Buyers of Renewable energy Certificates (RECs) are now able to filter their search by more than just vintage, volume and price; using the technology of today buyers are now able to see the REC's location and the project that generated it.
Where does my REC come from?
For over twenty years, corporations have been buying Renewable Energy Certificates (RECs) as a verifiable way to demonstrate their commitment to the use of renewable energy. At first glance all RECs may seem the same, but there can be fundamental differences between them that impact their value. These differences are known as attributes and they play a crucial role in enabling buyers to assess whether a REC offers more value to the environment, community, or grid beyond decarbonisation alone. There are several key REC attributes that buyers take into account when buying: their Vintage (the year the renewable energy was generated) and Fuel Source (the renewable technology used to produce the electricity). In recent years other attributes have also become important, such as the Project (the facility where the electricity was generated), Location (the state where the renewable energy was produced) and Commencement Date (the date the facility commenced start-up).
When the REC is bought in combination with renewable electricity it is known as a bundled REC. Customers purchasing bundled RECs will likely have all the aforementioned attributes available to them before entering into a contract with their energy supplier. However, when the customer buys the REC separate from their electricity (unbundled RECs), these attributes are not always apparent to the buyer. This means that the buyer is unable to use this important information to guide their purchase. But as customers become more informed about the impact of their energy choices, many now want clearer information about an unbundled REC’s provenance.
Buying by Project
Many renewable energy developers have implemented their own Environmental, Social and Governance (ESG) goals that go beyond the production of renewable energy. These are often in the form of a commitment to improving the health and safety of their workers, or working with the local community to ensure their project has a positive effect on biodiversity within the region. For some customers, investing in projects with these types of co-benefits has begun to form part of their REC procurement strategy. In the US, Salesforce pioneered this type of targeted investment by ensuring they support renewable projects that have the greatest positive impact for the grid, environment and community. Going beyond the matching of megawatts to a more holistic assessment by purchasing renewable energy certificates from specific developers that deliver more than just renewable energy. At this point, there’s no specific attribute or tag that can denote RECs that deliver societal benefits beyond decarbonisation, however searching out and procuring RECs from specific Projects can be a way to ensure that they are investing in renewable energy developers who’s ESG goals align with those of their own.
Buying by Program Eligibility
Some RECs come with labels from voluntary programs that provide purchasers with the assurance of quality and ownership. An example would be the CRS Green-E certification program that certifies renewable energy facilities in the US or the EKOEnergy and TÜV programs in the EU. These programs are designed to provide voluntary purchasers of RECs confidence that the RECs they have purchased come from high-quality renewable sources and have not been double sold or claimed by others. To be eligible as a CRS-listed facility under the Green-E program, a renewable energy project must be listed with a tracking system, or registry as it’s known in other markets, and come from certain renewable technologies. The facilities also need to have been built within the last 15 years. This is to ensure that consumers are investing in the development of new renewable resources. And as a program, it’s working. In 2020, almost half of the 90 million MWh of Green-E certified RECs were from projects less than 5 years old. For this reason, customers are seeking out RECs with certified ecolabels, or from newer facilities so that they know the RECs they are buying are advancing clean energy technology markets.
Buying by Location
Other customers, where possible, have begun buying RECs produced by renewable energy projects located in their state or near their facilities. The reasoning for this being they believe they are not only investing in cleaner air for their region but in the development of renewable resources on their own grids. Investing in local renewable energy assets can help to reduce the problems of grid congestion and ultimately reduce overall energy consumption costs. In the US, from 2000 to 2019, spending rose 64% to $57.4 billion in transmission & distribution system operations. This cost is mostly passed on to customers in the form of increased energy pricing. In some of the dirtiest parts of the grid, an over-demand for RECs from those locations can send valuable price signals to renewable energy developers and governments about the siting of future renewable projects.
Whilst most of these attributes are contained on every certificate issued, they are not always easily accessible. Customers can of course approach renewable energy projects directly, or their green energy provider or ask their broker. But finding out these details in an opaque market and matching RECs most suited to their needs can be difficult, time-consuming, and an administrative burden on their business.
Customize your REC trading in the TraceX Marketplace
That is why we created the TraceX platform, a first-of-its-kind, blockchain-enabled REC marketplace. The new home of REC trading enables participants to customize their REC purchases so they align with their business sustainability goals. Be it buying RECs from a certain project, location, renewable technology, or one that is eligible for a compliance or voluntary program. In the future where new attributes are added to RECs, such as grid carbon intensity information, or labels that reflect community co-benefits, TraceX is capable of capturing and sharing that information to customers transparently, so that they can be very specific and targeted about how they meet their renewable energy targets.
Customers also benefit from the platform’s real-time price discovery when they enter the market, providing trust and transparency for buyers and sellers. On sign up, customers link their existing REC registry account, allowing them to import RECs into the marketplace, list for sale and have ownership in the registry transferred in real time when a REC sale or purchase is successfully completed. All RECs listed for sale are secured in the registry so they cannot be double sold to another customer.
Our proprietary blockchain tracks each successful transfer of ownership, providing an immutable audit trail for each transaction. With built-in transaction reporting, customers gain greater insight and traceability of their REC origins.
TraceX streamlines the REC contracting process with standardized contract terms that all customers accept on sign up to the marketplace. Customers can also link their existing business bank account, meaning less time is spent on the payment and settlement process as payments are executed on-platform by our secure payment gateway provider.
TraceX is built to scale, and is capable of up to 50,000 transactions per second, which will become important as the REC market evolves to a more granular procurement model.
The world of RECs is changing, and Powerledger is committed to helping customers make informed, data-driven procurement decisions. TraceX provides transparency for customers when they need it most, so that they can procure RECs that align with their sustainability goals. For TraceX this is just the beginning of a REC revolution that will evolve RECs into a powerful renewable investment tool for customers to drive a deeper decarbonisation of the grid.
To find out more information about the TraceX platform, or to book a demonstration, you can reach a local Powerledger representative here.