page 1

Sustainable Energy IrelandSustainable Energy IrelandPerspectives from Abroad Colloquia SeriesPerspectives from Abroad Colloquia Series

27 May 2003 – Glasnevin27 May 2003 – Glasnevin

Renewable Energy Credits and Renewable Energy Credits and Certificates of OriginCertificates of Origin

Phil MoodyPhil Moody(Development Director, Campbell Carr +(Development Director, Campbell Carr +

Secretary General, RECS Association of Issuing Bodies)Secretary General, RECS Association of Issuing Bodies)

page 2

0

2

4

6

8

10

12

14

16

18

20

22

24

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lA

ug

Sep Oct

No

vD

ecJa

nF

ebM

arA

pr

May

Jun

Jul

Au

gS

ep Oct

No

vD

ec

2001 2002 2003

Millions

Month

Cer

tifi

cate

s is

sued

(ea

ch c

ou

ntr

y)

0

1

2

3

4

5

6

7

8

9

Millions Total

ATBE & LU

CHDE

DK-EDK-W

ESFI

FRIT

NLNO

POPT

SESL

UK & IE

RECS Certificates Issued - by countryRECS Certificates Issued - by country

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 3

Renewable Energy Credits Renewable Energy Credits and Certificates of Originand Certificates of Origin

Support schemesSupport schemes Tradable certificatesTradable certificates Guarantees of origin & disclosureGuarantees of origin & disclosure RECSRECS

page 4

The fundamental challenge: how to The fundamental challenge: how to trace the source of the energytrace the source of the energy

PoolPool

How to identify the source(s) of energy?How to identify the source(s) of energy? How to prove this blend to end-How to prove this blend to end-

consumers and government?consumers and government?

page 5

Support schemesSupport schemes

page 6

Types of support schemeTypes of support scheme InvestmentInvestment

Good for emerging technologiesGood for emerging technologies ……but not so good at driving down pricebut not so good at driving down price

Feed-inFeed-in Proved to be effectiveProved to be effective ……but transparency and international trade can be an issuebut transparency and international trade can be an issue

AuctionAuction Good at getting low pricesGood at getting low prices ……but planning permission can be a problembut planning permission can be a problem

Tradable certificatesTradable certificates Maintains price competition throughout project lifeMaintains price competition throughout project life ……but issues with international harmonisationbut issues with international harmonisation ……and infrastructure more sophisticatedand infrastructure more sophisticated

Su

pp

ort

sch

emes

Su

pp

ort

sch

emes

page 7

What support schemes, where?What support schemes, where?(1) P(1) Predominantly Feed-inredominantly Feed-in

GermanyGermany+ PV roofs scheme+ PV roofs scheme+ Various regional support schemes+ Various regional support schemes

SpainSpain+ Direct grants, infrastructure finance, investment tax + Direct grants, infrastructure finance, investment tax

relief, R&D grantsrelief, R&D grants FranceFrance

+ Subsidies, low-interest loans, tax deductions, feasibility + Subsidies, low-interest loans, tax deductions, feasibility supportsupport

PortugalPortugal DenmarkDenmark

+ Subsidy – moving to tradable renewable certificates?+ Subsidy – moving to tradable renewable certificates?

Su

pp

ort

sch

emes

Su

pp

ort

sch

emes

page 8

What support schemes, where?What support schemes, where?(2) V(2) Variousarious

FinlandFinland+ Investment aid+ Investment aid+ Tax rebate, tax reduction+ Tax rebate, tax reduction

NorwayNorway+ Tax exemption, investment support+ Tax exemption, investment support+ Support for running costs+ Support for running costs

IrelandIreland+ Competitive long term power purchase agreements+ Competitive long term power purchase agreements

Northern IrelandNorthern Ireland+ Competitive long term power purchase agreements+ Competitive long term power purchase agreements+ possible move to RO?+ possible move to RO?

