Is there any program similar to white certificates for renewable energy in US?

Hey, 

My friend from France told me about white tags for renewable energy. Can you tell me more about it and is there anything similar in the US?

Comments

Hey Matt,

In environmental policy, white certificates (white tags) are documents certifying that a certain reduction of energy consumption has been attained. In most applications, the white certificates are tradable and combined with an obligation to achieve a certain target of energy savings.

If energy producers do not meet the mandated target for energy consumption they are required to pay a penalty. The white certificates are given to the producers whenever an amount of energy is saved whereupon the producer can use the certificate for their own target compliance or can be sold to (other) parties who cannot meet their targets.

A white certificate, also referred to as an Energy Savings Certificate (ESC) or white tag, is an instrument issued by an authorized body guaranteeing that a specified amount of energy savings has been achieved. Each certificate is a unique and traceable commodity carrying a property right over a certain amount of additional energy savings and guaranteeing that the benefit of these savings has not been accounted for elsewhere.

In Europe several countries have implemented a white certificate scheme or are seriously considering doing so. However, in USA, green tags are more popular.

Matt, 

Renewable Energy Certificates (RECs), also known as Green tags are tradable, non-tangible energy commodities in the United States that represent proof that 1 MWh of electricity was generated from an eligible renewable energy resource. Solar Renewable Energy Certificates (SRECs) are RECs that are specifically generated by solar energy.

These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy. According to the U.S. Department of Energy's Green Power Network, RECs represent the environmental attributes of the power produced from renewable energy projects and are sold separate from commodity electricity. While traditional carbon emissions trading programs promote low-carbon technologies by increasing the cost of emitting carbon, RECs can incentivize carbon-neutral renewable energy by providing a production subsidy to electricity generated from renewable sources. It is important to understand that the energy associated with a REC is sold separately and is used by another party. The consumer of a REC receives only a certificate.

In states that have a REC program, a green energy provider is credited with one REC for every 1 MWh of electricity it produces (for reference, an average residential customer consumes about 800 kWh in a month). A certifying agency gives each REC a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying REC can then be sold on the open market.

I hope this answers your question.

Also, about the green certificates, there are two main markets for renewable energy certificates in the United States that are compliance markets and voluntary markets.

  1. Compliance markets are created by a policy that exists in 30 U.S. states, plus the District of Columbia, called Renewable Portfolio Standard. In these states, the electric companies are required to supply a certain percent of their electricity from renewable generators by a specified year. For example, in California the law is 33% renewable by 2020, whereas New York has a 24% requirement by 2013.Electric utilities in these states demonstrate compliance with their requirements by purchasing RECs; in the California example, the electric companies would need to hold RECs equivalent to 33% of their electricity sales.
  2. Voluntary markets are ones in which customers choose to buy renewable power out of a desire to use renewable energy. Most corporate and household purchases of renewable energy are voluntary purchases. Renewable energy generators located in states that do not have a Renewable Portfolio Standard can sell their RECs to voluntary buyers, usually at a cheaper price than compliance market RECs.

Prices depend on many factors, such as the vintage year the RECs were generated, location of the facility, whether there is a tight supply/demand situation, whether the REC is used for RPS compliance, even the type of power created. Solar renewable energy certificates or SRECs, for example, tend to be more valuable in the 16 states that have set aside a portion of the RPS specifically for solar energy. This differentiation is intended to promote diversity in the renewable energy mix, which in an undifferentiated, competitive REC market, favors the economics and scale achieved by wind farms. You can review current spot prices for SRECs in most states with solar portfolio standards at SRECTrade (http://www.srectrade.com).

While the value of RECs fluctuate, most sellers are legally obligated to "deliver" RECs to their customers within a few months of their generation date. Other organizations will sell as many RECs as possible and then use the funds to guarantee a specific fixed price per MWh generated by a future wind farm, for example, making the building of the wind farm a financially viable prospect. The income provided by RECs, and a long-term stabilized market for tags can generate the additional incentive needed to build renewable energy plants.

Guys,

I really appreciate your quick and explanatory responses. I read you guys talk about SRECs and I was wondering how does this system work?

 

Matt,

Solar Renewable Energy Certificates (SRECs) are a form of Renewable Energy Certificate or Green tag. SRECs exist in states that have Renewable Portfolio Standard (RPS) legislation with specific requirements for solar energy. SRECs represent the environmental attributes from a solar facility, and are produced each time a solar system produces one megawatt-hour of production.

Typically, there is no assigned monetary value to an SREC. Market forces within the parameters set forth by the state ultimately determine SREC prices. If there is a shortage in SREC supply, pricing will rise, resulting in an increase in the value of the incentive for solar systems and an intended acceleration in solar installations. As SREC supply catches up to SREC demand, pricing will likely decrease, resulting in an intended deceleration in solar installations. Over time, SREC markets are designed to find the equilibrium price that encourages enough installation to meet the growing demand set forth by the RPS. 

 

SREC prices are a function of: 

  1. A state's solar alternative compliance payment (SACP)
  2. The supply and demand for SRECs within the relevant state 
  3. The term or length over which SRECs are sold

The SACP is the fee that energy suppliers must pay if they fail to secure SRECs as required by state regulations called a RPS. A state's ACP therefore generally sets a cap on the value of SRECs because energy suppliers and utilities may simply pay the fee if SREC prices approach the fee level. In many states, the SACP is scheduled to decline over time with the intention of eventually phasing out the solar industry's reliance on SREC sales as an incentive for installing solar.

In order to produce SRECs, a solar system must first be certified by state regulatory agencies, usually public service commissions or public utility commissions, and then registered with the registry authorized by the state to create and track SRECs. Once a solar system is certified with the state agency and registered with a registry such as PJM GATS or NEPOOL GIS, SRECs can be issued using either an estimate table or actual meter readings - depending upon state regulations. In some cases, smaller installations may be able to use estimates, while actual meter readings are required for large installations. Solar installations may be registered in states other than the state in which they are physically located and many SREC aggregators will navigate the certification process on behalf of their customers to ensure that systems are certified in the states with the highest SREC values so as to ensure long-term price stability.

The responses are very much cleared for you Matt and here is an additional latest info in connection to renewable energy. China led the world in green energy investment last year according to a recent study. Third place in the clean energy race is now occupied by the U.S. as Germany supplanted it in second place. As the United States falls behind, Republicans in Congress favor more offshore drilling, oppose Obama administration power policy and want to cut Department of Energy loan programs sustaining green energy development. I read this here:  U.S. falling further behind in globalclean energy race

I find this post very interesting. People are now looking and eventually switching to alternative energy sources. Energy sources that are cheaper, more accessible and even free is the answer to electrical bills that is continuously rising. As simple as turning the lights off when not in use is already a big help to mother nature. Using alternative energy sources help us in many ways. Not only you can save some penny from your electric bills, you can also help in saving our natural resources.