Portfolio Manager and Green Power Tracking

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1 Building owners and operators can buy green power products as a way of reducing the environmental impacts associated with purchased electricity use in their facilities. The Environmental Protection Agency (EPA) defines green power as electricity generated from environmentally preferable renewable resources, such as solar, wind, geothermal, lowimpact biomass, and low-impact hydro resources 1. Green power can be acquired through three primary supply options onsite renewable system development, utility green power products, and Renewable Energy Certificate (RECs) contracts. Each of these green power options may be entered into Portfolio Manager to offer a more complete assessment of the building s energy consumption, efficiency, and associated GHG emissions footprint. This document describes the requirements for entering each of these products into Portfolio Manager, including a set of FAQs to help you account for your green power. The purchase of green power at the individual building or building portfolio level is an important part of an organization s GHG reduction strategy. To have the greatest impact on mitigating climate change, EPA recommends that you make your building as efficient as possible and then seek the cleanest sources of energy. The treatment of green power in Portfolio Manager reflects the position that green power is not a substitute for energy efficiency, but rather an integral component to tracking an organization s progress towards reducing the GHG emissions associated with building energy consumption. More on how Portfolio Manager handles source-site energy conversion, and GHG inventory and tracking is available on our website 2. Onsite Renewable Electricity Systems Onsite renewable electricity, generated through wind or solar photovoltaic power generation systems, installed on or at the building site is treated as a fuel in Portfolio Manager and entered using a standard energy meter in the Energy Meters section, similar to grid purchased electricity. When entering an electricity energy meter within Portfolio Manager you will have the opportunity to clarify whether it is a grid-purchase, onsite solar, or onsite wind. From a site energy accounting perspective, onsite solar and wind electricity are comparable to grid purchase, because it is still an electric requirement for your building operation. However, from a source energy accounting perspective, they differ because onsite renewable energy is not subject to traditional generation and transmission losses. To account for this benefit, onsite solar and wind energy is assigned a source conversion factor of 1.0 rather than the 3.34 value that is used for grid-based electricity. This factor means that a building with onsite renewable electricity will be expected to rate better than a building with grid electricity. For more on site and source energy visit: Site and source energy reference document: Greenhouse gas calculations reference document:

2 dgs. When renewable energy is generated onsite through solar or wind resources, it is either used on site or exported back to the grid. Exporting energy back to the grid does not make your individual building more or less efficient, because it does not change the total energy required to operate your building. Thus the export of electricity does not change the building s total energy consumption or its rating. Portfolio Manager requires that two separate Energy Meters be recorded in order to accurately account for the onsite use and generation of green power. Onsite System meter Separate fields are provided for any onsite solar or wind system to track both the energy generated by the system and consumed at the building and the energy generated by the system and exported to the grid. Both of these values must be tracked separately, so that it is clear which energy is used onsite and which energy is exported to the grid. All energy that is used is incorporated in your building s site and source energy consumption. o Please note that the amount of energy that you export to the grid may be recorded on your utility bill, rather than as part of a physical meter on your renewable installation. Grid Purchase meter Almost all commercial buildings with an onsite solar or wind system are also connected to the grid. At certain times of the day and month they will need to purchase power from the grid to supplement the onsite generation. A meter must be included to reflect all energy that flows from the grid into the building. It is not acceptable to enter a net meter reading that records the difference between the amount that is imported from the grid and the amount that is exported back to the grid. These values must be entered using the grid purchase meter and the onsite solar or wind meter, respectively. That is, if in a given time period you export 100 kwh and import 120kWh, you should report the import (purchase) of 120 kwh of grid electricity on your Grid Purchase meter, and report the export (sale) of 100 kwh in your Onsite System meter. You should not record the difference between these two (20 kwh) anywhere in Portfolio Manager. Because onsite solar and wind generation help avoid the emissions associated with grid purchased electricity, use of these technologies can greatly reduce your building s emissions footprint. In order to recognize the avoided emissions from onsite renewable energy systems, an electricity user must retain and retire the RECs associated with the onsite system s generation. In today s market, a common practice is to sell the RECs associated with onsite renewable energy generation and use the resulting sales revenue to help finance the system. Once the avoided emissions (RECs) are sold, the onsite system s electricity generation is no