Su

pp

ort

sch

emes

Su

pp

ort

sch

emes

page 9

What support schemes, where?What support schemes, where?(3) T(3) Tradable Renewable Certificatesradable Renewable Certificates

AustriaAustria (for small hydro, until relatively recently) (for small hydro, until relatively recently) BelgiumBelgium: + investment aid, fixed buy-back tariffs : + investment aid, fixed buy-back tariffs

and extra tariff schemesand extra tariff schemes ItalyItaly: +direct support, investment support, feed-in: +direct support, investment support, feed-in NetherlandsNetherlands: +tax rebates, tax reductions, : +tax rebates, tax reductions,

reduced interest, subsidiesreduced interest, subsidies SwedenSweden UKUK: CCL and RO + investment support: CCL and RO + investment support

Su

pp

ort

sch

emes

Su

pp

ort

sch

emes

page 10

Differences between Differences between RECS and ROCsRECS and ROCs

ROCs – UK specificROCs – UK specific RECS – internationally genericRECS – internationally generic

Compliance instrumentCompliance instrument Means of conveying renewable Means of conveying renewable benefitbenefit

Transferable within UK onlyTransferable within UK only Transferable internationallyTransferable internationally

Only redeemable in the UKOnly redeemable in the UK Can be redeemed anywhereCan be redeemed anywhere

Can be revoked after issueCan be revoked after issue Once issued, cannot be revokedOnce issued, cannot be revoked

Have limited lifeHave limited life Immortal (currently)Immortal (currently)

Limited to certain renewablesLimited to certain renewables Address all types of renewableAddress all types of renewable

Process driven by statuteProcess driven by statute Process agreed between participantsProcess agreed between participants

Dependant on UK Dependant on UK government supportgovernment support

Dependant on demandDependant on demand

Su

pp

ort

sch

emes

Su

pp

ort

sch

emes

page 11

Tradable Renewable CertificatesTradable Renewable Certificates

Represent the benefit of renewable over non-Represent the benefit of renewable over non-renewable energy:renewable energy: EnvironmentalEnvironmental Security of supplySecurity of supply Rural redevelopment …Rural redevelopment …

Allow this to be traded separate to the energyAllow this to be traded separate to the energy

Also known as RECS, RPS etcAlso known as RECS, RPS etc Note there are also certificate schemes for: Note there are also certificate schemes for:

EmissionsEmissions (SOx, NOx, CO2 … )(SOx, NOx, CO2 … ) WasteWaste (Packaging, landfill, tyres … )(Packaging, landfill, tyres … )

Su

pp

ort

sch

emes

Su

pp

ort

sch

emes

page 12

Principles of Principles of certificate schemescertificate schemes

page 13

Certificate system

Certificate SystemCertificate System

Supply Demand

IB: Issuing Transfer Redemption

electricity market

certificate market

Pri

nci

ple

sP

rin

cip

les

page 14

Certificate SystemCertificate System

Central monitoring office

Issuing / Registration / Redeeming

Verification / auditing

Issuing Body

Supply

no. xxx no. xxx

Demand

Pri

nci

ple

sP

rin

cip

les

page 15

No Harmonisation: No Harmonisation: Incompatible SystemsIncompatible Systems

nr. xxx nr. xxxSupply Demand

Central monitoring office

Redeeming

verification / auditing

Issuing Body

DKnr. xxx nr. xxx

Supply Demand

Central monitoring office

Redeeming

verification / auditing

Issuing Body

NL

nr. xxx nr. xxxSupply Demand

Central monitoring office

Redeeming

verification / auditing

Issuing BodyN

xx

x

Pri

nci

ple

sP

rin

cip

les

page 16

Compatible SystemsCompatible Systems

nr. xxx nr. xxxSupply Demand

Central monitoring office

Redeeming

verification / auditing

Issuing Body

DKnr. xxx nr. xxx

Supply Demand

Central monitoring office

Redeeming

verification / auditing

Issuing Body

NL

nr. xxx nr. xxxSupply Demand

Central monitoring office

Redeeming

verification / auditing

Issuing BodyN

Association ofIssuing Bodies

Basic Commitments(harmonisation / standardisation)

Verification / Auditing

Pri

nci

ple

sP

rin

cip

les

page 17

How can this enable How can this enable the various the various

Support Schemes?Support Schemes?

page 18

NL: Ecotax exemption

After redeeming certificates

““Voluntary" Green Tariff (NL)Voluntary" Green Tariff (NL)

