Renewable Energy Markets 101

Renewable Energy Markets 101

Designed for those new to the renewable energy industry, this free webinar offers a general overview of the fundamental aspects of voluntary green power markets. Attendees will receive a detailed introduction to key market characteristics, including historical market trends and the most up-to-date data. Topics also include definitions of eligible resources, relevant regulations and policies, and a primer on best practices for renewable energy accounting and claims.

This content is back by popular demand from the annual Renewable Energy Markets (REM) conference. Learn more about REM 2018, October 9–11 in Houston at www.renewableenergymarkets.com.


Speakers
Christopher Kent, U.S. Environmental Protection Agency
Eric O’Shaughnessy, National Renewable Energy Laboratory
Noah Bucon, Center for Resource Solutions

Transcript

  1. 1.

    1

  2. 2.

    2 Nongovernmental Organization (NGO) creating policy and market solutions to

    advance sustainable energy since 1997. • Expert assistance • Renewable energy and climate policy • Renewable Energy Markets annual conference • Green-e® certification for suppliers and users of renewable energy and carbon offsets in the voluntary market About Center for Resource Solutions
  3. 3.

    3 • Solar • Wind • Geothermal • Biomass •

    Hydroelectric Renewable Resource Types Measuring capacity vs. power
  4. 4.

    4 2017 US Electricity Utility-Scale Generation by Source Total: 4.01

    billion MWh • Hydro: 7.5% • Wind: 6.3% • Biomass: 1.6% • Solar: 1.3% • Geothermal 0.4% + 24 million MWh small-scale PV www.eia.gov Fossil Fuels 63% Nuclear 20% Renewables 17%
  5. 5.

    5 Electrical Grids • Regional coordination by RTOs & ISOs

    • Wholesale vs. retail electricity markets • Electron differentiation www.nerc.com
  6. 7.

    7 RECs are needed to: • Allocate and claim use

    of renewable generation on a shared grid • Avoid double counting and double claiming • Create a national market for renewable energy
  7. 8.

    8 Null Power = “Standard” Electricity “Null power claims are

    REC-less!” • Unspecified power that results when RECs have been sold elsewhere • Has the attributes of the residual mix after specified power purchases have been removed
  8. 9.

    9 • Databases are used to track, trade, and “retire”

    RECs • Claims must be substantiated with retired RECs • Used for both voluntary and compliance markets Attribute Tracking
  9. 10.

    10 www.dsireusa.org WA: 15% x 2020* OR: 50%x 2040* (large

    utilities) CA: 50% x 2030 MT: 15% x 2015 NV: 25% x 2025* UT: 20% x 2025*† AZ: 15% x 2025* ND: 10% x 2015 NM: 20%x 2020 (IOUs) HI: 100% x 2045 CO: 30% x 2020 (IOUs) *† OK: 15% x 2015 MN:26.5% x 2025 (IOUs) 31.5% x 2020 (Xcel) MI: 10% x 2015*† WI: 10% 2015 MO:15% x 2021 IA: 105 MW IN: 10% x 2025† IL: 25% x 2026 OH: 12.5% x 2026 NC: 12.5% x 2021 (IOUs) VA: 15% x 2025† KS: 20% x 2020 ME: 40% x 2017 29 States + Washington DC + 3 territories have a Renewable Portfolio Standard (8 states and 1 territories have renewable portfolio goals) Renewable portfolio standard Renewable portfolio goal Includes non-renewable alternative resources * Extra credit for solar or customer-sited renewables † U.S. Territories TX: 5,880 MW x 2015* SD: 10% x 2015 SC: 2% 2021 NMI: 20% x 2016 PR: 20% x 2035 Guam: 25% x 2035 USVI: 30% x 2025 NH: 24.8%x 2025 VT: 75% x 2032 MA: 15% x 2020(new resources) 6.03% x 2016 (existing resources) RI: 38.5% x 2035 CT: 27% x 2020 NY:50% x 2030 PA: 18% x 2021† NJ: 20.38% RE x 2020 + 4.1% solar by 2027 DE: 25% x 2026* MD: 20% x 2022 DC: 20% x 2020 Renewable Portfolio Standards
  10. 11.

    11 Green-e Certification • Consumer protection for voluntary renewable energy

    purchases • Green-e Standard and Code of Conduct • 2016: 48 million MWh - 1.3% of US supply - 963,000 purchasers, including 53,000 businesses
  11. 12.

    12 Additional Resources • Upcoming webinars and events: https://resource-solutions.org/events/ •

    Find renewable energy products: https://www.green-e.org/certified-resources • RY2016 Green-e Verification Report: https://www.green-e.org/2016 • Learn more: https://resource-solutions.org/learn/ • “What is a REC?” Video: http://youtu.be/opJMrzNauFQ
  12. 13.

