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Renewable Energy Certificate Process Review and Recommendations

This document reviews current Renewable Energy Certificate processes for financial and sustainability reporting, with a focus on standardization opportunities. The task force found potential for standardization, particularly in Voluntary RECs, and recommends creating a common dataset and digitized contract to support future technologies. As part of the proposed motion, a Distributed Ledger Technology (DLT) business practice standards contract may be developed to improve and automate Voluntary REC processes. This initiative aims to streamline REC creation, accounting, and retirement for enhanced financial and sustainability reporting.

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Renewable Energy Certificate Process Review and Recommendations

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  1. Renewable Energy CertificateProcess Review and Recommendations NAESB RMQ/WEQ Executive Committee Distributed Ledger Technology Task Force

  2. Overview Task Force Responsibility Background Findings Voluntary REC Recommendations

  3. Task Force Responsibility • Retail Markets Quadrant (RMQ) 2019 Annual Plan Item 7.a • Wholesale Electric Quadrant (WEQ) 2019 Annual Plan Item 7.b.i, • Review current Renewable Energy Certificate (REC) processes for financial and/or sustainability accounting/reporting to determine if Business Practice Standards and/or protocols are needed.”

  4. Background Annual Plan Items Added to 2019 Annual Plans & Approved by NAESB Board of Directors in December 2018 Kickoff June 21st for Taskforce review of REC process and Distributed Ledger Technologies (DLT) Three additional conference calls held to educate and garner consensus around existing REC process standardization opportunities

  5. Background A Renewable Energy Certificate (REC) is a unique, trackable instrument representing the right to claim 1 MWh of renewable energy delivered to the grid. RECs exist through validation and tracking by a third-party Registrar (the utility, NAR, GATS, APX, etc.)

  6. Discovery REC transactions have increased in the recent years and are projected to continue growing Processes are not controlled by a single organization or group At least eight separate marketplaces/registries for voluntary or state RPS compliance

  7. Discovery Existing registries represent RECs with different data structures Utilities may act as their own registrar and may not use the existing markets to track the REC Taskforce focused on data sets outside of existing registries

  8. Renewable Energy Certificates

  9. Challenge Utilities can be their own registrar and greatly reduce transaction costs associated with RECs Without a standard there is no common contract, validation, attestation, and retirement processes Each contract may have a different method for tracking the REC Complicated and manual efforts to support each contract

  10. Voluntary REC Contract Framework

  11. Chairs’ Recommendations • The taskforce found there are standardization opportunities, particularly for Voluntary RECs • Proceed with joint RMQ/WEQ effort to create a NAESB REC Contract, beginning with Voluntary RECs • Develop common datasets and necessary for digitization of the contract using a common format to ensure support for future technologies

  12. Proposed Motion • Revise 2019 Annual Plan Items WEQ 7. b. ii. And RMQ 7. a • Develop a Distributed Ledger Technology (DLT) Business Practice standardscontract and/or protocols to improve and automate /replace the current Voluntary Renewable Energy Certificate (REC) creation, accounting, and retirement processes for financial and/or sustainability accounting/reporting, if needed based upon review • Set status to Started • Jointly assign to the WEQ and RMQ Business Practices Subcommittee

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