Supply Demand

IB: Issuing Transfer Redemption

electricity market

certificate market

Ap

plic

atio

n t

o S

up

po

rtA

pp

licat

ion

to

Su

pp

ort

page 19

GovernmentRedemption account

Mandatory systemsMandatory systems

Supply

electricity market

IB: Issuing Transfer Redemption

Demand

Obligation:• Suppliers (UK)• Producers (Italy)• End users (DK)

certificate market

Ap

plic

atio

n t

o S

up

po

rtA

pp

licat

ion

to

Su

pp

ort

page 20

Only Wind

Certificates

Green labellingGreen labelling

Supply

certificate market

electricity market

IB: Issuing Transfer Redemption

Demand

Supplier with green label

e.g. Only Wind

Ap

plic

atio

n t

o S

up

po

rtA

pp

licat

ion

to

Su

pp

ort

page 21

Redemption account

Grid company

Feed-in systemsFeed-in systems

electricity market

Supply

IB: Issuing Transfer Redemption

Demand

Grid company

Germany

Feed in Tariff

certificate market

Ap

plic

atio

n t

o S

up

po

rtA

pp

licat

ion

to

Su

pp

ort

page 22

NL: RECS certificates accepted by

tax authorities in future

Import / exportImport / export

Supply

certificate market

electricity market

IB: Issuing Transfer Redemption

Demand

RECS system orGovernmental agreement

Transfer of certificate

Ap

plic

atio

n t

o S

up

po

rtA

pp

licat

ion

to

Su

pp

ort

page 23

SummarySummary Certificates can enable:Certificates can enable:

Voluntary green tariffsVoluntary green tariffs Mandatory systemsMandatory systems Green labelingGreen labeling Feed-in lawsFeed-in laws International tradeInternational trade

Also:Also:

Certificates of Origin (art. 5 RES Directive)Certificates of Origin (art. 5 RES Directive)

Ap

plic

atio

n t

o S

up

po

rtA

pp

licat

ion

to

Su

pp

ort

page 24

Guarantees of Origin & DisclosureGuarantees of Origin & Disclosure

RequirementRequirement IssuesIssues National plans / statusNational plans / status DisclosureDisclosure

page 25

RequirementsRequirements

Background:Background: Article 5 of the RES-DirectiveArticle 5 of the RES-Directive

Timetable:Timetable: By 27 October 2003, all Member States must By 27 October 2003, all Member States must

ensure the origin for electricity from renewable ensure the origin for electricity from renewable sources can be guaranteedsources can be guaranteed

Who can claim a GoO?Who can claim a GoO? Consumers of electricity from renewable Consumers of electricity from renewable

sources in all EU countriessources in all EU countriesGu

aran

tees

of

Ori

gin

Gu

aran

tees

of

Ori

gin

page 26

Obligations on Member StatesObligations on Member States

To designate competent supervisory bodies To designate competent supervisory bodies independent of generation and distribution independent of generation and distribution activitiesactivities

To implement a mechanism to ensure an To implement a mechanism to ensure an accurate and reliable GoO systemaccurate and reliable GoO system

Gu

aran

tees

of

Ori

gin

Gu

aran

tees

of

Ori

gin

page 27

Characteristics of national Characteristics of national mechanismsmechanisms

National GoO systems must:National GoO systems must: be transparent, objective and non-discriminatorybe transparent, objective and non-discriminatory enable mutual recognitionenable mutual recognition

GoO must specify:GoO must specify: energy sourceenergy source dates and places of productiondates and places of production capacity (hydroelectric installations)capacity (hydroelectric installations)

Refusal must be justified, and can be overruled Refusal must be justified, and can be overruled by the Commissionby the CommissionGu

aran

tees

of

Ori

gin

Gu

aran

tees

of

Ori

gin

page 28

EU MonitoringEU Monitoring

National mechanisms must be outlined to the National mechanisms must be outlined to the Commission by 27 October 2003Commission by 27 October 2003

The Commission will publish its conclusions by The Commission will publish its conclusions by 27 October 200427 October 2004

Every two years, the Commission will report on Every two years, the Commission will report on follow-up information from Member Statesfollow-up information from Member States

If necessary, the Commission can propose If necessary, the Commission can propose common rulescommon rules

Gu

aran

tees

of

Ori

gin

Gu

aran

tees

of

Ori

gin

page 29

IssuesIssues Size: standard?Size: standard? Content? (apart from source, date, place & capacity)Content? (apart from source, date, place & capacity) Frequency of issue?Frequency of issue? Information from generator to qualify / receive GoO?Information from generator to qualify / receive GoO? Paper or internet?Paper or internet? Linkage with tradable certificate schemes?Linkage with tradable certificate schemes? International transfer of GoO:International transfer of GoO:

Infrastructure? How managed? Infrastructure? How managed? Recognise / reject GoO from other member states?Recognise / reject GoO from other member states?

