Green tariff vs RECs vs onsite solar: what each path lets a Kentucky business claim

Choosing between a green tariff, RECs or onsite solar starts with one question: what do you need to claim, and who is asking? Suppose a customer questionnaire wants a market-based Scope 2 figure this year. Then retired renewable energy certificates (RECs) are the fastest and cheapest way to change that number, bought through a utility program or on the open market. Onsite solar where you keep and retire the RECs gives you a stronger claim and lower bills, but it takes capital, time and a tight federal tax-credit calendar. LG&E and KU’s Renewable Power Agreement is only open to very large loads.

One fact surprises most first-time reporters. Of these paths, only onsite generation lowers your location-based Scope 2, because only it cuts what you buy from the grid. Everything else changes the market-based number alone.

How the Scope 2 claim actually works

The GHG Protocol’s Scope 2 Guidance (2015) requires dual reporting from companies in markets with contractual instruments, and the U.S. is one of them. You report a location-based total using grid-average factors (in the U.S., the guidance points to EPA’s eGRID rates). You also report a market-based total that reflects what you contracted for. Our explainer on location-based vs market-based Scope 2 walks through the arithmetic.

A certificate counts in the market-based total only if it meets the guidance’s eight Scope 2 Quality Criteria. The ones that matter most to a Kentucky buyer are these:

• It conveys the emission rate of the electricity it represents, and nobody else holds a claim to the same megawatt-hours.
• It is tracked and retired “by or on behalf of the reporting entity.”
• It is issued and retired as close as possible to the period you’re reporting.
• It comes from the same market as your operations.

The 2015 guidance does not require additionality. You don’t have to prove that your purchase caused a new project to be built. That gap drives the debate below.

The LG&E and KU Green Tariff, option by option

If LG&E serves you (Louisville and surrounding counties) or KU does (Lexington and many other communities across Kentucky), the Green Tariff has three options, and you can combine them. Customers of other utilities should ask their own. The details below come from the Rider GT tariff sheets effective February 16, 2026.

Option 1: Green Energy RECs

You pledge monthly “blocks” through the Green Energy Program. Residential and small-commercial schedules (including GS) pay in $5 increments. Larger schedules (PS, TODS, TODP, RTS, EHLF and FLS) pay in $13 increments. The utility buys RECs with the money, and the tariff says those RECs “shall be retired by the Company on behalf of the customers.” It limits eligible RECs to facilities in Kentucky and its seven neighboring states that are tracked in PJM’s GATS or the M-RETS registry.

The program page posts averages of about 1,402 kWh per $5 block and 4,688 kWh per $13 block, labeled as both 2025 and 2022 figures, so ask for current ones. That works out to roughly $3.57 per MWh for small accounts and $2.77 per MWh for large ones. There’s no minimum term, and you can cancel any time without penalty. The tariff also lets the utility close the option to new participants if it can’t buy RECs for $13 each or less.

Two details matter for reporting:

• The program retires each year’s RECs after the year ends. Ask for documentation that ties retired RECs to your account and your reporting year.
• The program page doesn’t mention third-party certification. If your customer requires Green-e certified RECs, ask before you rely on these.

Option 2: Business Solar

Under Business Solar, the utility builds, owns and maintains a solar array dedicated to your business (the program’s examples are on customers’ own sites), and the tariff says the array’s energy “will be assigned to the Customer.” Each project needs a special contract approved by the Kentucky PSC. The program page says upfront costs are usually limited to permitting and feasibility studies. You pay a monthly fee based on array size and receive production-based bill credits that offset part of it.

The tariff sheet doesn’t say who receives or retires the RECs. You don’t own the array, so your Scope 2 claim rests entirely on the contract. Get it in writing that certificates are issued and retired on your behalf.

Option 3: Renewable Power Agreement

The Renewable Power Agreement is for very large customers. Under the current tariff you need these:

• A minimum monthly billing load of 10 MVA. You can combine accounts to reach it.
• An agreement larger than 10 MW nameplate AC. All agreements across LG&E and KU together are capped at 250 MW. The program web page lists a lower cap, so read the tariff.
• A term that matches the generation purchase agreement, with a minimum of five years.
• A renewable resource developed on or after the date the PSC approves your contract. You can choose the technology, but not the specific facility.

You buy the output “and all associated environmental attributes.” Two terms are easy to miss. The renewable energy can’t offset demand charges. And the utility compares deliveries with your consumption every 15 minutes, crediting any surplus at its as-available purchase rate rather than your retail rate.

Not part of the Green Tariff: Solar Share

LG&E and KU’s community Solar Share program is open to many business schedules. You subscribe in quarter-kW increments and pay either a one-time $799 or $5.55 a month per increment, under the rider effective February 16, 2026. The rider says the RECs from subscribed capacity will be retired, and it requires an advanced meter that records 15-minute data.

Unbundled RECs on the open market

You can also buy RECs from a broker or marketer, separate from your electricity. Green-e Energy certification is the common quality screen. It requires approved renewable sources, accepts only facilities built in the last 15 years, requires registration in tracking systems such as PJM GATS or M-RETS, and guards against double counting.

When you buy, check four things: the vintage matches your reporting year, the RECs are retired in your name, there’s a tracking-system record, and they come from a U.S. market. Prices vary by technology, vintage and region, so get quotes.

Green-e certification protects the integrity of your claim. It doesn’t prove your purchase caused a new project.

