Transcript Slide 1

Sustainable Energy Ireland
Perspectives from Abroad Colloquia Series
27 May 2003 – Glasnevin
Renewable Energy Credits and
Certificates of Origin
Phil Moody
(Development Director, Campbell Carr +
Secretary General, RECS Association of Issuing Bodies)
page 1
Millions
24
22
9
8
20
18
16
14
7
6
5
12
10
8
6
4
3
2
4
2
0
1
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Certificates issued (each country)
Millions

RECS – Market Activity
RECS Certificates Issued - by country
2001
page 2
2002
Month
2003
Total
AT
BE & LU
CH
DE
DK-E
DK-W
ES
FI
FR
IT
NL
NO
PO
PT
SE
SL
UK & IE
Renewable Energy Credits
and Certificates of Origin




page 3
Support schemes
Tradable certificates
Guarantees of origin & disclosure
RECS
The fundamental challenge: how to
trace the source of the energy
Pool


page 4
How to identify the source(s) of energy?
How to prove this blend to endconsumers and government?
Support schemes
page 5
Types of support scheme

Investment
Support schemes
 Good for emerging technologies
 …but not so good at driving down price

Feed-in
 Proved to be effective
 …but transparency and international trade can be an issue

Auction
 Good at getting low prices
 …but planning permission can be a problem

Tradable certificates
 Maintains price competition throughout project life
 …but issues with international harmonisation
 …and infrastructure more sophisticated
page 6
What support schemes, where?
(1) Predominantly Feed-in
Support schemes

Germany
+ PV roofs scheme
+ Various regional support schemes

Spain
+ Direct grants, infrastructure finance, investment tax
relief, R&D grants

France
+ Subsidies, low-interest loans, tax deductions,
feasibility support


page 7
Portugal
Denmark
+ Subsidy – moving to tradable renewable certificates?
Support schemes
What support schemes, where?
(2) Various

Finland
+ Investment aid
+ Tax rebate, tax reduction

Norway
+ Tax exemption, investment support
+ Support for running costs

Ireland
+ Competitive long term power purchase agreements

Northern Ireland
+ Competitive long term power purchase agreements
+ possible move to RO?
page 8
What support schemes, where?
(3) Tradable Renewable Certificates
Support schemes






Austria (for small hydro, until relatively recently)
Belgium: + investment aid, fixed buy-back tariffs
and extra tariff schemes
Italy: +direct support, investment support, feed-in
Netherlands: +tax rebates, tax reductions,
reduced interest, subsidies
Sweden
UK: CCL and RO + investment support
page 9
Support schemes
Differences between
RECS and ROCs
ROCs – UK specific
RECS – internationally generic
Compliance instrument
Means of conveying renewable
benefit
Transferable within UK only
Only redeemable in the UK
Transferable internationally
Can be redeemed anywhere
Can be revoked after issue
Once issued, cannot be revoked
Have limited life
Immortal (currently)
Limited to certain renewables
Address all types of renewable
Process driven by statute
Process agreed between participants
Dependant on UK
government support
Dependant on demand
page 10
Tradable Renewable Certificates
Support schemes

Represent the benefit of renewable over nonrenewable energy:
 Environmental
 Security of supply
 Rural redevelopment …