Prevention of double salePrevention of double sale?? Treatment of mixed fuel sources / mixed CVs?Treatment of mixed fuel sources / mixed CVs? Sanctions for non-compliance? Sanctions for non-compliance? Revocation possible?Revocation possible? Must CoO always be joined to associated electricity?Must CoO always be joined to associated electricity? How does a certificate “end its life”?How does a certificate “end its life”?

Gu

aran

tees

of

Ori

gin

Gu

aran

tees

of

Ori

gin

page 30

National plansNational plans ATAT To link RECS and GoOTo link RECS and GoO BEBE For Flanders, RECS basis of GoOFor Flanders, RECS basis of GoO CHCH Not yet clear – may use RECSNot yet clear – may use RECS DEDE No public draft for GoO, but probably default to RECS No public draft for GoO, but probably default to RECS DKDK Likely to use RECSLikely to use RECS ESES Deciding who will be IB and what standardsDeciding who will be IB and what standards FIFI Preparing proposals - likely link to RECSPreparing proposals - likely link to RECS FRFR Government so far non-committalGovernment so far non-committal ITIT Drafting legislationDrafting legislation NLNL Law before Parliament – favours RECS systemLaw before Parliament – favours RECS system NONO Preparing proposals – possible link with SwedenPreparing proposals – possible link with Sweden PTPT TSO proposing to use of RECS. TSO proposing to use of RECS. SESE Has promoted a bill. Will coordinate with RECS Has promoted a bill. Will coordinate with RECS SLSL Committed to joining EC, and will propose RECSCommitted to joining EC, and will propose RECS UKUK DTI consultingDTI consulting ECEC “RECS complies with the requirements for “RECS complies with the requirements for

GoO”GoO”

Gu

aran

tees

of

Ori

gin

Gu

aran

tees

of

Ori

gin

page 31

DisclosureDisclosure

Europe has yet to rule definitivelyEurope has yet to rule definitively To end-consumerTo end-consumer Based on annual supplyBased on annual supply Energy sourceEnergy source Based on contracts, certificates or statisticsBased on contracts, certificates or statistics

page 32

Disclosure – the issuesDisclosure – the issues Actions required

Legal & infrastructural, at European and Member State level Policy makers, NGOs, suppliers, auditors & consumers

Verification of information on a label Credibility: label information must be transparent, trustworthy,

simple, accurate, efficient and watertight Harmonisation across Europe

Different types possible (information, label design, monitoring…) Interaction with existing policies & directives

Synergies with other policies & schemes to foster use of renewable energy and inform choice

Supporting policies Need for other policies, to raise market relevance

Raising consumer awareness Consumer awareness is key Need for education, information campaigns, etc

Dis

clo

sure

Dis

clo

sure

page 33

Disclosure can be enabled by certificatesDisclosure can be enabled by certificates

Clear and simple evidence of energy sourceClear and simple evidence of energy source Easily verifiedEasily verified Fit with current practicesFit with current practices European standards exist (or are forming)European standards exist (or are forming) Possible to phase introductionPossible to phase introduction

Support by statistical approach?Support by statistical approach?Dis

clo

sure

Dis

clo

sure

page 34

Double dippingDouble dipping

Support schemes are all about Government helping Support schemes are all about Government helping Renewables to be Renewables to be viableviable

Guarantees of Origin are all about Guarantees of Origin are all about consumer choiceconsumer choice It is therefore not “double-dipping” if a generator sells It is therefore not “double-dipping” if a generator sells

supported energy as renewablesupported energy as renewable (Government can always adjust the amount of support)(Government can always adjust the amount of support)

page 35

Characteristics of Characteristics of Tradable Renewable Certificate SchemesTradable Renewable Certificate Schemes

page 36

Characteristics of Characteristics of Tradable Renewable Certificate schemesTradable Renewable Certificate schemes

Mandatory / voluntaryMandatory / voluntary Coupled with obligation or fiscal incentiveCoupled with obligation or fiscal incentive Obligation on generator, importer, supplier, Obligation on generator, importer, supplier,

business consumer or domestic consumerbusiness consumer or domestic consumer Lifetime: limited or immortalLifetime: limited or immortal Banking and borrowing: permitted? Limits?Banking and borrowing: permitted? Limits? Pricing: collar & cap values, tax exemptionPricing: collar & cap values, tax exemption Size (MWh)Size (MWh) Capacity restrictionsCapacity restrictions Fuel restrictions (e.g. co-firing rules)Fuel restrictions (e.g. co-firing rules) ExclusionsExclusions