    13 Noah Bucon Senior Analyst, Policy & Certification Programs Center

    for Resource Solutions Noah.Bucon@resource-solutions.org Contact:
  13. 15.

    NREL | 15 Voluntary Green Power Markets • Voluntary green

    power refers to renewable electricity voluntarily purchased by retail electricity customers • The voluntary green power market refers to the suite of products that allow customers to procure green power: • Utility green pricing programs • Utility renewable contracts • Competitive suppliers • Unbundled RECs • Community choice aggregation • Power purchase agreements • Community solar
  14. 16.

    NREL | 16 The Big Picture In 2016, about 6.3

    million customers procured about 95 million MWh of renewable energy through green power markets. That represents about: 2.5% of U.S. retail electricity sales 28% of U.S. non-hydro renewable energy generation Total green power sales 2010-2016 (million MWh) Source: O’Shaughnessy et al. (2017)
  15. 18.

    NREL | 18 Utility Green Pricing Basic utility green pricing

    program structure Specific program structures vary
  16. 19.
  17. 23.

    NREL | 23 Power Purchase Agreements Basic PPA structure Specific

    program structures vary. See full report for a more complete description of the differences between physical and financial PPAs
  18. 25.

    NREL | 25 Green Power Sales and Customers by Product

    Source: O’Shaughnessy et al. (2017)
  19. 26.

    NREL | 26 The Geography of Green Power Products Different

    products are available in different states, largely determined by whether the state has a restructured electricity market. Utility green pricing is the primary product in fully regulated markets, while CCAs and competitive suppliers provide green power in states with restructured electricity markets. Primary green power market product by # of customers by state
  20. 27.

    NREL | 27 Reference O’Shaughnessy, E., J. Heeter, J. Cook,

    and C. Volpi. 2017. Status and Trends in the U.S. Voluntary Green Power Market (2016 Data). NREL/TP-6A20-70174. Available at: https://www.nrel.gov/docs/fy18osti/70174.pdf.
  21. 28.

    www.nrel.gov NREL is a national laboratory of the U.S. Department

    of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Eric O’Shaughnessy Market Research Analyst 303-274-4878 eric.oshaughnessy@nrel.gov
  22. 30.

    30 Green Power Partnership Overview • Summary – The U.S.

    EPA’s Green Power Partnership is a voluntary program that encourages US based organizations to use green power. • Objectives – Reduce U.S. greenhouse gas emissions – Expand the voluntary green power market – Standardize green power procurement as part of best practice environmental management • Program Activities – Provide technical assistance and tools on how to procure green power – Provide recognition platform for organizations using green power in the hope that others follow their lead • +1,700 Partners are purchasing >45.5 B kWh annually
  23. 31.

    REC value • Currency of renewable energy markets – both

    compliance and voluntary • Allow access to, allocate, and claim use of renewable generation on a shared grid • Inherent in all green power procurements; from unbundled RECs to investing in your own RE project – Green power purchases can be customized based on several criteria (i.e., resource, geography, supplier, term etc.) – You must retain the RECs associated with onsite projects in order to claim to be using renewable electricity • They are not offsets – different instruments, different applications and claims • EPA recommends buying certified and verified green power products as a best practice 31
  24. 32.

    Why are RECs important? • Instrument through which renewable energy

    and environmental claims are substantiated • Tool used for meeting 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 their scope 2 emissions • 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 • Incent new renewable energy project development – Voluntary users can qualify their preference for specific renewables – States can spur development through mandated programs (SREC programs) 32
  25. 33.

    Making Environmental Claims • Explain green power & the environmental

    benefits – Public has limited understanding of green power and its benefits – Provide simple information about the difference you will make – Ensure that you have retained the contractual rights to make claims • Make your message transparent and tangible • A simple, safe claim – I use renewable electricity from a zero emissions resource • Focus on GHG emission claims, rather than clean air benefits – Environmental regulations for SO2 and NOx complicate those claims 3 3 https://www.epa.gov/greenpower/guide-making-claims-about-your-solar-power-use
  26. 34.

    Types of Partner Claims • Purchaser claims – Powered in

    part or wholly by renewable electricity – Reducing our emissions associated with purchased electricity – Supporting renewable energy • Generator claims – Generates renewable electricity – Produces zero or low emissions electricity 34
  27. 35.

    • FTC Example: A toy manufacturer places solar panels on

    the roof of its plant to generate power, and advertises that its plant is “100% solar-powered.” The manufacturer, however, sells renewable energy certificates based on the renewable attributes of all the power it generates. Even if the manufacturer uses the electricity generated by the solar panels, it has, by selling renewable energy certificates, transferred the right to characterize that electricity as renewable. • The manufacturer’s claim is therefore deceptive. Direct or Express Claims 35
  28. 36.