Allow this to be traded separate to the energy

Also known as RECS, RPS etc

Note there are also certificate schemes for:
 Emissions (SOx, NOx, CO2 … )
 Waste
(Packaging, landfill, tyres … )
page 11
Principles of
certificate schemes
page 12
Certificate System
Principles
certificate market
electricity market
Demand
Supply
IB:
Issuing
Transfer
Certificate system
page 13
Redemption
Certificate System
Principles
no. xxx
no. xxx
Demand
Supply
Issuing / Registration / Redeeming
Central monitoring office
Verification / auditing
Issuing Body
page 14
No Harmonisation:
Incompatible Systems
Supply
nr. xxx
nr. xxx
Demand
Central monitoring office
Redeeming
verification / auditing
DK
Principles
Supply
nr. xxx
nr. xxx
Issuing Body
Demand
Central monitoring office
Redeeming
NL
Supply
nr. xxx
nr. xxx
verification / auditing
Issuing Body
Central monitoring office
Redeeming
verification / auditing
N
page 15
Issuing Body
Demand
Compatible Systems
Basic Commitments
(harmonisation / standardisation)
Association of
Issuing Bodies
Principles
Supply
Verification / Auditing
nr. xxx
nr. xxx
Demand
Central monitoring office
Redeeming
verification / auditing
DK
Supply
nr. xxx
nr. xxx
Issuing Body
Demand
Central monitoring office
Redeeming
NL
Supply
nr. xxx
nr. xxx
verification / auditing
Issuing Body
Central monitoring office
Redeeming
N
page 16
verification / auditing
Issuing Body
Demand
How can this enable
the various
Support Schemes?
page 17
Application to Support
“Voluntary" Green Tariff (NL)
certificate market
electricity market
Demand
Supply
IB:
Issuing
Transfer
Redemption
NL: Ecotax exemption
After redeeming certificates
page 18
Application to Support
Mandatory systems
Obligation:
• Suppliers (UK)
• Producers (Italy)
• End users (DK)
certificate market
electricity market
Demand
Supply
IB:
Issuing
Transfer
Redemption
Government
Redemption account
page 19
Green labelling
Supplier with green label
Application to Support
e.g. Only Wind
certificate market
electricity market
Demand
Supply
IB:
Issuing
Transfer
Redemption
Only Wind
Certificates
page 20
Application to Support
Feed-in systems
Feed in Tariff
Grid company
Germany
certificate market
electricity market
Demand
Supply
IB:
Issuing
Transfer
Redemption
Redemption account
Grid company
page 21
Import / export
Application to Support
RECS system or
Governmental agreement
certificate market
electricity market
Demand
Supply
IB:
Issuing
Transfer
Redemption
NL: RECS certificates
accepted by
tax authorities in future
Transfer of certificate
page 22
Summary
Application to Support

Certificates can enable:
 Voluntary green tariffs
 Mandatory systems
 Green labeling
 Feed-in laws
 International trade

Also:
 Certificates of Origin (art. 5 RES Directive)
page 23
Guarantees of Origin & Disclosure




Requirement
Issues
National plans / status
Disclosure
page 24
Guarantees of Origin
Requirements

Background:
 Article 5 of the RES-Directive

Timetable:
 By 27 October 2003, all Member States must
ensure the origin for electricity from renewable
sources can be guaranteed

Who can claim a GoO?
 Consumers of electricity from renewable
sources in all EU countries
page 25
Guarantees of Origin
Obligations on Member States


To designate competent supervisory bodies
independent of generation and distribution
activities
To implement a mechanism to ensure an
accurate and reliable GoO system
page 26
Guarantees of Origin
Characteristics of national
mechanisms

National GoO systems must:
 be transparent, objective and non-discriminatory
 enable mutual recognition

GoO must specify:
 energy source
 dates and places of production
 capacity (hydroelectric installations)

Refusal must be justified, and can be overruled
by the Commission
page 27
Guarantees of Origin
EU Monitoring




National mechanisms must be outlined to the
Commission by 27 October 2003
The Commission will publish its conclusions by
27 October 2004
Every two years, the Commission will report on
follow-up information from Member States
If necessary, the Commission can propose
common rules
page 28
Issues


Guarantees of Origin





Size: standard?
Content? (apart from source, date, place & capacity)
Frequency of issue?
Information from generator to qualify / receive GoO?
Paper or internet?
Linkage with tradable certificate schemes?
International transfer of GoO:








page 29
Infrastructure? How managed?
Recognise / reject GoO from other member states?
Prevention of double sale?
Treatment of mixed fuel sources / mixed CVs?
Sanctions for non-compliance?
Revocation possible?
Must CoO always be joined to associated electricity?
How does a certificate “end its life”?
National plans

AT
BE
CH
DE
DK
ES
FI
FR
IT
NL
NO
PT
SE
SL
UK

EC “RECS complies with the requirements for GoO”


Guarantees of Origin












page 30
To link RECS and GoO
For Flanders, RECS basis of GoO
Not yet clear – may use RECS
No public draft for GoO, but probably default to RECS
Likely to use RECS
Deciding who will be IB and what standards
Preparing proposals - likely link to RECS
Government so far non-committal
Drafting legislation
Law before Parliament – favours RECS system
Preparing proposals – possible link with Sweden
TSO proposing to use of RECS.
Has promoted a bill. Will coordinate with RECS
Committed to joining EC, and will propose RECS
DTI consulting
Disclosure