Ch

arac

teri

stic

sC

har

acte

rist

ics

page 37

Additional conditions for eligibilityAdditional conditions for eligibility GeneralGeneral

New or recent capacityNew or recent capacity Certificates must include all environmental value attributable to Certificates must include all environmental value attributable to

the generated electricity (inc. COthe generated electricity (inc. CO22, SO, SO22, and NO, and NOxx))

GovernmentalGovernmental Transfer registered with RECS or governmentTransfer registered with RECS or government Past and present government support declared by per MWh and Past and present government support declared by per MWh and

investmentinvestment ‘‘No objection’ by government No objection’ by government Positive Environmental (Impact) Assessment ReportPositive Environmental (Impact) Assessment Report Physical import of associated powerPhysical import of associated power ReciprocityReciprocity

TechnicalTechnical Description of production device, meters, technology & capacityDescription of production device, meters, technology & capacity Statement of grid operator that RES-E fed into local gridStatement of grid operator that RES-E fed into local grid Calculation of line losses from source to destinationCalculation of line losses from source to destination

Ch

arac

teri

stic

sC

har

acte

rist

ics

page 38

Certificate systems: the challengesCertificate systems: the challenges

The MechanismThe Mechanism International AspectsInternational Aspects

page 39

Certificate systemsCertificate systems- challenges: the mechanism- challenges: the mechanism

What types of renewable are “green”?What types of renewable are “green”? How to measure generation?How to measure generation? What to do with the carbon?What to do with the carbon?

C

ertif

icat

e sc

hem

es -

Issu

esC

ertif

icat

e sc

hem

es -

Issu

es

page 40

Types of “green”Types of “green”

Wind Wind turbine (onshore / offshore) Photovoltaic Solar Thermal Hydro power Tidal energy (onshore / offshore)

Water

Wave energy (onshore / offshore) Geothermal

Energy crops Forestry and agricultural by-products and waste Biogas (landfill / sewage / other)

(municipal solid waste /

Biomass

Energy from waste industrial by-products and

commercial waste)

C

ertif

icat

e sc

hem

es -

Issu

esC

ertif

icat

e sc

hem

es -

Issu

es

page 41

Generation measurementGeneration measurement

Grossproduction

Transformersubstation

Auxiliaries Onsitedemand

System

Transformerlosses

Linelosses

NettProduction

= -

1

2

1 2C

ertif

icat

e sc

hem

es -

Issu

esC

ertif

icat

e sc

hem

es -

Issu

es

RESGenerator

page 42

Carbon connectionsCarbon connections

NL wanted RECS certificates to include CO2NL wanted RECS certificates to include CO2 IT wanted two separate marketsIT wanted two separate markets Compromise:Compromise:

sellers of RECS certificates may not sell components sellers of RECS certificates may not sell components of the RE benefit separately  of the RE benefit separately 

Debate is now whether the buyer:Debate is now whether the buyer: Cannot sell component benefits separately; orCannot sell component benefits separately; or Can sell them, but the residue must be excluded from Can sell them, but the residue must be excluded from

RECS; orRECS; or Ignore emissions products altogether…?Ignore emissions products altogether…?

C

ertif

icat

e sc

hem

es -

Issu

esC

ertif

icat

e sc

hem

es -

Issu

es

page 43

Certificate systemsCertificate systems- - challenges: challenges: International aspectsInternational aspects

Compatibility of visionCompatibility of vision Same objectives (e.g. pro-European, pro-renewables)Same objectives (e.g. pro-European, pro-renewables)

Fungibility and reciprocityFungibility and reciprocity Can you use UK ROCs in the Swedish market?Can you use UK ROCs in the Swedish market? ““If you get access to our market, can we have access If you get access to our market, can we have access

to yours?”to yours?” Process and technologyProcess and technology

Same definitions, same interfaces, same protocolsSame definitions, same interfaces, same protocols SubsidiaritySubsidiarity

Vive la difference ….. but how much?Vive la difference ….. but how much?C

ertif

icat

e sc

hem

es -

Issu

esC

ertif

icat

e sc

hem

es -

Issu

es

page 44

RECSRECS

HistoryHistory Test phaseTest phase Present activitiesPresent activities

page 45

History of RECS – activitiesHistory of RECS – activities

Dutch green label systemDutch green label system1997/81997/8

Foundation of RECSFoundation of RECSMar 1999Mar 1999

International trade commences / AIB foundedInternational trade commences / AIB foundedMay 2002May 2002

