Solar Renewable Energy

CertificatesSmart and Sustainable Campuses Conference 2017

What RECs are and why they are important

How RECs are used and how they affect costs

Best practices and additional resources

Making environmental claims – Hampton

Understanding SRECs – Christian

Case Study: National Aquarium REC arbitrage

Q&A

Session Outline

2

What is a Renewable Energy Certificate?

3

A REC is the legal instrument that conveys to its owner the exclusive right to claim the associated environmental attributes of a generating resource

A REC represents and conveys the “renewable-ness” of electricity generation to consumers

A REC is created for every Megawatt-hour of renewable electricity generated and delivered to the utility grid

A REC includes, among other information, the following:

Type of renewable resource

Location of renewable resource

Date stamp or vintage of generation

Emissions profile of the generating resource

Unique identification number

Why RECs are Important RECs are used to allocate renewable energy to individual consumers on a shared grid

The grid’s physical electricity says nothing about its source, its environmental impact or the method of its generation

Influence electricity market dynamics by allowing the expression and aggregation of consumer preferences for specific forms of electricity generated from renewables

REC procurement reduces available REC supply sending a demand signal to the market to develop more supply

They are used to legally substantiate consumer claims of renewable energy generation and use, as well as substantiate consumer environmental marketing claims

Tool used for meeting voluntary corporate goals for greenhouse gas reporting as well as for state policy mandates under Renewable Energy Portfolio (RPS) standards

They are used by organizations as a tool to reduce indirect scope 2 emissions

Incent new renewable energy project development

Voluntary users can qualify their preference for specific renewable technologies

States can spur development through mandated programs (SREC programs)

How are RECs Used? Compliance markets exist because of state policy decisions and mandates; such as state renewable

portfolio standards (RPS). Such standards require some electric service providers to have a minimum amount of renewable energy in their electricity supply. RECs are used for tracking these claims of compliance towards state mandates.

Voluntary markets are driven by consumer preference for renewable electricity. Voluntary markets allow a consumer to go above and beyond what mandatory policy decisions require and to reduce the environmental impact of their electricity use. RECs are used by voluntary consumers to substantiate renewable electricity use and environmental marketing claims.

Impact on Cost of Delivered Electricity: Self-Financed Systems

REC

MarketRECs

$/REC

RECs

Make solar power use claims

Pay relatively higher price for renewable

electricity

Cannot make solar power use claims

Pay relatively lower price for grid-

average electricity

Impact on Cost of Delivered Electricity: Third-Party Financed Systems

3rd-Party

System Owner

REC

MarketRECsRECs

$/REC$/kWh

3rd-Party

System Owner

RECs

$/kWh + RECs

REC Arbitrage

REC arbitrage

Monetize RECs from project into REC market to improve project economics

Use some of the value of the monetized RECs to purchase lower cost

replacement RECs

REC price varies based on many factors (supply, demand, location, resource type,

size of purchase, timing, market application)

State mandates are primary factor driving price disparity between RECs used

for compliance purposes verses RECs used for voluntary purchases

Arbitrage still changes your claims – slightly!

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REC Arbitrage

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REC Arbitrage: National Aquarium

10

Entered into a 25-year PPA with Constellation Energy for offtake from a 4.3 MW solar project

Comprised of 14,500 PV panels and is designed to meet 40 percent of the Aquarium’s annual electricity needs.

REC arbitrage into Maryland’s SREC market to improve project’s economics

Replacement RECs are Green-e certified

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REC Arbitrage

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REC conveyed to developer (No arbitrage)

REC Arbitrage REC retained by consumer (No arbitrage)

Improve economics of electricity procurement

Yes Some No

Enables consumer to substantiate renewable energy “use” claims

No Yes, with qualifications

Yes

To become solar powered

Reduce carbon footprint

Meet stated environmental or climate commitments

Save money and/or reduce variability in price of power

Demonstrate leadership

Attract students

Hands-on educational and research tool

Why are Schools Looking at Solar?

To become solar powered (REQUIRES REC OWNERSHIP)

Reduce carbon footprint (REQUIRES REC OWNERSHIP)

Meet stated environmental or climate commitments (REQUIRES

REC OWNERSHIP)

Save money and/or reduce variability in price of power

Demonstrate leadership

Attract students

Hands-on educational and research tool

Why are Schools Looking at Solar?

Green Power Partnership, Making Environmental Claims: www.epa.gov/greenpower/making-environmental-claims

RE100, Making Credible Renewable Energy Usage Claims:media.virbcdn.com/files/62/53dc80177b9cc962-RE100CREDIBLECLAIMS.pdf

The Federal Trade Commission, Green Guides: www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguides.pdf

Vermont Attorney General's Office, Guidance for Third-Party Solar Projects:ago.vermont.gov/assets/files/PressReleases/Consumer/Guidance%20on%20Solar%20Marketing.pdf

Electricity Marketing Claims Resources

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Green Power Partnership: www.epa.gov/greenpower

Renewable Energy Project Development Toolbox: www.epa.gov/repowertoolbox

More Questions?

James Critchfield, EPA, Critchfield.James@epa.gov

Hampton…..

Christian….

Any Questions?

REC Claims: Best Practices

16

Ensure your contractual right to make claims

Ensure your purchase does not count towards a mandate

Make claims that match the scope of your purchase

Avoid making claims where green power purchases originate from projects in markets outside of where the green power will be applied

Retain ownership of RECs for on-site green power

Retire the RECs associated with your green power purchase

Support your claims by buying certified or verified green power products

Avoid claiming emissions reductions not included in your purchase

Use the terms "REC" and "offset" correctly in your claims

Ask for communications assistance from industry experts and key stakeholders (e.g., EPA GPP)

Appropriate claims under various scenariosScenario Appropriate Claims Using Zero-Emissions

Electricity

College has onsite solar

system and owns associated

RECs

We are using solar power

Our solar reduces our carbon footprint

We are powered by solar energy

Our electricity comes from solar panels

Apply the zero emissions rate

conveyed by the REC to your

purchased electricity

consumption under Scope 2

College has onsite solar

system but does not own

associated RECs

We generate solar energy but sell it to another

party

Our solar panels are helping reduce our energy

costs and generate revenue through the sale

of the RECs

We are not using solar power but our solar

system is helping to green the grid

By selling the RECs from our solar system to

our utility we are helping it fulfill its state-

mandated renewable energy targets

In the absence of an

emissions rate from RECs or

electricity supplier, apply

either a residual mix or grid

average emissions rate to

calculate your unspecified

purchased electricity use.

College has onsite solar

project and does not own

associated Solar RECs, but

purchases wind RECs equal

to 100% of power needs

We generate solar energy but sell the RECs to

another party. However, we purchase 100%

wind power and have zero scope 2 emissions.

The replacement wind RECs

allow you to apply a zero

emissions rate to your

purchased electricity, but not

claim it to be of solar origin.