1. Renewable Energy Certificates (REC) Primer for REC Transaction Management, Accounting and Reporting
Karen Utt June 7, 2019

2. Agenda Introduction What is a REC? REC Tracking Systems
REC settlement business problem
Smart Contracts—value exchange
Operations and security benefits of Smart Contracts in renewable energy
Evolution of reporting and audit response processes
Manual multi-step existing today
Q & A
Agenda
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3. What is a Renewable PPA?
A power purchase agreement relating to a renewable electric generating facility
Wind, solar, biomass, geothermal, etc.
Wholesale vs Retail
Physical delivery vs Financial settlement
Includes applicable RECs “bundled” with electricity.
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4. What is a REC?
A unique, trackable instrument representing the right to claim 1 MWh of Renewable Energy delivered to the grid.
Not controlled by any one organization or group
Can only be “used”/retired once.
A compliance instrument for state RPS (renewable portfolio standard) compliance.
State rules can differ regarding generation type and timing consistent with jurisdictional energy preferences = not all RECs are equal
A voluntary instrument for use to verify corporate renewable consumption claims.
Cannot be “used” to make a renewable compliance claim or voluntary consumption claim more than once.
Can be sold “bundled” with an electricity purchase or sold separately “unbundled” from the energy they represent--in effect making the underlying electricity no longer renewable.
Without REC retirement, the underlying energy is considered emitting--at “null” or “grid” power emission rates.
RECs are created in 1MWh size---no rounding.
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5. A REC includes several data attributes
Certificate data
Certificate type
Tracking system ID
Renewable fuel type
Renewable facility location
Nameplate capacity of project
Project name
Project vintage (build date)
Certificate (generation) vintage
Certificate unique identification number
Utility to which project is interconnected
Eligibility for certification or RPS
Emissions rate of the renewable source
*Note: this is not an exhaustive list and, depending on the market in which the REC is generated, other attributes may be associated with the certificate
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6. 3 Common Types of REC Tracking Systems
Certificate-Based Tracking
Electronic tracking systems allow RECs to be transferred among account holders similar to online banking.
Regulators also use tracking systems as a means of ensuring state RPS compliance
Preferable method for tracking wholesale renewable energy.
Third-Party Verification
Retail energy supply products generally use third party verification as retail green power customers generally do not hold accounts on tracking systems
Contract-Path Tracking
Characterized by a third-party audit supported by declarations, sworn statements, contract receipts, and other proof of generation and transfer of ownership.
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7. Threats to the status quo
The renewables industry is viewed as less advanced and is still reliant on the exchange of physical documents ( PDFs, Text, etc.) which can lead to delays, higher costs, and increased risk of fraud.
The new platforms will lead to faster, cheaper and more secure ways of completing a trade, as well as settling the transaction and improve efficiency and security.
Inaction by a standards organization to adjust to digital age transformation could result in the standards becoming obsolete. Data format, security and Communication standards are all susceptible to rapid changes in a digitalized world.
Energy groups, including WePower, Power Ledger, Acciona Energy & Iberdrola, the Brooklyn Microgrid, and The Sun Exchange are looking to launch new platforms underpinned by blockchain technology.
Potential business value from utilizing Distributed Ledger (DL) Technology -
Improve our capabilities via People, Processes, Information, and Tech
Transparency: Distributed ledgers are inherently transparent to the nodes on the network. Transactions are not only processed by the network, they are permanently recorded on a shared ledger. Public government ledgers for expenditures, legislative actions, grants, and government contracts would impose a greater level of accountability.
Greater transparency supports a stronger working relationship with partners; offers greater collaboration potential and efficiencies as partners take advantage of the shared information. “All Can See – All Can Agree”
Costs: reduce overhead & admin spend associated with middlemen and intermediaries serving as “double/triple/quadruple” checkers; “funds” tied-up in wait time processing are now freed.
Processes: reduce reconciliation & settlement time - from days to minutes; enables IoT devise to participate in transactions (enhanced automation options);
Security & Trust: via cryptography and consensus validation assures that only valid users can see / retrieve / use data and reduces risk of collusion and tampering; virtually impossible to counterfeit or change records / data / transactions.