    • A toy manufacturer places solar panels on the roof

    of its plant to generate power…. • It also would be deceptive for this manufacturer to advertise that it “hosts” a renewable power facility because reasonable consumers likely interpret this claim to mean that the manufacturer uses renewable energy. Implied Claims 36
  29. 37.

    • A university issues a press release about its recent

    power purchase agreement for a on-campus, 1 MW solar array • Press release highlights: – University’s goal of achieving carbon neutrality by 2030 – University’s new purchase of fixed price electricity from the on-campus solar facility. • Both claims are technically accurate. • However, reasonable consumer would interpret as the university is using solar to reduce its carbon footprint. Implied Claims, continued 37
  30. 38.

    • Review power purchase agreement (PPA) contracts, interconnection and net-metering

    agreements, state and utility incentives, and other solar contracts. • Look for “renewable energy certificates”, “renewable energy credits”, “environmental attributes”, “green tags”, or similar. • Solar Energy Industries Association’s Solar Business Code – Guiding Principles • 5.12: Renewable Energy Certificate (“REC”) ownership is a Material Term in a solar contract, regardless of ownership structure (e.g., purchase, lease, power purchase agreement). • 5.14: Many Consumers are unfamiliar with RECs and their characteristics…. The Company must take steps to educate its Consumer about RECs, including providing …: Guidelines for Renewable Energy Claims: Guidance for Consumers and Electricity Providers, Center for Resource Solutions (Feb. 26, 2015) [http://resource- solutions.org/site/wp-content/uploads/2015/07/Guidelines-for-Renewable-Energy-Claims.pdf] Determining REC Ownership 38
  31. 40.

    • Legal: Federal Trade Commission and state attorney general offices

    • Contractual & Financial: Breach of contract • Brand & Reputation: Issuance of clarifying statement • Renewable Energy Market: Double “use” claim on the same renewable electricity • GHG Accounting: Double accounting for same zero emission resource Potential Consequences of Deceptive Claims 40
  32. 41.

    Market Standards & Guidance • U.S. EPA – Green Power

    Partnership minimum purchase requirements • U.S. FTC revised Green Guides on marketing claims • WRI/WBCSD GHG accounting standards • Third-party certification/verification – Certification is a best practice for voluntary REC markets – While certification is not mandatory or necessary for REC generation, the standards used by REC certifiers set expectations for both the compliance and voluntary REC markets 41
  33. 43.

    • Scenario 1: Company A has onsite solar system and

    owns associated RECs. What claims can this company claim about their use and generation of renewable energy and associated greenhouse gas emissions? Select all that apply. – We are using solar power – Our solar panels are reducing our carbon footprint – Our solar panels are helping to reduce our energy costs and generate revenue through the sale of the RECs – Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 – Apply grid average emissions rate or grid residual mix Scenario 1 – Appropriate claims and emissions statement
  34. 44.

    • Scenario 1: Company A has onsite solar system and

    owns associated RECs. – We are using solar power – Our solar panels are reducing our carbon footprint – Our solar panels are helping to reduce our energy costs and generate revenue through the sale of the RECs – Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 – Apply grid average emissions rate or grid residual mix Scenario 1 – Appropriate claims and emissions statement
  35. 45.

    • Scenario 2: Company B has onsite solar system but

    does not own associated RECs. What claims can this company claim about their use and generation of renewable energy and associated greenhouse gas emissions? Select all that apply. – We are using solar power – We are not using solar power but our solar system is helping to green the grid – Our solar panels are helping to reduce our energy costs and generate revenue through the sale of the RECs – Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 – Apply grid average emissions rate or grid residual mix Scenario 2– Appropriate claims and emissions statement
  36. 46.

    • Scenario 2: Company has onsite solar system but does

    not own associated RECs. – We are using solar power – We are not using solar power but our solar system is helping to green the grid – Our solar panels are helping to reduce our energy costs and generate revenue through the sale of the RECs – Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 – Apply grid average emissions rate or grid residual mix Scenario 2– Appropriate claims and emissions statement
  37. 47.

    • Scenario 3: Company C has onsite solar and does

    not own associated Solar RECs, but purchases wind RECs equal to 100% of power needs. What claims can this company claim about their use and generation of renewable energy and associated greenhouse gas emissions? Select all that apply. – We are not using solar power but our solar system is helping to green the grid – Our solar panels are reducing our carbon footprint – Our solar panels are helping to reduce our energy costs and generate revenue through the sale of the RECs – Apply grid average emissions rate or grid residual mix Scenario 3– Appropriate claims and emissions statement
  38. 48.