Europe has yet to rule definitively
To end-consumer
Based on annual supply
Energy source
Based on contracts, certificates or statistics
page 31
Disclosure – the issues

Actions required
 Legal & infrastructural, at European and Member State level
 Policy makers, NGOs, suppliers, auditors & consumers
Disclosure

Verification of information on a label
 Credibility: label information must be transparent, trustworthy,
simple, accurate, efficient and watertight

Harmonisation across Europe
 Different types possible (information, label design, monitoring…)

Interaction with existing policies & directives
 Synergies with other policies & schemes to foster use of
renewable energy and inform choice

Supporting policies
 Need for other policies, to raise market relevance

Raising consumer awareness
 Consumer awareness is key
 Need for education, information campaigns, etc
page 32
Disclosure can be enabled by certificates

Disclosure




Clear and simple evidence of energy source
Easily verified
Fit with current practices
European standards exist (or are forming)
Possible to phase introduction
 Support by statistical approach?
page 33
Double dipping




Support schemes are all about Government helping
Renewables to be viable
Guarantees of Origin are all about consumer choice
It is therefore not “double-dipping” if a generator sells
supported energy as renewable
(Government can always adjust the amount of support)
page 34
Characteristics of
Tradable Renewable Certificate Schemes
page 35
Characteristics of
Tradable Renewable Certificate schemes

Characteristics









Mandatory / voluntary
Coupled with obligation or fiscal incentive
Obligation on generator, importer, supplier,
business consumer or domestic consumer
Lifetime: limited or immortal
Banking and borrowing: permitted? Limits?
Pricing: collar & cap values, tax exemption
Size (MWh)
Capacity restrictions
Fuel restrictions (e.g. co-firing rules)
Exclusions
page 36
Additional conditions for eligibility

General
 New or recent capacity
 Certificates must include all environmental value attributable to
the generated electricity (inc. CO2, SO2, and NOx)
Characteristics

Governmental
 Transfer registered with RECS or government
 Past and present government support declared by per MWh and
investment
 ‘No objection’ by government
 Positive Environmental (Impact) Assessment Report
 Physical import of associated power
 Reciprocity

Technical
 Description of production device, meters, technology & capacity
 Statement of grid operator that RES-E fed into local grid
 Calculation of line losses from source to destination
page 37
Certificate systems: the challenges


page 38
The Mechanism
International Aspects
Certificate systems



What types of renewable are “green”?
How to measure generation?
What to do with the carbon?

Certificate schemes - Issues
- challenges: the mechanism
page 39

Certificate schemes - Issues
Types of “green”
Wind turbine
(onshore / offshore)
Photovoltaic
Thermal
Hydro power
Water
Tidal energy
(onshore / offshore)
Wave energy
(onshore / offshore)
Geothermal
Biomass Energy crops
Forestry and agricultural by-products and waste
Biogas
(landfill / sewage / other)
Energy from
(municipal solid waste /
waste
industrial by-products and
commercial waste)
Wind
Solar
page 40
2
Onsite
demand
Auxiliaries
RES
Generator
Transformer
substation
Transformer
Gross
losses
production
System
1
Line
losses
Nett
Production
= 1 - 2

Certificate schemes - Issues
Generation measurement
page 41



NL wanted RECS certificates to include CO2
IT wanted two separate markets
Compromise:
 sellers of RECS certificates may not sell components
of the RE benefit separately

Debate is now whether the buyer:
 Cannot sell component benefits separately; or
 Can sell them, but the residue must be excluded from
RECS; or
 Ignore emissions products altogether…?

Certificate schemes - Issues
Carbon connections
page 42
Certificate systems

Certificate schemes - Issues
- challenges: International aspects

Compatibility of vision
 Same objectives (e.g. pro-European, pro-renewables)

Fungibility and reciprocity
 Can you use UK ROCs in the Swedish market?
 “If you get access to our market, can we have access
to yours?”

