Renewable Energy Certificates: Information, Applications and Market Potential Këri Bolding Center for Resource Solutions kbolding@resource-solutions.org Governor s Tribal Forum Flagstaff, AZ; August 5, 2005
Presentation Overview CRS & Green-e Tradable Renewable Certificates 101 Definitions of a REC & Terminology Applications: Compliance & Voluntary Markets, Emissions Values of RECs Market Context: Product Labeling Oversight of RECs: Certification & Tracking
About CRS Non-profit organization National and International programs Headquartered in San Francisco Promote renewable energy & energy efficiency 90% financial support through foundation and government grants Leading organization on green power certification/accreditation (Green-e)
CRS: What We Do 4 Primary Business Lines: Clean Energy Policy Design & Implementation Measurement and Verification Services for RE and Carbon Markets Promotional Services: Product Labeling, Expert Assistance in Marketing Renewable Resource Assessment & Technical Assistance
Green-e Certification Green-e Certification voluntary program for renewable energy products sold in: competitive electricity markets regulated utility markets, and nationwide through RECs Green-e is a tool that can help consumers make an informed renewable energy choices www.green-e.org
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 Green Power
What s in a Name? Green Tags Green Tickets Renewable Credits Renewable Certificates Tradable Renewable Certificates (TRC) T-RECS Renewable Energy Certificates (RECs)
CRS Definition of a REC A generic term for a bundle of attributes that does not include the actual electrical energy associated with the generation of electricity at a renewable energy facility. Depending upon the facility, the REC will embody various attributes with varying quantitative values. Values such as avoided emissions are quantified according to some baseline metric, engineering estimate, or a value deemed by private or government bodies.
RECs Terminology Unbundling: Selling the REC and the electrons in separate transactions Disaggregation: Selling the emissions values from a REC
How to Prevent Double Counting: Definitions Double Sale Selling part or whole REC to two or more parties 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
RECs: The Benefits Facilitate renewable energy markets Breaks down geographic boundaries Create fluidity in markets Direct dollars to lowest cost renewable resources Can be used as a financing mechanism for new renewable energy facilities Could be used for solar aggregation Monetizes the value of attributes
Applications: RECs are used to Substantiate compliance with RPS Supply green pricing programs Provide renewable energy options for customers with no green power choices Meet emissions reduction goals Green events, products and services.
Applications: RECs 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
Applications: Utility Check-off Programs Q: What do these utilities have in common? Pacificorp Portland General Electric Niagara Mohawk NYSEG City of Palo Alto Mass Electric A: REC-based check-off programs offered by 3 rd party suppliers
Applications: Independent REC Marketers Ex: The Rosebud Sioux Tribe Wind Farm & Native Energy Other Models (i.e. 3Phases)
Applications: Voluntary Market Voluntary REC Offers (MWh) vs. Compliance Fuel Type REC Type Location Price New Wind Voluntary WA/CA $3.00 New Solar Voluntary CA $30.00 New Compliance MA $48-51.00 Compliance Texas $13.25 Class II Compliance NJ $3.75 Solar Compliance NJ $170-260.00 Volume: millions of MWh traded per quarter Source: Evolution Markets LLC www.evomarkets.com/mmu
Why the Price Disparity? Geography of low-cost renewables Supply/demand Volume of purchase Voluntary vs. compliance markets Type & vintage of renewables Regulatory (e.g. penalties for non-compliance with RPS)
Applications: Emissions Value Emissions markets exist for SOx, NOx, carbon These markets may expand: Regional cap & trade for carbon? Kyoto Protocol? Renewable energy reduces emissions Renewables displace more polluting sources Some renewables (wind, solar) are emissions-free REC tracking systems are becoming sophisticated, will include direct emissions data, but what about emissions offsets? How should emissions values of RECs be treated? Who owns them?
Market Context: Business Market WRI Green Power Development Group 12 large corporations purchasing 97 MW of renewables including 36 MW of RECs - the largest corporate purchase of RECs in the US.
EPA Green Power Partnership Over 500 members, many large purchasers of RECs
Market Context : Product Labeling In 2004 Green-e launched the Product Labeling Initiative. Many vendors are using the Made With Renewable Energy Green-e logo. Many more consumer products (Odwalla juice, Silk Soy Milk, Fat Tire beer, etc.) contain info on packing encouraging customers to buy RECs
Product Labeling
Silk (white Wave) uses the side panel of the carton of its soy milk product to align its brand with wind power. Product Labeling
Market Context: Mini Tags Mini-tags or Point of Purchase (POP) Tags are small quantities of RE attributes sold at point-ofpurchase to offset the consumer s energy use and/or emissions from a particular activity. Green Mountain and BEF have sold 100 kwh blocks of wind RECs at ski resorts so customers can offset their ski lifts energy use. Potential uses: offsetting emissions from airline travel, grocery store purchases, rental car usage, etc.
Mini Tag Sales : Ski Resorts Small amounts of renewable energy are sold to consumers allowing them to support renewable energy. Consumers can use mini tags to offset ski lift rides and travel to the resort.
Oversight of RECs Certification & Verification typically for retail markets Tracking for wholesale markets only available in some regions These are compliments, not substitutes
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 such as RPS, Green-e Electronic system tracks each unit from birth to retirement
REC Tracking in North America 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.
North American Association of Issuing Bodies (NAAIB) Activities A North American Association of Issuing Bodies (NAAIB) is being considered to ensure compatibility among systems and provide credibility to the emerging REC market 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
Green-e Certification Green-e is the leading certifier of RECs and other renewable energy products Voluntary program; products must meet Green-e criteria Includes annual verification component and marketing compliance review Provides safe harbor for utilities Strong environmental endorsements Green-e offers free support services such as our Marketers Marketers Group Totally open and transparent process
What Green-e Considers Renewable Wind Solar Geothermal Small and/or low impact hydro Biomass For Green-e this does NOT include: MSW incineration Tire incineration Fuel cells unless fueled by renewables Waste heat
More Information on RECs Këri Bolding, kbolding@resource-solutions.org www.resource-solutions.org CRS Regulators Handbook on TRCs, www.resourcesolutions.org/regulatorhandbook.htm Green-e standards and TRC product lists, www.green-e.org NREL: Emerging Markets for Renewable Energy Certificates: Opportunities and Challenges, www.eere.energy.gov/greenpower