3 longer considered green and the electricity user may not claim any avoided emissions in direct connection to the onsite system. However, under a practice known as REC arbitrage, many onsite system owners are able to leverage existing price differentials between the sale and purchase of onsite and offsite RECs. REC prices vary based on differences in resource type, geography, local market policies and basic supply and demand dynamics. REC arbitrage provides a credible opportunity for system developers to finance systems. Under a REC arbitrage situation, the secondary REC purchase from an offsite project(s) affords the building s electricity user to still make an emissions reduction claim, however, these claims would be independent from the onsite renewable energy system. Avoided emissions associated with a secondary offsite REC purchase may or may not provide the same emissions value to the electricity user. These offsite REC purchases cannot be reported within the onsite system meter, but must be entered separately, as discussed in the RECs section, below. In order to do proper emissions accounting for onsite systems, Portfolio Manager asks the following questions: Do you own this meter s RECs (avoided emissions)? o Yes, I own the RECs (avoided emissions) associated with the generation of the onsite renewable energy system. A Renewable Energy Certificate, Renewable Energy Credit, or Green Tag has not been sold for this electricity. o No, I do not own the RECs (avoided emissions) associated with the generation of the onsite renewable energy system. The Renewable Energy Certificate, Renewable Energy Credit, or Green Tag for this power does not belong to me. Therefore, you (i.e. the building owner/occupant) own your avoided emissions (1) if you own a renewable onsite system and you have not sold the REC associated with the power generated from the system or (2) if a third-party owns your onsite system and you purchase a bundled product that includes both the electricity from the system and the RECs (avoided emissions). If you own the avoided emissions, then Portfolio Manager will compute your emissions using an emissions factor of zero (0) kg CO2e/MBtu. Conversely, if you have sold the RECs, then the emissions from your onsite renewable electricity consumption are computed using the system average emissions rate associated with your local utility grid 3. An onsite renewable electricity system is the only type of green power that lowers the direct, indirect, and total emissions of your building. 3 Please note all emissions factors come from the U.S. EPA's Emissions & Generation Resource Integrated Database (egrid). Information on emissions factors and calculations within Portfolio Manager is available at:

4 While utility green power purchases and offsite RECs result in avoided emissions, these are tracked separately. If you have sold the RECs associated with your onsite system and purchased alternate RECs (REC arbitrage, above), then you would record these new purchased RECs as a Green Power Purchase within Portfolio Manager. Utility Green Power Green Power Pricing products are often available from your local electricity utility, and typically take the form of a price premium for fixed quantity or percentage of monthly electricity consumption supplied from renewable energy resources. When you purchase utility green power through any of these mechanisms, the renewable energy is generated off-site and the price that you pay includes both the energy delivered to your building and the associated avoided emissions. This is considered a bundled product, because the electricity (kwh) and the avoided emissions are both part of the transaction In order to obtain accurate energy and emissions metrics, you must track and record utility green power by entering the underlying physical electricity and RECs separately. To do this, a user must enter a grid purchase meter and a green power purchase as follows: Grid Purchase meter When you purchase these products you are still making a grid electric purchase, and you must record this in Portfolio Manager using an electric energy meter. This ensures that your site and source energy correctly reflect the energy that flows to your site from the local utility grid. Green Power Purchase entry In addition to your grid purchase, you track the avoided emissions in the separate Green Power Purchases section on the My Facility page. This enables you to track your avoided emissions correctly. o When Green Power is entered you are asked to supply the location where your green power was generated. This location information is critical because the amount of avoided emissions associated with your purchase depends on the physical location of the generation (i.e. the portion of the grid where traditional energy has been displaced by green power). The avoided emissions are calculated using the marginal (non-baseload) emissions factors associated location of the grid where the green power was produced. There are three options for entering the location: entering a specific plant; entering the egrid subregion; or indicating that the location of the generation is unknown. Please note that in Portfolio Manager you should have both a grid purchase meter and a green power purchase entry recorded in order to obtain accurate energy and emissions metrics. Utility green power does not, in itself, make your building more energy efficient. Therefore, the site energy, source energy, and total emissions do not change when green power

5 products are purchased. However, the purchase of utility green power does have the important environmental benefit of avoided emissions. Avoided emissions are tracked separately in Portfolio Manager and may be aggregated and applied at the organizational level as part of your overall greenhouse gas reduction strategy. Renewable Energy Certificate (RECs) Contracts Renewable Energy Certificates (RECs) are tradable certificates that are widely used to establish environmental claims associated with buying or using green power. They represent the environmental, social, and other non-power qualities associated with the generation of one megawatt-hour of electricity from a renewable resource. Although RECs are a key component of all green power supply options, they are often sold separately from an underlying electricity service, and thus offer buyers flexibility in procuring green power across a diverse geographical area. The process for entering a standalone REC contract in Portfolio Manager is similar to the process for entering utility green power. An independent REC contract and an underlying gird electricity purchase should be entered separately in the Green Power Purchases and Energy Meter sections of Portfolio Manager, respectively. You are required to enter both a grid purchase meter and a green power purchase entry in order to obtain accurate energy and emissions metrics. As with other green power products, the geographic location of the REC s generator is required. Location is especially important for all RECs, because they are often generated offsite on other parts of the utility grid. As with utility green power, purchasing offsite generated RECs does not make your building more energy efficient, and therefore will not change your building s total electricity consumption or its rating. However, the purchase of a REC offers the benefit of avoided emissions, helping you to reduce your organization s overall GHG footprint.

