SIPs RECs & RPS

1. SIPsRECs&RPS Ann Elsen Energy Planner Montgomery County

2. Overview • Montgomery County wind energy purchase • How renewable energy improves the air • SIP can be a market driver. • So, what exactly is a REC? • How an RPS can help and/or harm a renewable energy market. • Montgomery County residential & business incentive program

3. Electricity Buying Group

4. We’ll pay more for power when…

5. Maryland Department of Environment

6. Locations of 50 Largest Power Plants in US Source: NOAA

7. Maryland Department of Environment

8. PJM Control Area NY NJ PA OH MD DE WV VA

9. Montgomery County Wind Purchase • Two year contract began July 1, 2004 • 38.4 million kWh/year = 5% • Price premium of $0.01498 per kWh • Total aggregate cost of $575,408/yr

11. New EPA Guidance for SIPs • Encourages the use of renewable energy as a “voluntary control measure.” • Sites the Montgomery County wind energy purchase as an example. • Provides a sample methodology for calculating emissions reductions. • Is easier to apply in states with NOx “set-aside,” but can be applied in any location where power plant emissions are a significant contributor to air quality problems.

13. REC Defined by Contract • Includes all environmental attributes, and transfer of rights, certificates, values and/or credits (even if not yet developed) • Generation must occur within term of contract. • Generation must occur within a defined geographic area. • Annual reporting of kWh delivered into PJM • Annual reporting of kWh generated during “ozone season”

14. The Devil is… …in the details.

15. Creation of a REC 1 MWh Renewable Electricity e Renewable Attributes Electricity e e 1 MWh Ordinary Power 1 REC

16. Zero-emission “new” wind energy generated at a location within a defined geographic region determined to provide local air quality benefits, and at a facility meeting environmental criteria including minimal impacts upon wildlife.

17. Combustion of municipal solid waste combined with landfill methane and biomass

18. Generation Attributes • What --- 1 megawatt hour of electricity • How ---- fuel mix & combustion emissions • When -- generation date or REC creation/registration? • Where - within state, control area, region?

19. Which is the NOx “allowance?” Is it an additional commodity to be traded on an open market, or an integral part of the renewable energy product?

20. A Closer Look at RECs

21. Voluntary Market:Customers: individuals, businesses, governments, suppliers I buy RECs because I want to.[environmental, political, financial or personal motivation]Compliance Market:Customers: suppliers onlyI buy RECs because I have to.[Renewable Portfolio Standard]

22. Has the REC that I purchased been used to meet a Renewable Portfolio Standard or environmental disclosure requirement?

23. Need for Seamless Legislative and Regulatory Coordination of: • Renewable Portfolio Standard • Environmental Disclosure Requirements • Registry and/or tracking system for RECs • Consumer Protection • Consumer Education

24. Example: Voluntary Electricity Purchase Including 5% Renewable • If total electricity sale is 100 MWh, RPS at 3% • Buyer believes 5 MWh renewable or 5 RECs have been purchased. • 3 of the 5 RECs are counted toward suppleirs RPS requirement. • All 5 RECs are included in supplier’s Environmental Information Label • Supplier is required to disclose this to buyer. • Buyer is confused.

25. The Big Issues for States • What “Attributes” should make up a REC? • Separation of Voluntary and Compliance markets • Prevention of “double counting” of RECs in RPS, voluntary purchases, environmental disclosure.

26. A Renewable Portfolio Standard is a VERY GOOD thing, and…

27. The Devil is… …in the details.

28. The End.

29. Contact Information: Ann Elsen Energy Planner Montgomery County Department of Environmental Protection 240-777-7754Ann.Elsen@montgomerycountymd.gov