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Tradable Renewable Energy Credits

Tradable Renewable Energy Credits. Robin B. Davidov Executive Director Northeast Maryland Waste Disposal Authority Rdavidov@nmwda.org. What if each State established a definition of “Renewable Food”. Example of Renewable Foods: Wisconsin: Cheese Logs California: Veggie Burgers

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Tradable Renewable Energy Credits

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  1. Tradable Renewable Energy Credits Robin B. Davidov Executive Director Northeast Maryland Waste Disposal Authority Rdavidov@nmwda.org

  2. What if each State established a definition of “Renewable Food” • Example of Renewable Foods: • Wisconsin: Cheese Logs • California: Veggie Burgers • Maryland: Corn Fritters and Crabcakes • Texas: Hamburgers

  3. Federal Government decides to buy “Renewable Food” for inmates • Feds adopt the standard of the “Green Veggi-e” group • Inmates eat veggie burgers and corn fritters: Vegetable Farmers win • Cattleman, Waterman and Dairy Farmers loose • Inmates revolt • Feds make up new definition

  4. Renewable Energy Credits • A credit is a tradable certificate of proof that 1 kWh of electricity has been generated by a renewable-fueled resource • RECs provide a cost efficient renewable energy system • RECs spur competitive technology to generate renewable energy • RECs can be used to reduce greenhouse gas intensity

  5. Renewable Portfolio Standards • 15 States have RPS • 4 States allow RECs to be unbundled from energy • RPS requirement is 15% in Nevada, 30% in Maine, and 25% in New York (3,700 MW’s)

  6. Every State adopts a different definition of “Renewable Energy” • Texas includes solar, wind geothermal, hydro, wave, biomass, and landfill gas • Mass. includes solar, wind, clean biomass but not hydro or municipal solid waste • N.J., Md. and Ct. have two tiers. • Generally, solar, wind, landfill gas on top tier, hydro and MSW on bottom tier • N.Y. includes hydro but not MSW • In Pa., hydro is non-renewable

  7. Who Buys RECs? • Residential customers opting for a “green pricing” program offered by local utility or distant utility (Bonneville Power website) • Organization buying RECs to make a specific event “emission free” • Company deciding to purchase a quantity of RECs equivalent to a certain percentage of electricity consumption.

  8. How much do RPS cost consumers? • N.Y. Estimates that over 5 years: • Residential customers -0.9 to +1.68% • Commercial customers -.78 to +1.79% • Industrial customers –1.54 to +2.2% • Austin (Texas) Energy sold 250,000 MWh of green energy to its customers in 2003

  9. REC Markets August 2004Evolution Markets LLC www.evomarkets.com • COMPLIANCE RECs • NJ Class I $7.50 • NJ Class II $4.35 • VOLUNTARY • Existing Solar $40.00 • New Wind $2.50 • Existing Biomass $5.00

  10. Montgomery County WTE

  11. Montgomery County WTE • Facility came on line in 1995 with 20 year energy contract (no capacity) • 1997 Sold capacity through utility • 2001 Utility sold contract, Negotiated three year contract with Mirant, including Energy and Capacity • 2003 RECs sold to Mirant under 2001 contract • 2004 Conducted competitive procurement for energy, capacity and RECs, signed 3 year contract with Mirant

  12. How to Sell Energy, Capacity and REC’s • Suppliers are sent a form of contract and operating history 2 weeks prior to pricing date. • Suppliers submit pricing by 10:00 a.m. on the pricing date. • Suppliers offer fixed and time of use (TOU) full requirements pricing for 6, 12 and 18 month term lengths • Consultant arrives at Buyer’s offices between 12:30 – 1:00 p.m. with pricing offers, pricing comparisons, cost analysis (POLR vs. Market, % and $ increases etc.) and recommendations. • Buyer needs to be prepared to execute a contract before 2:00 p.m. on that day. All supplier contract issues will need to be resolved prior to the pricing date • While pricing is requested on the pricing date, this does not mean Buyer will have to enter into a contract on that day.  

  13. Energy, Capacity and RECs Sales

  14. Recommendations • If your State does not have an RPS get one adopted • Do not allow special interest groups to define “Renewable”, build a consensus • Make sure State/Regional/Local energy procurements do not adopt a special interest group’s definition of renewable

  15. Recommendations cont’d • Before signing any contract to sell credits, make sure that ownership of RECs and Emissions Credits are clearly defined • Buy Brown…Sell Green • Sources of RECs: landfill gas, sewage sludge digesters, composting, WTE

  16. Sources • “Gains from an integrated market for tradable renewable energy credits”, Pallab Mozumder and Achla Marathe • “On the track of green certificates”, Anna Giovinetto, Evolution Markets • “PSC Votes to Adopt Aggressive Renewable Energy Policy for NY State” NY PSC

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