End of test phase / RECS International foundedEnd of test phase / RECS International foundedDec 2002Dec 2002

Registry interfaces agreedRegistry interfaces agreedFeb 2002Feb 2002

First certificates issued (Finland), national trade First certificates issued (Finland), national trade commencescommences

July 2001July 2001

Basic Commitment agreedBasic Commitment agreed

-- Drafting of domain protocols startsDrafting of domain protocols starts

Apr 2001Apr 2001

Preparation commencesPreparation commences

–– resolution of many detailed issuesresolution of many detailed issues

Mar 2000Mar 2000

Test phase conceived to prove the conceptTest phase conceived to prove the conceptMay 1999May 1999

Dutch green label systemDutch green label system1997/ 1998

Foundation of RECSFoundation of RECSMar 1999Mar 1999

International trade commences / AIB foundedInternational trade commences / AIB foundedMay 2002May 2002

End of test phase / RECS International foundedEnd of test phase / RECS International foundedDec 2002Dec 2002

Registry interfaces agreedRegistry interfaces agreedFeb 2002Feb 2002

First certificates issued (Finland), national trade First certificates issued (Finland), national trade commencescommences

July 2001July 2001

Basic Commitment agreedBasic Commitment agreed

-- Drafting of domain protocols startsDrafting of domain protocols starts

Apr 2001Apr 2001

Preparation commencesPreparation commences

–– resolution of many detailed issuesresolution of many detailed issues

Mar 2000Mar 2000

Test phase conceived to prove the conceptTest phase conceived to prove the conceptMay 1999May 1999

R

EC

S -

His

tory

RE

CS

- H

isto

ry

page 46

Achievements of the Test Achievements of the Test PhasePhase

A well-functioning A well-functioning organisationorganisation A set of practical A set of practical agreementsagreements Robust and operational Robust and operational systemssystems & &

processesprocesses A working A working marketmarket

R

EC

S –

Tes

t Pha

seR

EC

S –

Tes

t Pha

se

page 47

A well–functioningA well–functioning OrganisationOrganisation

NationalNational Domain teams Domain teams Agreements with service providersAgreements with service providers

InternationalInternational RECS International (market participants)RECS International (market participants) Association of Issuing Bodies (market mechanisms)Association of Issuing Bodies (market mechanisms)

Relations with other organisationsRelations with other organisations Traders …………..…… EFETTraders …………..…… EFET Regulators …….….…. CEERRegulators …….….…. CEER System operators …. ETSOSystem operators …. ETSO

R

EC

S –

Org

anis

atio

nR

EC

S –

Org

anis

atio

n

page 48

Current members

Accession - 2004

Accession - 2007

EC likely members

Other

RECS member countriesRECS member countriesR

EC

S –

Org

anis

atio

nR

EC

S –

Org

anis

atio

n

page 49

Structure of RECSStructure of RECS

General meeting

Board

Working groups

Task Forces

General meeting

Issuing Bodies

Board

Working groups

Agents

AIB RECS International

Secretariat Secretariat

R

EC

S –

Org

anis

atio

nR

EC

S –

Org

anis

atio

n Market players

National teams

page 50

AIB membersAIB members

Standards body

Consultancies

Green labeller

Regulators

Transmission system operators

Specialists

Not appointed

R

EC

S –

Org

anis

atio

nR

EC

S –

Org

anis

atio

n

page 51

A set of practicalA set of practicalAgreementsAgreements

Concept: the Basic CommitmentConcept: the Basic Commitment Practice:Practice:

Framework ProtocolFramework Protocol Domain ProtocolsDomain Protocols Registry interface specificationRegistry interface specification Audit rulesAudit rules Best practice / guidance notesBest practice / guidance notes

Governance:Governance: Articles of AssociationArticles of Association Internal regulationsInternal regulations

RE

CS

– A

gree

men

tsR

EC

S –

Agr

eem

ents

page 52

Robust and operationalRobust and operationalSystems and processesSystems and processes

National National Standard certificate registriesStandard certificate registries Specific features per countrySpecific features per country

– E.g. Meter data collection and preparationE.g. Meter data collection and preparation– E.g. Production registration & auditE.g. Production registration & audit

