pursuing net zero commitments, electricity suppliers meeting regulatory obligations, or traders operating in the secondary market. The agreement sets the price, volume, delivery mechanism, and the allocation of risk between the parties. Because the product is intangible and the schemes depend on tracking systems and registries, the drafting tends to focus heavily on transfer mechanics, verification, and what happens if certificates fail to materialise.

How to use this document

  1. Identify the scheme and certificate type. Work out which certificate you are actually buying or selling, whether that is a ROC, a Guarantee of Origin, a voluntary REC from an international registry, or something else. The scheme determines registry rules, transfer procedures and the eligibility criteria that the generator must meet for the certificates to be valid.
  2. Agree volume, vintage and duration. The contract should set out how many certificates are being traded, the generation period they cover (often called the vintage), and whether the arrangement is a one-off trade or a longer term offtake running across several years. Long term deals usually need mechanisms to handle variations in actual generation output.
  3. Settle pricing and payment terms. Pricing can be fixed, indexed to a market reference, or structured as a floor and ceiling. Agree when invoices are raised, when payment falls due, and how any taxes, scheme fees or registry charges are allocated. For multi-year deals, consider review triggers if market conditions shift significantly.
  4. Define transfer, verification and title. The agreement needs a clear process for transferring certificates through the relevant registry, confirming they are genuine and unencumbered, and dealing with the point at which legal title and risk pass to the buyer. Double counting protections and cancellation or retirement obligations should be spelled out in detail.
  5. Address risk, remedies and termination. Consider what happens if the generator fails to deliver, if certificates are revoked by the scheme administrator, or if regulatory changes affect the product. The contract should cover warranties, indemnities, limitation of liability, force majeure, dispute resolution, and the grounds on which either party can walk away.

Common questions

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Common questions

Q What is the difference between a REC and a ROC in the UK?
A ROC is a specific certificate issued by Ofgem to accredited generators under the Renewables Obligation scheme, which closed to new entrants but still runs for existing participants. REC is a broader international term for tradable certificates representing the environmental benefits of renewable generation. In UK contracts, parties often use REC loosely, so the agreement should always make clear exactly which certificate type is being bought and sold.
Q Who typically buys RECs in the UK?
Buyers commonly include electricity suppliers meeting regulatory obligations, large corporates pursuing sustainability and net zero targets, public sector bodies with green procurement goals, and traders operating in the secondary market. Some buyers want certificates bundled with the underlying electricity through a power purchase arrangement, while others buy unbundled certificates separately. The right structure usually depends on the buyer's reporting framework and commercial priorities.
Q Can RECs be sold separately from the electricity?
Yes. Certificates can be traded on an unbundled basis, meaning the environmental attributes are sold to one party while the actual electricity flows into the grid and is consumed by unrelated users. Bundled arrangements, where both the power and the certificates move together under a single contract, are also common. The choice affects pricing, accounting treatment and how the buyer can describe its renewable credentials.
Q How long do REC purchase agreements usually last?
Terms vary widely. Spot trades cover a single batch of certificates, while longer offtake agreements can run for five, ten or even fifteen years, often alongside a corporate power purchase agreement. Longer contracts give generators revenue certainty that supports project financing, but they also require careful drafting around volume flexibility, change in law, and how the parties respond if the certificate market shifts significantly over time.
Q What happens if the generator cannot deliver the agreed certificates?
Most contracts include specific remedies for shortfall, which may involve the generator sourcing replacement certificates from the market, paying damages calculated against a reference price, or giving the buyer a right to terminate. The drafting should distinguish between genuine force majeure events, such as grid outages, and commercial under-performance. Caps on liability and carve-outs for specific categories of loss are negotiated heavily in practice.
Q Are RECs the same as carbon offsets?
No. RECs represent the environmental attributes of renewable electricity generation and are used to support claims about electricity consumption. Carbon offsets represent emission reductions or removals from separate projects, such as forestry or methane capture, and are used against broader greenhouse gas footprints. The two instruments sit within different standards, registries and reporting frameworks, and should not be treated as interchangeable in contracts or sustainability disclosures.
Q Do I need a specialist to negotiate a REC purchase agreement?
For small one-off trades on standard terms, many parties transact without heavy external input. For longer term deals, project-linked arrangements, or contracts with unusual volume or pricing structures, specialist input is sensible because the drafting touches on energy regulation, commercial risk allocation and sometimes project finance. A short conversation with an experienced adviser early on can help identify the issues worth focusing on before negotiations begin.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £89.

Sources

This guide is based on primary UK law and official guidance.

Brad Askew, Solicitor (non-practising)

Written & reviewed by

Brad Askew Solicitor (non-practising)

Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.

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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.