Process and technology
 Same definitions, same interfaces, same protocols

Subsidiarity
 Vive la difference ….. but how much?
page 43
RECS



page 44
History
Test phase
Present activities

RECS - History
History of RECS – activities
1997/
1997/81998
Dutch green label system
Mar 1999
Foundation of RECS
May 1999
Test phase conceived to prove the concept
Mar 2000
Preparation commences
– resolution of many detailed issues
Apr 2001
Basic Commitment agreed
- Drafting of domain protocols starts
July 2001
First certificates issued (Finland), national trade
commences
Feb 2002
Registry interfaces agreed
May 2002
International trade commences / AIB founded
Dec 2002
End of test phase / RECS International founded
page 45




A well-functioning organisation
A set of practical agreements
Robust and operational systems & processes
A working market

RECS – Test Phase
Achievements of the Test Phase
page 46
A well–functioning
Organisation

RECS – Organisation

National
 Domain teams
 Agreements with service providers

International
 RECS International (market participants)
 Association of Issuing Bodies (market mechanisms)

Relations with other organisations
 Traders …………..…… EFET
 Regulators …….….…. CEER
 System operators …. ETSO
page 47
RECS member countries
Current members
RECS – Organisation
EC likely members
Accession - 2004
Accession - 2007

Other
page 48
Structure of RECS
Agents
RECS International
Issuing
Bodies
Market players
National teams
General
meeting
Working
groups
General
meeting
Secretariat
Working
groups
Secretariat

RECS – Organisation
AIB
Board
page 49
Task
Forces
Board
Transmission system operators
Regulators
Green labeller
Standards body
Consultancies
Specialists
Not appointed

RECS – Organisation
AIB members
page 50
A set of practical
Agreements

Concept: the Basic Commitment
Practice:






Framework Protocol
Domain Protocols
Registry interface specification
Audit rules
Best practice / guidance notes
Governance:
 Articles of Association
 Internal regulations

RECS – Agreements

page 51
Robust and operational
Systems and processes

RECS – Systems

National
 Standard certificate registries
 Specific features per country
– E.g. Meter data collection and preparation
– E.g. Production registration & audit



Inter-registry transfer of certificates
Shared & managed common data
Linkages to market platforms (future)
– E.g. Exchanges
page 52
Participating registries
-
Nordic
Etrans
TenneT
E-Certe
• About to go live
- LogActiv
• Not decided

RECS – Systems
• Existing
page 53
AIB
CMO Interface

RECS – Systems

Agreement on





Certificate data (contents and standards)
Messages
(format & process)
Quality
(security, reliability, timeliness etc)
Change management
Areas for resolution




page 54
Recording of individual support schemes
Treatment of other energy sources (e.g. heat)
Sharing of common information
Recording or management of cross-border transfers
RECS – Market Activity

RECS live: activity
page 55
Jan
Feb
Mar
Apr
Ma
Jun
Jul
Au
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
Ma
Jun
Jul
Au
Sep
Oct
Nov
Dec
Number of countries
RECS – Market Activity

Participants
page 56
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
PT
PO
SL
LU
BE
FR
NL
ES
DK
IT
CH
IE
UK
NO
AT
SE
FI
DE
2001
2002
Date
2003
By country…
36% redeemed
22,526,842 certificates issued
Issued
Total
Transferred
RECS – Market Activity
Total
Austria
1,670,681
3,430
Redeemed
Export
3,444
125,701
100
35,635
Belgium and Luxembourg
Switzerland
408,914
Germany
687,087
Denmark (West)
223,647
513,728
41
Denmark (East)
Spain
304,256
Finland
7,652,654
France
94,443
Italy
313,986
Netherlands
203,052
Norway
6,564,304
255,664
2,774,564
4,551
163,467
31,251
6,953
7,000
279,108
100
3,053,969
Poland
Portugal

Sweden
Slovenia
UK / IE - UK & Ireland
All countries
page 57
4,313,660
2,124,796
90,158
22,526,842
1,215,397
8,195
8,159,910
…and by technology
Issue
Trading report for all countries
Transfer
Redeem
RECS – Market Activity
Total
Export
Onshore wind
286,094
23,956
Offshore wind
3,268
70
11,881,131
809,022
166,024
159,071
2,523
78,518
186
Photovoltaic
Thermal
Hydropower
5,672
3,660,128
Onshore tidal
Offshore tidal
Onshore wave
Offshore wave
Geothermal
Energy crops
6,953
84,390
30,091
Forestry etc
9,633,176
219,298
4,275,775
Landfill gas
Sewage gas
19,353
24,831
9,081
24,831
337,520
91,055
3,980
10,079
64,268
22,526,842
1,215,397

