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Renewable Energy Certificates: A Detailed Overview Dan Lieberman Center for Resource Solutions NARUC August 1, 2006 San Francisco, CA Presentation Overview RECs 101 Voluntary vs. Compliance Markets Oversight of RECs: Voluntary Certification

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renewable energy certificates a detailed overview

Renewable Energy Certificates:A Detailed Overview

Dan Lieberman

Center for Resource Solutions


August 1, 2006

San Francisco, CA

presentation overview
Presentation Overview
  • RECs 101
  • Voluntary vs. Compliance Markets
  • Oversight of RECs:
    • Voluntary Certification
    • Tracking
  • Key Regulatory Issues
who is the center for resource solutions
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 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
Size of the REC Market

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
The Voluntary RE Market

By “voluntary renewable energy market” we mean purchase or use by retail customers (residential and non-residential) of renewable energy, renewable energy certificates, or the use of energy from an on-site renewable generation unit.

the voluntary re market11
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.
  • CRS “Regulators Handbook on TRCs”

  • Green-e standards and REC product lists

  • NREL: “Emerging Markets for Renewable Energy Certificates: Opportunities and Challenges”

contact information
Contact information

Dr. Jan Hamrin, President

Center for Resource Solutions

San Francisco, CA