Inter-registry transfer of certificatesInter-registry transfer of certificates Shared & managed common dataShared & managed common data Linkages to market platforms (Linkages to market platforms (futurefuture))

– E.g. ExchangesE.g. Exchanges

R

EC

S –

Sys

tem

sR

EC

S –

Sys

tem

s

page 53

• ExistingExisting- Nordic- EtransEtrans- TenneTTenneT - E-CerteE-Certe

• About to go liveAbout to go live- LogActivLogActiv

• Not decidedNot decided

Participating registriesParticipating registries

AIB

R

EC

S –

Sys

tem

sR

EC

S –

Sys

tem

s

page 54

CMO InterfaceCMO Interface

Agreement onAgreement on Certificate dataCertificate data (contents and standards)(contents and standards) MessagesMessages (format & process)(format & process) QualityQuality (security, reliability, timeliness (security, reliability, timeliness

etc)etc) Change managementChange management

Areas for resolutionAreas for resolution Recording of individual support schemesRecording of individual support schemes Treatment of other energy sources (e.g. heat)Treatment of other energy sources (e.g. heat) Sharing of common informationSharing of common information Recording or management of cross-border transfersRecording or management of cross-border transfers

R

EC

S –

Sys

tem

sR

EC

S –

Sys

tem

s

page 55

RECS live: activityRECS live: activity

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 56

ParticipantsParticipants

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

0123456789

1011121314151617181920

Ja

nF

eb

Ma

rA

pr

Ma

Ju

nJ

ul

Au

Se

pO

ct

No

vD

ec

Ja

nF

eb

Ma

rA

pr

Ma

Ju

nJ

ul

Au

Se

pO

ct

No

vD

ec

2001 2002 2003Date

Nu

mb

er

of

co

un

trie

s

PTPOSLLUBEFRNLESDKITCHIEUKNOATSEFIDE

page 57

By country…By country…22,526,842 certificates issued 36% redeemed

Total Export

Austria 1,670,681 3,430 3,444 125,701

Belgium and Luxembourg

Switzerland 408,914 100 35,635

Germany 687,087 513,728

Denmark (West) 223,647 41

Denmark (East)

Spain 304,256

Finland 7,652,654 255,664 2,774,564

France 94,443 4,551 31,251

Italy 313,986 163,467 6,953

Netherlands 203,052 7,000

Norway 6,564,304 279,108 100 3,053,969

Poland

Portugal

Sweden 4,313,660 2,124,796

SloveniaUK / IE - UK & Ireland 90,158

All countries 22,526,842 1,215,397 8,195 8,159,910

Total

Issued Transferred Redeemed

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 58

……and by technologyand by technology

Total Export

Onshore wind 286,094 23,956 2,523 78,518

Offshore wind 3,268 70 186

Photovoltaic

Thermal

Hydropower 11,881,131 809,022 5,672 3,660,128

Onshore tidal

Offshore tidal

Onshore wave

Offshore wave

Geothermal 166,024 159,071 6,953

Energy crops 84,390 30,091

Forestry etc 9,633,176 219,298 4,275,775

Landfill gas 19,353 9,081Sewage gas 24,831 24,831

Other biogas

MSW 337,520 10,079IB&CW 91,055 3,980 64,268

Total 22,526,842 1,215,397 8,195 8,159,910

Issue Transfer Redeem

Trading report for all countries

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 59

0

2

4

6

8

10

12

14

16

18

20

22

24

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lA

ug

Sep Oct

No

vD

ecJa

nF

ebM

arA

pr

May

Jun

Jul

Au

gS

ep Oct

No

vD

ec

2001 2002 2003

Millions

Month

Cer

tifi

cate

s is

sued

(ea

ch c

ou

ntr

y)

0

1

2

3

4

5

6

7

8

9

Millions Total

ATBE & LU

CHDE

DK-EDK-W

ESFI

FRIT

NLNO

POPT

SESL

UK & IE

Issue - by countryIssue - by country

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 60

Issue - by countryIssue - by country

RECS certificates issued - per country

Sweden19%

Austria7%

Spain1%

Norway29%

Finland34%

Netherlands1%

France, 0.42%Italy1%

Denmark (West)1%

Switzerland2%

Germany3%

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 61

0

5

10

15

20

25

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lA

ug

Sep Oct

No

vD

ecJa

nF

ebM

arA

pr

May

Jun

Jul

Au

gS

ep Oct

No

vD

ec

2001 2002 2003

Millions

Month

Cer

tifi

cate

s is

sued

(ea

ch t

ech

no

log

y)

