Renewable Energy Certificates in
Energy Business Reports
Renewable
Energy Certificates (RECs) or Green Tags are
market-based commodity designed to facilitate transactions between buyers and sellers
of renewable energy, free from the constraints of the electricity grid. By
unbundling the renewable characteristic from the actual electricity commodity, RECs allow renewable energy generators more flexibility in
the distribution of their products, and therefore encourages further
development of the renewable energy market. In states or regions that have an
REC program, one REC represents the environmental attributes generally
associated with one megawatt-hour (MWh) of
electricity from renewable resources.
Currently, the
Standardization initiatives are developing on the regional and national levels.
For example, the California Energy Commission and the Western Electricity
Coordinating Council established the Western Renewable Energy Generation
Information System (WREGIS) to issue, register, and track RECs
for the territory covered by the Western Interconnection. Other similar
regional tracking organizations include the PJM Generation Attribute Tracking
System (GATS) and the New England Power Pool Generation Information System
(NEPOOL GIS). Each of these organizations issues certificates with unique
serial numbers that represent the attributes of the generation for each
megawatt-hour produced by qualified generators. States that are parties to the
organization may use and exchange certificates within each tracking system.
State efforts suggest the creation of a national marketplace likely will become
a reality in the near future. Creating a nationwide, perhaps global, fungible
REC commodity also could facilitate a national RPS, although significant
obstacles remain. Nevertheless, REC advancements also serve as a foundation for
national carbon trading. For companies actively engaged today, the desirable
benefits of standard contracting, verification, and revenue stability will
foster opportunities in regional and global carbon trading markets in the
future.
As REC markets develop, key issues are being addressed regarding market
interaction. The first issue involves certificate verification, with respect to
both verification of the renewable attributes of power and the ownership of
those attributes. Second, developers and utilities focus increasingly on
protecting the revenue stream produced by REC sales by directing the revenue
toward the expansion of renewable power generation. Finally, utilities and
regulators across the country will focus on standardizing REC programs, to
capture the value of consistency and homogeneity for healthy REC trading
markets.
PJM Generation Attribute Tracking System (GATS)
New England Power Pool Generation Information System (NEPOOL GIS)
Pages : 83
Publication Date : January, 2008
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