Business Meeting #28

Trading renewable certificates is a new concept to some, but even to those more knowledgeable, the details of market dynamics may still be a mystery. Trading is already occurring, in voluntary retail sales and in mandatory demand (RPS) markets. If certificate trading is to expand, and the resulting benefits to wind power accrue, markets will need to be larger, more transparent and more liquid, and be supported by tracking and verification systems that work across state and regional boundaries.

There is a lot of discussion about facilitating tradable renewable certificates (TRCs).

• The NWCC Credit Trading project has identified Opportunities and Guidelines for trading.
• The NWCC is working to identify education and outreach opportunities with energy and environmental regulators to gain their support for policies facilitating wind energy and TRCs.
• Green-e has adopted a standard for certifying TRCs, and two products have been certified so far.
• The Texas RPS requires TRCs for compliance, and the state has established a tracking system, but not a trading platform, to facilitate trading.
• The NEPOOL Generation Information System has just been completed, enabling the tracking of all generation in the region, including TRCs for marketing green power products, for electricity labeling or disclosure purposes, and for tracking compliance with state RPSs and generation or emission portfolio standards.
• The Center for Resource Solutions is spearheading the development of an American Association of Issuing Bodies, modeled after the European Association of Issuing Bodies, to standardize protocols for tracking systems and to facilitate interregional and international TRC trade.

There are several things still missing, including the establishment of regional Issuing Bodies that will support cross-boundary trade, and real market experience to understand the effects of different market drivers and policies on the supply of, demand for, and price of TRCs. It is to this latter point that this proposed resolution is addressed.

European infrastructure and planning for TRCs is much more advanced than in the US. With funding from the European Union, a team of contractors from several countries undertook the European Renewable Electricity Certificate Trading Project (RECerT). Key elements included:

The European simulation exercise (called RECerT-sim) included over 140 participants from 16 countries. Participants took the parts of virtual generators (supplying certificates to the market), virtual consumers such as retail energy service providers (buying certificates from the market) and virtual traders. The simulation compressed ten years of trading activity into ten short periods using an Internet-based trading platform developed for the purpose. The demand-side parameters reflected some of the complexity emerging in the market for TRCs, with demand differentiated by size of renewables obligation (e.g., RPS), penalties for non-compliance with RPS, technology exclusions (e.g., no large hydro), banking of certificates, and different validity periods for certificates. On the supply-side participants invested in new capacity all over the EU, in a variety of technologies, based on an economic model and constrained by rate of investment and speed of build.

This experience inspired the following proposal.