Other biogas
MSW
IB&CW
page 58
Total
8,195
8,159,910

Millions
Millions
24
22
9
8
20
18
16
14
7
6
5
12
10
8
6
4
3
2
4
2
0
1
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Certificates issued (each country)
RECS – Market Activity
Issue - by country
2001
page 59
2002
Month
2003
Total
AT
BE & LU
CH
DE
DK-E
DK-W
ES
FI
FR
IT
NL
NO
PO
PT
SE
SL
UK & IE
Issue - by country
RECS – Market Activity
RECS certificates issued - per country
Austria
7%
Sweden
19%
Switzerland
Germany
2%
3%
Denmark (West)
1%
Spain
1%

Norway
29%
page 60
Finland
34%
Netherlands
1%
Italy
1%
France, 0.42%
Issue - by technology
Total
Millions
Millions
14
Offshore wind
Certificates issued (each technology)
Photovoltaic
12
Thermal
Hydro
20
10
Onshore tidal
Offshore tidal
15
8
Onshore wave
Offshore wave
6
10
Ind.& comm.waste
Geothermal
4
Energy crops
Forestry etc
5
2
Landfill gas
Sewage gas
0
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

RECS – Market Activity
25
Onshore wind
2001
page 61
2002
2003
Month
Other biogas
Mun.solid waste
RECS certificates issued - per technology
Mun.solid waste
1%
Onshore wind
1%
Forestry etc
43%
Hydro
53%
Geothermal
1%

RECS – Market Activity
Issue - by technology
page 62
The Nordic Work-around
(due to lack of inter-registry link)
Redeemed
Certificates
Guarantee
Of redemption
page 63
Proportion redeemed
Millions
Monthly redemption / issue
25
40%
35%
20
30%
25%
15
10
20%
Issue
Redemption
15%
Proportion
10%
5
5%
0
0%
J
page 64
F M A M J
J A S O N D J
F M A M
Austria, 8%
Switzerland, 9%
Denmark (West),
0%
UK & Ireland, 0%
Germany, 0%
Sweden, 49%
Spain, 0%
Finland, 36%
France, 33%
Italy, 2%
Norway, 47%

RECS – Market Activity
Redemption rates
Netherlands, 3%
page 65
General costs

Test phase

Now
 RECS International
– member fee (€1,000 - €5,000 per organisation)
 AIB
– Operational costs of IBs (tariffs differ)




RECS – Costs
 European Commission (€450,000 for test phase)
 Members (€20,000 a country + €2,000 an organisation)
Audit – normally passed through at cost
Software – depends on supplier
Administration - varies
– Contribution to AIB per domain


page 66
€5,000 for a small IB; or €20,000 for a large IB
+ €0.01 per certificate issued
Costs - per Issuing Body

RECS – Costs

IB fees during test phase either:







Free (!)
Single entrance fee
Registration plus activity fees
Detail differs widely (factor of 10+)
Cost of production registration & audit at cost
Post test phase - still being negotiated
Possible future costing for an average certificate
= €0.15 – 0.30 (will be less as market grows)

Current exercise to improve transparency of costs
page 67
Cost comparison



Exchange
Broker
Issuing Body
0.5 – 2%
2 – 7%
4 - 10%
per trade
per trade
total, all transfers
 Due to far RECS’ lower volumes….
 ….RECS needing more info….
 ….RECS includes all transfers, issue & redemption
page 68
Other markets – some examples
NEPOOL (New England)
 Software = 1 cent per certificate per year

Ofgem (UK)
 Free (or rather, paid for by UK Government)

TenneT GCB (Dutch)
 15 cents issue
 2 cents transfer
 15 cents redeem

RECS – Costs

page 69
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
RECS – Current Activities
Current activities
page 70
More technologies - e.g. heat
Guarantees of origin
Refinement of the Basic Commitment
Better registry interfaces & data sharing
Audit & compliance

RECS
www.recs.org
page 71