Standards: standardization of data and transactions formats. When users join a DL network, they (and their computers) agree to a protocol – a format for transmitting data between nodes on a network. By virtue of their participation, users are bound by the data and transaction formats of the network. Not only are the parties communicating in the same “language”, they are sharing a place of record.
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8. Benefits of Distributed Ledger Technology (DLT)
Security is enhanced by having well designed work flows and integration with adjacent applications
Distributed Ledger Technology (DLT) adds redundancy over single points of failure with peer-to-peer
Creation of a superior audit history
One system of record and not two separate databases that need to be reconciled
Improved efficiency in the settlement process
Billing – Applications in the field of smart meters, decentralized energy, and micro-payments, billing transparency
Metering & Data Transfer – Data exchange between stakeholder of Smart Grid application, intelligent control systems, as well as the standardization of data transfers.
Grid Management – Services in decentralized energy installations, but also to the use of market-based non-wires alternatives.
Sales & Marketing – Packaged solutions for household devices and the electricity they consume, improvements in customer services and new products, to a change in existing sales practices.
EV Charging & Mobility – Electric mobility with the management of energy supply contracts and decentralized billing processes of public charging stations for owners of electric vehicles.
Security – Transactions such as authentication and identification of data, protection of the private sphere, and IT security.
Automation – The control and optimization of decentralized energy systems and micro-grids, and systemic integration according to SCADA.
Communication – Data exchange with partners, communication with grid operators, to a general exchange of knowledge and social networks.
Peer-to-Peer Trading – Communication for security of supply, the potential to reduce trading volumes on conventional trading platforms, and peer-to-peer marketing.
Trading Platforms – Public platforms such as balancing markets, capacity markets, and intraday trading, as well as private platforms such as demand-side management. The coordination of the existing power plant portfolio, industrial energy supply, and virtual power plants.
Decentralized Generation – As the cluster is a hybrid between processes and platforms, it contains elements such as decentralized energy management, neighborhood solutions, and renewable installations.
TBD – Evolving – increased niche and in development solutions - such as integrating and management of central & decentralized storage including mobile storage.
AND - General Business – Corporate Use case areas too: HR
Supply Chain
Finance
Renewable Energy Certificates etc.
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9. Why a NAESB Renewable Purchase Contract is needed?
1,000s of companies today are transacting renewable energy.
Lack of standardization increases transaction costs and risk.
A digitized contract eliminates the need for purchasing the contract.
A “smart” digital representation of physical Renewable Purchase Contract would serve as a foundation to bridge the wholesale – retail market ensuring authenticity, eliminating duplicity concerns .
NAESB’s Blockchain effort under R18007 serves as a foundational basis for a Renewable Purchase Standard
All Interested parties may participate, through the NAESB process, as the standards may serve as a foundational basis for other standards development efforts applicable in other markets.
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10. Creation of RECs happens here
TVA’s REC Management Process
Creation of RECs happens here
Annually
Renewable Generation
Meter
Attestation
Retirement
Monthly
Monthly
Local Power Company
End-Use Customer
Metered data is entered by the LPCs (RSO, DSS) which is QA/QC by Power Billing. Comparison to historical data to see if metered data is within range is performed 3Xs/month (as required by SOX control) intervals for all generating sites. Data is stored within a database system spreadsheet. Within the QA/QC process the data is highlighted. If it is highlighted green, the metered data is within range and is approved for billing. It is later placed on the monthly approved power summary report to issue invoices. If an issue is identified, the data will be highlighted in red, which triggers a call to the Customer Service Engineer to get direction/confirmation. Once cleared by CSE, it can be approved and placed on monthly power summary report and invoice in ESS (sites <1 MW). These RECs will have to be created before adding to the SYSTEM-REC inventory database which currently occurs periodically throughout the year. For the purposes of this example, this is done through NAR-APX. Once a generating asset is registered and appropriate certificate documentation, affidavits and attestations are uploaded, the NAR administrator will issue one Renewable Energy Certificate for each megawatt-hour (MWh) of eligible energy reported to NAR-APX. The asset owner then uses NAR to transfer certificates to another account holder or retire the certificates. The unique numbering by NAR ensures the integrity of the certificates through a transaction-based data structure designed to prevent double-counting and provide full audit trail capabilities. Additionally, NAR provides numerous publicly accessible reports that list Account Holders, the status of generators and projects, and information about both issued and retired certificates.