0

2

4

6

8

10

12

14

Millions

Total

Onshore wind

Offshore wind

Photovoltaic

Thermal

Hydro

Onshore tidal

Offshore tidal

Onshore wave

Offshore wave

Ind.& comm.waste

Geothermal

Energy crops

Forestry etc

Landfill gas

Sewage gas

Other biogas

Mun.solid waste

Issue - by technologyIssue - by technology

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 62

Issue - by technologyIssue - by technology

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

Hydro53%

Forestry etc43%

Geothermal1%

Onshore wind1%

Mun.solid waste1%

page 63

The Nordic Work-aroundThe Nordic Work-around(due to lack of inter-registry link)(due to lack of inter-registry link)

RedeemedCertificates

Guarantee Of redemption

page 64

Proportion redeemedProportion redeemed

Monthly redemption / issue

0

5

10

15

20

25

J F M A M J J A S O N D J F M A M

Mil

lio

ns

0%

5%

10%

15%

20%

25%

30%

35%

40%

Issue

Redemption

Proportion

page 65

Redemption ratesRedemption rates

Netherlands, 3%Italy, 2%

France, 33%

Norway, 47%

Sweden, 49%

UK & Ireland, 0%

Finland, 36%

Denmark (West), 0%

Spain, 0%

Austria, 8% Switzerland, 9%

Germany, 0%

R

EC

S –

Mar

ket A

ctiv

ityR

EC

S –

Mar

ket A

ctiv

ity

page 66

General costsGeneral costs

Test phase European Commission (€450,000 for test phase) Members (€20,000 a country + €2,000 an organisation)

Now RECS International

– member fee (€1,000 - €5,000 per organisation) AIB

– Operational costs of IBs (tariffs differ) Audit – normally passed through at cost Software – depends on supplier Administration - varies

– Contribution to AIB per domain €5,000 for a small IB; or €20,000 for a large IB + €0.01 per certificate issued

R

EC

S –

Cos

tsR

EC

S –

Cos

ts

page 67

Costs - per Issuing BodyCosts - per Issuing Body

IB fees during test phase either:IB fees during test phase either: Free (!)Free (!) Single entrance feeSingle entrance fee Registration plus activity feesRegistration plus activity fees Detail differs widely (factor of 10+)Detail differs widely (factor of 10+)

Cost of production registration & audit at costCost of production registration & audit at cost Post test phase - still being negotiatedPost test phase - still being negotiated Possible future costing for an average certificate Possible future costing for an average certificate

= €0.15 – 0.30 (will be less as market grows)= €0.15 – 0.30 (will be less as market grows) Current exercise to improve transparency of costsCurrent exercise to improve transparency of costs

R

EC

S –

Cos

tsR

EC

S –

Cos

ts

page 68

Cost comparisonCost comparison

ExchangeExchange 0.5 – 2%0.5 – 2% per tradeper trade BrokerBroker 2 – 7%2 – 7% per tradeper trade Issuing BodyIssuing Body 4 - 10%4 - 10% total, all transferstotal, all transfers

Due to far RECS’ lower volumes….Due to far RECS’ lower volumes…. …….RECS needing more info…..RECS needing more info…. …….RECS includes .RECS includes all all transfers, issue & redemptiontransfers, issue & redemption

page 69

Other markets – some examplesOther markets – some examples

NEPOOL (New England)NEPOOL (New England) Software = 1 cent per certificate per yearSoftware = 1 cent per certificate per year

Ofgem (UK)Ofgem (UK) Free (or rather, paid for by UK Government)Free (or rather, paid for by UK Government)

TenneT GCB (Dutch)TenneT GCB (Dutch) 15 cents issue15 cents issue 2 cents transfer2 cents transfer 15 cents redeem15 cents redeem

R

EC

S –

Cos

tsR

EC

S –

Cos

ts

page 70

Current activitiesCurrent activities

More technologies - e.g. heatMore technologies - e.g. heat Guarantees of originGuarantees of origin Refinement of the Basic CommitmentRefinement of the Basic Commitment Better registry interfaces & data sharingBetter registry interfaces & data sharing Audit & complianceAudit & compliance

R

EC

S –

Cur

rent

Act

iviti

esR

EC

S –

Cur

rent

Act

iviti

es

page 71

www.recs.orgwww.recs.orgR

EC

SR

EC

S