6 Frequently Asked Questions 1. I am purchasing green power generated and delivered by my local utility; does this improve my ENERGY STAR rating? No. The ENERGY STAR rating is a measure of the thermodynamic performance of your building, which is determined by the amount and type of fuel your building consumes. The rating is designed to reflect the energy efficiency of the building, not the efficiency of the utility (or source) supplying energy to your building. Each fuel in Portfolio Manager is assigned one national source-to-site factor, which does not provide either a credit or a penalty to a building due to efficiency of the local grid. This provides an equitable evaluation of the building s performance relative to the national building stock. 2. How does Portfolio Manager include the electricity consumption from my building s onsite solar or wind system when calculating my rating? The electricity use from onsite solar and wind must be reported and included in your total energy consumption and ENERGY STAR rating calculation. The use of onsite renewable electricity is part of your overall site energy consumption (i.e. the energy requirement of your building). However, onsite renewable electricity is not subject to traditional generation, transmission, and distribution losses. This benefit is acknowledged in the ENERGY STAR rating by assigning onsite electricity a source conversion factor of 1.0 rather than the 3.34 value that is used for grid-sourced electricity. As such, a building with onsite solar or wind power is likely to receive a higher score. By identifying and tracking onsite solar and onsite wind energy consumption (i.e. by not recording them as zero energy use), Portfolio Manager enables a more complete assessment of the energy requirements of your building, and enables better management of those resources. For example, consider two buildings using 100% onsite solar power, but with differing amounts of total energy use. The inclusion of onsite power in your site energy use intensity (EUI), source EUI, and ENERGY STAR rating will enable you to determine which of your buildings is operating more efficiently. It would be misleading to consider two buildings with 100% onsite solar power to be the same, because doing so would mask the buildings true energy efficiency. 3. Do I receive credit in Portfolio Manager for the export of onsite generated renewable electricity back to the grid? No. Some buildings may generate more electricity from onsite wind and solar energy than they can use in real time, and they may export this excess to the electricity grid. Portfolio Manager allows tracking of these renewable electricity exports. However, the export of energy does not lower the total energy requirement of the building, which is the basis of the ENERGY STAR rating. For example, if your building requires 100 units of electricity to operate, it will require 100 units whether your onsite generation is capable of producing 90 units or 110 units. Generating more/less electricity than you need does not make the inherent operation of your building any more efficient. Therefore buildings do not receive any credit in their energy performance rating when energy is exported to the grid.

7 When you export electricity to the grid, these exports are not included in Portfolio Manager s calculation of the indirect, direct, or total building emissions. If you export electricity, you may or may not export the RECs (e.g. avoided emissions). That is, you may export the power and retain the REC, or export both the REC and the power together as a bundled product. If you retain the REC, then you can track the avoided emissions associated with the REC under the Green Power Purchases section of Portfolio Manager. Either way, the export of renewable electricity does not affect the emissions associated with the electricity that the building does consume. 4. Does the Total Emissions value reported in Portfolio Manager reflect the emissions avoided from my utility green power and RECs? No. In Portfolio Manager two different numbers are tracked: the total emissions associated with the building and the avoided emissions associated with green power purchases. The net value is not a metric within Portfolio Manager. Portfolio Manager determines a building s total GHG emissions footprint by accounting for all CO 2, CH 4, and N 2 O emissions associated with a building s energy use. This is accomplished by assigning national emissions factors for all onsite combusted fuels and district heating and cooling, and assigning regional factors for grid-sourced electricity. The avoided emissions from all green power purchases are separately calculated as avoided emissions based on the quantity, location, and generation period of that power. The avoided emissions from green power may then be applied against the indirect emissions associated with building s purchased electricity use (scope 2 emissions), or aggregated to the building portfolio or organization level, giving you flexibility on how you wish to account for and disclose your GHG emission reduction accomplishments. This approach is consistent with common greenhouse gas reporting protocols, which typically include avoided emissions and building emissions as separate items in the inventory. 5. Can I account for forms of onsite renewable energy other than solar and wind (e.g. biomass or landfill gas)? No. The only types of renewable energy included in Portfolio Manager are onsite solar and wind. These two technologies were selected for the first renewable energy enhancement in Portfolio Manager because they are the most common in commercial building applications. In the interest of providing the best assessment of energy and associated greenhouse gas emissions, EPA plans to expand the onsite renewable reporting options to include other forms of onsite renewable energy, such as biomass combustion and landfill gas purchases. EPA is performing an investigation of other onsite sources of renewable energy to determine the most appropriate way to incorporate them in the future. 6. If I do not know the resource type or location information related to a green power purchase what options do I have for inputting data into Portfolio Manager? When entering a utility green power or REC contract into Portfolio Manager, you will be asked to select the renewable energy type and the location of the generator. This detailed information enables the most accurate calculation of avoided emissions. However, EPA recognizes that the exact details of some green power supply contracts are not known

8 until the contract is delivered in full. For this reason, there is an option to select that the location is unknown. Making this selection will result in a conservative estimate of the avoided emissions. To enter your resource mix, you may confer with your green power supplier to enter the best approximation of energy sources for blended products.