Fuel Accounting generates a spreadsheet for purchased power. Purchased Power Data is placed on spreadsheet. For the renewable energy sites, RES uploads this data into SYSTEM -REC inventory database indicating source qualities of the REC (bundled or not-bundled) which occurs via NAR-APX.
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11. DLT can Streamline Current Monthly & Yearly Processes
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12. Meter
Metered Data
MAJOR STEPS: Metered data will start coming-in around the 4th calendar day and should be received by the 15th calendar day of the month Net generation data is entered into spreadsheet for invoicing by the 20th calendar day of the month Occasionally, an invoice will not be reconciled until after the SYSTEM-1 approval date
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13. Creation of RECs happens here
Registry Transaction(s)
Creation of RECs happens here
MAJOR STEPS: After registration with the Registry. Renewable energy generation is substantiated through metering records, official filings with the Energy Information Administration as well as independent reporting from qualified third parties, such as the Midwest ISO. The North American Renewables Registry tracks certificates originating from NAR. Certificates from ERCOT, MIRECS, M-RETS, NC-RETS, and WREGIS can be imported into NAR. Certificates from NAR can be exported to NC RETS for use with the North Carolina Portfolio Standard. Create folder in Outlook (YYMM) and save invoice s / faxes regarding REC transactions. NOTE: Keep this folder for 2 years (NAESB standard)
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14. Validation to Retirement
MAJOR STEPS: Renewable energy generation is substantiated through metering records, official filings with the Energy Information Administration as well as independent reporting from qualified third parties. (1 MW = 1 REC) Within the web-based platform, account holders can transfer certificates to other account holders, and retire certificates that have been used for compliance by referencing the unique serial number of the certificate(s) being retired. Create folder in Outlook (YYMM) and save invoice s / faxes. NOTE: Keep this folder for 2 years (NAESB standard)
Renewable energy generation is substantiated through metering records, official filings with the Energy Information Administration as well as independent reporting from qualified third parties, such as the Midwest ISO.
Generating facilities must meet the criteria, whether its fuel source is, in fact, “renewable.”
Once registered, the facility is eligible to participate.
Renewable energy facilities must maintain their energy production data for audit by third parties.
Third parties will need to see if renewable energy production criteria is met which includes meter data; as well as, renewable facility location, nameplate capacity of project , project name, project vintage (build date), certificate (generation) vintage, certificate unique identification number. utility to which project is interconnected, eligibility for certification or RPS Emissions rate of the renewable source, certificate data, certificate type, tracking system ID, and renewable fuel type.
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15. Step 1 – Metered Data Transfer
Metered data is QA/QC’d by Transmissions Regulatory Compliance and Financial Services departments personnel
-Compare totals of current net generation meter data to the average historical values in SYSTEM-1
-If they are within range; then put the invoice in the 'Good' pile and
Highlight line green - on the SYSTEM-1 spreadsheet
Place on the approved power summary report spreadsheet
If they don't match; then put the invoice in the 'Bad' pile and
Highlight line red - Put an 'X' on the SYSTEM-1 screen print
Contact Customer Service Engineer for direction.
-Compare totals of invoices to the totals in SYSTEM-2 spreadsheet
Put a check mark on the SYSTEM-2 screen print
Circle the total amount on the invoice and add a check mark
Review the SYSTEM-2 screen print to see if you are missing any invoices (any supplier that does not have a check mark or an 'X')
Go to: XXX\ RES \ Purchases \ Contacts to find supplier
Send saying that we have not received your 'month' invoice; please send ASAP.
Put the Good pile off to the side – Generate monthly spreadsheets (2 reports generated) Data is entered into ESS database.