Onsite solar: the claim that also cuts the bill

Every kilowatt-hour your array produces and you use is one you don’t buy, which lowers both Scope 2 totals. Table 6.1 of the guidance sets the rules:

• No certificates issued, or you keep and retire them: no Scope 2 for the solar power you use onsite. If you hold certificates, report that separately.
• Certificates sold: you treat that consumption like grid power under both methods. The guidance also notes that the FTC Green Guides prevent claims about using or hosting renewable energy once the RECs have been sold.

Exported energy isn’t part of your consumption. In Kentucky, how exports are credited depends on your utility and when you interconnected; see our guide to Kentucky net metering. If a third party owns the system under a lease or PPA, the contract decides who holds the RECs.

Federal credits add a deadline. Under the 2025 budget law, as IRS Notice 2025-42 explains, the 45Y and 48E credits end for wind and solar facilities placed in service after December 31, 2027 if construction began after July 4, 2026. That begin-construction date has passed. So a project that starts construction now generally needs to be in service by the end of 2027, and foreign-entity sourcing restrictions also apply. This is general information, not tax advice. Confirm your situation with a tax professional, and see our commercial solar credit timeline.

Green tariff vs RECs vs onsite solar: cost, claim and control

	Green Energy RECs	Unbundled RECs	Business Solar	Renewable Power Agreement	Onsite solar you own
Who it fits	Any eligible LG&E or KU account	Any business, anywhere in the U.S.	Business and industrial accounts with a suitable site	Loads of 10 MVA or more	Owners with a roof or land and capital
Upfront cost	None	None	Usually permitting and feasibility studies	Set by contract	Purchase price or financing
Commitment	Monthly, cancel any time	Per purchase	Special contract, PSC-approved	Five years minimum, PSC-approved	Life of the system
Market-based claim	Yes, if retirement is documented	Yes, if retired in your name	Only if the contract conveys retired RECs	Yes, energy plus attributes	Yes, if you keep and retire the RECs, or none are issued
Location-based effect	None	None	Depends on metering and contract	None	Lower, for the solar power you use
Effect on your bill	Adds a cost	Adds a cost	Monthly fee minus bill credits	Contract price; no demand-charge offset	Lower energy purchases
New-project (“impact”) story	Weak	Weak unless sourced from new projects	Moderate	Strong; resource must be new	Strong

A worked example

Take a hypothetical Kentucky plant that uses 1,200 MWh a year on a large commercial schedule. These figures use the program’s posted block averages, which will move with REC prices.

• All RECs through Green Energy: 22 blocks a month at $13 comes to $286 a month, or $3,432 a year. At the posted averages that buys about 1,238 MWh of RECs. The market-based total for the covered megawatt-hours drops to zero, and the location-based total doesn’t change.
• 300 MWh of onsite solar, all used onsite, plus RECs for the rest: the remaining 900 MWh takes 16 blocks a month, or $2,496 a year. Grid purchases fall 25%, so the location-based total falls about 25% too. The market-based total covers both pieces.

The first option reaches a market-based zero for less than this plant likely pays for one month of electricity. Expect follow-up questions about a number like that.

The additionality debate, fairly stated

The 2015 guidance acknowledges the critics’ concern that market-based accounting may only “reallocate” attributes between buyers who care and buyers who don’t. It still declines to require additionality.

The GHG Protocol’s October 2026 update sums up the two camps that came out of its consultation:

• One camp argues that clean power matched hourly, on the same grid and from newer plants is more likely to drive new supply and cut emissions across the system.
• The other camp argues that annual matching across broad regions keeps barriers low and supports a large, liquid certificate market that steers voluntary money into renewables.

Both are serious positions. In practice, a retired REC is a valid market-based claim today. If your audience cares about real-world impact, an RPA’s new-resource requirement or your own array tells a stronger story.

As of November 1, 2026: where the rules stand

• The Scope 2 public consultation ran from October 20, 2025, to January 31, 2026. It proposed requiring hourly matching and deliverability for certificates counted in the market-based method.
• The Independent Standards Board has backed developing two market-based methods. Method 1 would add hourly matching, deliverability and incrementality. Method 2 would keep the 2015 rules. Under the board’s proposed direction, companies could use Method 2 until a date not yet set and would disclose which method they used. Whether reporting would be “shall,” “should” or “may” is still open.
• A consolidated public consultation is slated for the second quarter of 2027. Publication of a joint GHG Protocol–ISO corporate standard is slated for the fourth quarter of 2028.

Your 2026 inventory follows the 2015 rules. Annual RECs from distant regions would likely be the hardest to fit under Method 1, so weigh that before signing long contracts.

What we’d do

1. Name the audience. A customer, a lender and a board may want different claims. Write down the one you need.
2. Build both baselines first. From 12 months of bills or interval data, estimate your location-based and market-based Scope 2. Our figures are non-certified estimates based on published methods, and we show every factor.
3. Cover this year with documented RECs. Use Green Energy blocks or certified unbundled RECs, and file the retirement evidence by reporting year.
4. Test onsite solar in parallel. A Commercial Feasibility Study compares bill savings, the credit calendar and what happens to your claim if you sell the RECs.
5. Write the claim language carefully. Say exactly what you bought and retired, and nothing more.

If you’d like help putting the numbers and evidence together, our Carbon & Scope 2 Reporting service starts with a free 20-minute fit call. We have no relationship with LG&E, KU or any REC seller, and we earn nothing from whichever path you pick.