    • Scenario 3: Company has onsite solar and does not

    own associated Solar RECs, but purchases wind RECs equal to 100% of power needs. – We are not using solar power but our solar system is helping to green the grid – Our solar panels are reducing our carbon footprint – Our solar panels are helping to reduce our energy costs and generate revenue through the sale of the RECs – Apply grid average emissions rate or grid residual mix – Apply zero emissions rate from the replacement wind RECs but not claim it to be of solar origin. Scenario 3– Appropriate claims and emissions statement
  39. 49.

    • Scenario 4: University D signs a physical PPA to

    offtake production from 10 MW of wind power (and associated RECs) with a yet-to-be developed off-site 100 MW system. Nine other institutions have similar 10 MW PPA agreements and because of this PPA, the project is now being built. What claims can this company claim about their use and generation of renewable energy and associated greenhouse gas emissions? Select all that apply. – We are using solar power – We helped develop new renewable energy supply – We are not using solar power but our solar system is helping to green the grid – Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 – Apply grid average emissions rate or grid residual mix Scenario 4 – Appropriate claims and emissions statement
  40. 50.

    • University D is getting some of its power through

    the PPA and the associated RECs. Their off-take represents 10% of the output. Their engagement helped get this project built. – We are using solar power – We helped develop new renewable energy supply – We are not using solar power but our solar system is helping to green the grid – Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 – Apply grid average emissions rate or grid residual mix Scenario 4 – Appropriate claims and emissions statement
  41. 51.

    • Scenario 5: Company E signs a 20-year physical PPA

    with a new off-site system, but per agreement the developer owns RECs for the first 5 years and company will receive replacement nationally sourced wind RECs. For years 5-20 the company will own RECs. What claims can this company claim about their use and generation of renewable energy and associated greenhouse gas emissions? Select all that apply. – We generate solar energy but do not keep the RECs. – We are using solar power /powered by solar energy – Our solar panels reduce our carbon footprint – Apply zero emissions rate from the replacement wind RECs but not claim it to be of solar origin. – Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 Scenario 5– Appropriate claims and emissions statement
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    • Scenario 5: Company E signs a 20-year physical PPA

    with a new off-site system, but per agreement the developer owns RECs for the first 5 years and company will receive replacement nationally sourced wind RECs. For years 5-20 the company will own RECs. – For Year 1 – 5: We generate solar energy but do not keep the RECs. However, we purchase 100% wind power and have zero scope 2 emissions. • Apply zero emissions rate from the replacement wind RECs but not claim it to be of solar origin. – For year 5 – 20: • We are using solar power /powered by solar energy • Our solar panels reduce our carbon footprint • Our electricity comes from solar panels • Apply the zero emissions rate conveyed by the REC to your purchased electricity consumption under Scope 2 Scenario 5– Appropriate claims and emissions statement
  43. 53.

    • If you are claiming to use solar electricity, ensure

    you either own, or have exclusive contractual rights to, the RECs associated with the solar electricity you are claiming to use. • If you don’t own the RECs associated with your onsite system, don’t make public claims about using renewable electricity. • Avoid making unqualified claims. Be specific and clearly define RECs and who owns them in any public communication. • Avoid making implied claims. • Ask for communications assistance from industry experts and key stakeholders. • Ensure individuals throughout your organizations understand importance of accurate claims and have multiple stakeholders review communications materials. Claims: Best Practices 53
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    • Visit Green Power Partnerships’ Claims web page: – https://www.epa.gov/greenpower/making-environmental-claims

    • Center for Resource Solutions (CRS) REC claims and ownership – http://resource-solutions.org/learn/rec-claims-and-ownership • National Association of Attorneys General (NAAG) Environmental Marketing Guidelines for Electricity – http://apps3.eere.energy.gov/greenpower/buying/pdfs/naag_0100.pdf • Vermont Attorney General's Office Guidance for Third-Party Solar Projects – http://ago.vermont.gov/assets/files/PressReleases/Consumer/Guidance%20on%20Solar%20Marketing.pdf • RE100 Making credible renewable energy usage claims – http://media.virbcdn.com/files/62/53dc80177b9cc962-RE100CREDIBLECLAIMS.pdf Claims: Additional Resources 54
  45. 55.

    55 Upcoming Webinars How Carbon Policy Affects Renewable Energy Markets:

    Solutions to Maximize Benefits (Eastern Region) Thursday, April 5, 2018 | 11:00 AM PT (2:00PM ET) Introduction to Green-e Energy Wednesday, April 25th, 2018 | 11:00 AM PT (2:00PM ET) https://resource-solutions.org/events/
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