The information regarding the Generation Partners/Green Power Providers is located within the Electricity Sales Statistics (ESS) database. The local power provider or distributor enters this data into the ESS database contains only the data entered for Generation Partners/Green Power Provider (GP/GPP) information since they are not metered by TVA. The ESS data may be obtained from their website,
Metered data is entered by the LPCs (RSO, DSS) which is QA/QC by Power Billing. Comparison to historical data to see if metered data is within range is performed 3Xs/month (as required by SOX control) intervals for all generating sites. Data is stored within a database system spreadsheet. Within the QA/QC process the data is highlighted. If it is highlighted green, the metered data is within range and is approved for billing. It is later placed on the monthly approved power summary report to issue invoices. If an issue is identified, the data will be highlighted in red, which triggers a call to the Customer Service Engineer to get direction/confirmation. Once cleared by CSE, it can be approved and placed on monthly power summary report and invoice in ESS (sights <1 MW). PPA- spreadsheet received from Fuel Accounting.
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16. Step 2 – Creation of REC
(NAR-APX and/or NC-RETS)
Using a web-based platform to create, track, and manage renewable energy certificate (REC) origination for renewable energy production facilities, utility energy efficiency and demand-side management programs, and hydro power sold by the Southeastern Power Administration.
Facilities generating RECs must be registered. The facility must meet the criteria, whether its fuel source is, in fact, “renewable.” Once registered, the facility is eligible to participate.
The facility’s energy production data, such as a monthly meter read, is entered into web-based platform where it creates one unique certificate for each megawatt-hour (MWh) of renewable energy produced.
All certificates issued are tracked using unique serial numbers.
(For facilities that produce thermal energy, NC-RETS will create RECs based on a conversion factor of 3,412,000 Btu per 1 MWh.)
Manages transfers of RECs from NC-RETS and NAR accounts on behalf distributors within North Carolina on an aggregated basis consistent with applicable laws and regulations to the NC-RETS Compliance sub-account.
NC-RETS provides an easy-to-use, Web-based platform to create, track, and manage renewable energy certificate (REC) origination for renewable energy production facilities, utility energy efficiency and demand-side management programs, and hydro power sold by the Southeastern Power Administration to NC municipal and cooperative electric utilities. NC-RETS will be used by North Carolina utilities to demonstrate compliance with NC’s renewable energy portfolio standard.
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17. Step 3 – Validation
Web-based platform data infrastructure prevents double-counting of certificates and provides public reports and a full audit trail of all transactions, to ensure the integrity of the certificates issued and held in the system.
Generating facilities must meet the criteria, whether its fuel source is, in fact, “renewable.”
Once registered, the facility is eligible to participate.
Renewable energy facilities must maintain their energy production data for audit by third parties.
Third parties will need to see if renewable energy production criteria is met which includes meter data; as well as, renewable facility location, nameplate capacity of project , project name, project vintage (build date), certificate (generation) vintage, certificate unique identification number. utility to which project is interconnected, eligibility for certification or RPS Emissions rate of the renewable source, certificate data, certificate type, tracking system ID, and renewable fuel type.
REC 101

18. Step 4 – Retirement of REC
RECs are retired for various reasons; such as:
Compliance with renewable energy portfolio standard
Carbon rate adjustment
Aging-out or nearing Shelf-life (RECs can practically expire or lose commercial value over time)
Use of a web-based platform data infrastructure prevents double-counting of certificates and provides a public report of the certificates issued and held in the system.
Account holders can transfer certificates to other account holders, and retire certificates that have been used for compliance by referencing the unique serial number of the certificates being retired.
All certificates issued and held are tracked using unique serial numbers.
All certificates issued and held in NAR-APX/NC-RETS are tracked using unique serial numbers. Account holders can transfer certificates to other account holders, and retire certificates that have been used. Within NC, NC-RETS is used for compliance with North Carolina’s renewable energy portfolio standard. The NC-RETS data infrastructure prevents double-counting of certificates and provides public reports and a full audit trail of all transactions, to ensure the integrity of the certificates issued and held in the system.
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