Renewable Energy Certificates
Presented by
Janice Moore, Partner
jmoore@mcguirewoods.com (202-857-1752)
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Renewable Energy Certificates
• Represent attributes of electricity generated from
renewable energy sources
• Also called “green tags”
• Unbundled from the physical electricity
• Currency of renewable energy markets
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Renewable Energy Certificates
• Flexible enough to make attributes a commodity
• Not subject to geographic or physical limitations
of electricity
• Certificates are used to
– Show compliance with regulatory requirements
– Supply end-use costumers with renewable energy
products
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REC Challenges
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Issues to be Resolved
•
•
•
•
•
REC substantiation and verification
National REC Markets
Ownership uncertainty
Emissions markets
REC definition
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Tracking and Verification
• Bilateral contract between buyer and seller with
affidavit as to source, ownership and exclusive
sale
• Third-party entity that issues certificates
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EPA’s SO2 Program – Obstacles
• Emissions allowances primarily granted to fossil
plants, with limited amount set aside for
renewables; optimal allocation is difficult
• Program limits participation to utilities; renewable
energy developers may participate only if join
with a utility
• So2 capped by federal law; allowances allocated
only to polluting plants
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REC Tracking Systems
• Verify compliance with renewable energy
definitions
• Substantiate voluntary marketing claims
• Provide protection against trading abuses
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REC Tracking Systems
• Issue an electronic certificate
• Record changes of certificate ownership
• Retire certificates when used for different
purposes
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PJM’s GATS
Generation Attributes Tracking
System
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GATS
• PJM Market (Pennsylvania, New Jersey,
Maryland)
• Motivated by state requirements for distributing
emissions information to customers
• See: http://www.pjm-eis.com and
http://www.pjm.com/committees/workinggroups/dsrwg/downloads/20050921-item-6-gatsupdate.pdf
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NEPOOL/ERCOT/PJM
REC Tracking Systems Comparison
NEPOOL
ERCOT
PJM
All generation in or
delivered to area
Existing and new
renewable generation
All generation in PJM
control area
Lifespan 1 quarter to one
year, depending on issue
date
Lifespan 3 calendar years
Lifespan undecided
Annual membership fee
ERCOT fees
Subscription fee and
volumetric fees
6 New England States
Texas only
13 states, including PA,
MD, NJ
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NEPOOL/ERCOT/PJM
REC Tracking Systems Comparison
NEPOOL
ERCOT
PJM
Unit-specific imports or
exports must be
physically delivered
to/from NEPOOL system
Imports under certain
circumstances
Imports only from regions
offering reciprocal
treatment of PJM RECs
Mandatory participation
for all generators and
LSEs
Mandatory participation
for competitive retail
suppliers that must meet
RPS
Mandatory participation
for all generators and
LSEs
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NEPOOL/ERCOT/PJM
REC Tracking Systems Comparison
NEPOOL
ERCOT
PJM
System administered by
APX, sharing some
responsibilities with NE
regulators
System administered by
ERCOT, sharing some
responsibilities with
PUCT
System administered by
PJM, sharing some
responsibilities with
regulators
End of RPS compliance
period: RECs retired after
used for compliance;
unsold certificates
assigned to residual mix
End of RPS compliance
period: RECs retired after
used for compliance;
unused certificates remain
in REC account until
retired
End of RPS compliance
period: RECs retired after
used for compliance;
unsold certificates
assigned to residual mix
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