David C. Schanbacher, P.E.

TNRCC Air Program Coordinator

Renewable Energy Credit Trading Program

Roy McCoyManager, Congestion & Renewable Credits

Graphics Courtesy of

• Required by Texas Restructuring Legislation

• Goal: Develop 2000 MW new Renewable Capacity in TX by 2009

• Full Program began January 1, 2002

Renewable Energy Credit (REC) Program

New Capacity Ratchets

Year

MW Cumulative New Renewable Capacity

2003 1280

2005 1730

2007 2280

2009 2880

Cumulative Renewable Capacity

0

500

1000

1500

2000

2500

3000

3500

Year

Capa

city

TX Definition of Renewable

Renewable energy technology—Any technology that exclusively relies on an energy source that is

naturally regenerated over a short time and derived directly from the sun, indirectly from the sun, or from

moving water or other natural movements and mechanisms of the environment. Renewable energy

technologies include those that rely on energy derived directly from the sun, or wind, geothermal,

hydroelectric, wave, or tidal energy, or on biomass or biomass-based waste products, including landfill gas.

A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from

inorganic sources.

• Affects Competitive Retail Providers & Renewable Generators

• Texas-wide (includes non-ERCOT areas)

• Requires Generators to be Certified by PUC

• Requires Competitive Retailers to submit RECs annually for Compliance

REC Program Overview

• Generated from Renewable Resource: – Hydro, Solar, Wind, Geothermal, Biomass

• 1 MWh renewable energy = 1 REC

• Each REC is good for two compliance periods after the year of generation (“three year life”)

REC Attributes

• REC Program: Annual REC Compliance Requirement for Competitive Retail Providers

– Submit RECs annually in proportion to retail load served in TX

• PUC Labeling Initiative: RECs will (likely) be used for verification of advertising claims for green power

REC Uses

• PUC appointed ERCOT as REC Program Administrator in May 2000 Register Program ParticipantsCreate REC accounts Track MWh of renewable energy generatedCreate unique REC IDs for each MWhDistribute RECs to generators, quarterlyDetermine annual REC Allocation for Competitive

Providers Retire RECs submitted for complianceRetire REC’s as they expire

REC Program: ERCOT Administrator Responsibilities

•Maintain public information –Website Monthly report of MWH load in Texas List of REC account holders with contact information List of Facility ID Numbers, and associated information

• Report to the PUCT – Compliance• Verify that Competitive Retailers meet REC compliance requirements

Administrator Responsibilities Continued

• Apply to PUCT for certification as a REC generator

• Apply to ERCOT for REC account

• Generate & Sell Energy • Separate Energy from Attribute as Renewable• Two revenue streams for the same “product”• Flexible pricing—lower Energy cost and recover

difference through sale of RECs

• Receive RECs

• Sell RECs

Participant Responsibilities: Generators

• Competitive Retail ProvidersAnnual REC Compliance RequirementApply to ERCOT for REC account

• Other EntitiesNo Restrictions on Participation Apply to ERCOT for REC account

Participant Responsibilities: Competitive Retailers & Others

REC Software Design: Account Holder Functionality

• All Activities Online – Account Registration

• Secure Portal for REC Account Holders– Enable Account Activities: View, sort, batch,

or singly identify RECs to Transfer or Retire

• At outset—assume 1000 MW generation * 35% CF * 8760 = 3,066,000 unique IDs in year 1

• If trade 3 times before retirement: 9 million transactions for Year 1 RECs alone!

• All data available online for 3 years

• No limits on REC Account Applications

Software Scaling: Potential Transaction Volumes

REC Software Design: ERCOT Perspective

• ERCOT Load and Generation Data used to calculate annual REC requirements (Siebel output)

• Nonmetered and nonERCOT data: API or manually

Questions?

W HY?