Transcript Renewable Energy Certificates: A Detailed Overview Dan Lieberman Center for Resource Solutions www.resource-solutions.org www.green-e.org NARUC August 1, 2006 San Francisco, CA.

Renewable Energy Certificates:
A Detailed Overview
Dan Lieberman
Center for Resource Solutions
www.resource-solutions.org
www.green-e.org
NARUC
August 1, 2006
San Francisco, CA
Presentation Overview
• RECs 101
• Voluntary vs. Compliance Markets
• Oversight of RECs:
– Voluntary Certification
– Tracking
• Key Regulatory Issues
Who is the Center for Resource
Solutions?
• CRS is an NGO located at the Presidio
in San Francisco
• Focus on environmental issues,
renewable energy and energy
efficiency policy
• We work in the US and internationally
Wind turbine in Nan’ao, Guangdong
Introduction to RECs
Production of
Renewable Energy
REC (Environmental Benefits)
Commodity Electricity
– Certificates represent the contractual right to
claim the environmental and other attributes
associated with electricity generated from a
renewable energy facility
– May be traded independently of energy markets
A Simple View of RECs
Green
Green Power
Power
What’s in a Name
• RECs: Renewable Energy Certificates
• AKA: Green Tags, Green Tickets, Tradable
Renewable Certificates (TRCs), T-RECS
• Renewable Credits: Used in regulatory
context
• Unbundling: The financial separation of
RECs from the underlying electricity
• Disaggregation: The separation of specific
attributes from a REC
Uses of RECs
•
•
•
•
•
Substantiating compliance with RPS
Supply for green pricing programs
Choice for customers with no green power
option
Meeting emissions reduction goals
Greening of events, products, services
Size of the REC Market
Compliance
Market
Voluntary
Market
Total
2004 REC
Market
Size
(Million
MWhs)
2004 REC
Market
Value
($ Millions)
2010 REC
Market Size
(Million
MWhs)
2010 REC
Market
Value
($ Millions)
8-13
$140
45
$600
3+
$15 - $45
20
$100 - $300
11-16
$155 - $185
65
$700 - $900
Source: NREL Energy Analysis Office
Where RECs are Used as
RPS Implementation Tool
• 13 states have a certificate-based RPS
compliance mechanism
– ME, MA, CT, RI, NV, AZ, WI, NJ, PA, MD, TX, CO, DC
• 5 states likely to use certificates once regional
tracking system is operational
– CA, MN, NM, MT, IL
• 3 states undecided or have other methods to
show compliance
– NY, HI, IA
The Voluntary RE Market
By “voluntary renewable energy market”
we mean purchase or use by retail
customers (residential and nonresidential) of renewable energy,
renewable energy certificates, or the
use of energy from an on-site renewable
generation unit.
The Voluntary RE Market
• 2004 supporting 2,233 MW of new renewable
capacity
• Increasingly non-residential
• Largest single purchaser (U.S. Air Force) buying
> 1 million MWhs/yr
• EPA Green Power Partnership
– Over 650 members
– 5.3 million MWh of green power annually
– purchasing enough RE to power >400,000 American
homes each year
• Xcel, Austin wind products cheaper than fossil
Certification and Verification
• Certification
– What you purchase is certified by an
independent third party to meet specific
standards
• Verification
– Independent third party checks that what
was promised to you was delivered
Types of Certification
• Product Certification
– Focus on established product standard and
transfer of renewable energy product (RECS or
renewable energy) from generator to end-use
customer.
– Green-e is industry leader
• Project/Facility Certification
– Certifies generation project, but does not follow the
contract path to the end user
– Examples: Low Impact Hydro Institute,
Terrachoice (Canada), some state programs
Sample Green-e Criteria
• Verification audits
– Customer sales records
– Sales of renewables- quantity and type
– Sources of supply- clear chain of custody and no double
claims
• Consistency with National Association of Attorney
Generals and US FTC guidelines
• Purchase is additional
• Each kWh is only sold once
• All environmental attributes (e.g. carbon reduction)
are included in customer’s purchase
• Certification tied to real electricity production
What is Tracking?
• Each unit of generation assigned a unique ID
that includes its attributes:
•
•
•
•
•
•
Date generated
Facility location
Date facility went online
Type of renewable
Emissions profile
Eligibility for programs (RPS, Green-e)
• Electronic system tracks each unit from “birth”
to retirement (like online banking)
• Technology and policy neutral
Role of Tracking Systems
•
•
•
•
Issue RECs to Generators
Verify generator characteristics
Verify generation amount
Provide permanent retirement
mechanism for certificates
• Protect against double-selling
• Verify deliverability requirements
• Provide for banking functionality
REC Tracking
•
Canada: British Columbia and Alberta are participating in WREGIS, and
Manitoba is participating in the northern Midwest system.
•
Mexico: northern Baja is participating in the WREGIS system.
Regional Tracking Programs
•
•
•
•
•
•
ERCOT RECs Program (2001)
NEPOOL GIS (2002)
WI RRC Program (2003)
PJM Gats (2005)
NJ SRECS (2005)
WREGIS (western states, Operational
mid-2007)
• M-RETS (upper midwest, Operational ?)
• New York State
• NAAIB Coordinating Body
North American Association of
Issuing Bodies (NAAIB)
•
•
•
•
•
Ensure compatibility among systems
Registering generators
Issuing certificates
Transferring ownership of RECs
Recording information in the Central
Registration Database
• Verifying generation
• Investigating requests for changes to the
Basic Commitment rules
• Mediating disputes
Implications for Utility Regulators
REC purchases and sales by regulated utilities may:
• Influence rate-setting policies,
• Affect ratepayer value,
• Affect the success of renewable programs to meet their
goals, such as RPS or incentive programs paid for through
system benefits charges,
• Overlap with environmental regulation,
• Overlap with state or Federal renewable energy programs
such as an RPS, green pricing programs, or competitive
renewable electricity markets
• Create legal issues related to the property rights of
renewables, both with new contracts held by utilities and
existing PURPA contracts.
Key Issue: Double Counting
How to prevent unwanted cases of:
• Double Sale
– Selling part or whole REC to two or more parties
concurrently
• Double Use
– Single MWh used for more than one purpose
• Double Claiming
– Two or more parties claiming ownership or benefits
of single MWh, e.g. on disclosure label
Key Issue: Ownership
• Are utilities entitled to any of the RECs
associated with net metered facilities?
• How should regulators treat RECs from
PURPA facilities when the contact is silent
on RECs?
Key Issue: Emissions Values
• There are SOx, NOx and Carbon markets
– SOx is always capped and traded
– NOx is sometimes capped and traded
– Carbon is not currently capped and traded
• Renewables have been left out of Sox C&T
• Renewables may have access to NOx set
aside
• If carbon dioxide emissions are capped/traded
and renewables are not assigned credits, then
renewable energy will provide zero carbon
emission reductions.
Resources
• CRS “Regulators Handbook on TRCs”
www.resource-solutions.org/RegulatorHandbook.htm
• Green-e standards and REC product lists
www.green-e.org
• NREL: “Emerging Markets for Renewable Energy
Certificates: Opportunities and Challenges”
www.eere.energy.gov/greenpower
Contact information
Dr. Jan Hamrin, President
Center for Resource Solutions
San Francisco, CA
415/561-2100
Email: [email protected]
www.resource-solutions.org