Delaware Million Solar Roofs

OVERVIEW OF RENEWABLE ENERGY CERTIFICATES FOR

SOLAR AND OTHER SMALL RENEWABLE ENERGY GENERATORS

Markets for renewable energy certificates (RECs) are a growing opportunity that owners of solar energy generators and other small renewable energy generators may be able to benefit from. Attributes of renewable energy, such as no emissions of pollutants, may have a value that is separate from the value of the energy itself. This value, a REC (sometimes called a green tag), can be traded or sold.

In general, the market for RECs can be divided into two market segments -- voluntary and government-mandated. In the voluntary market segment, private companies and institutions (e.g., universities and governments) buy RECs to support renewable energy because of a commitment to renewable energy and/or to project a public image of concern for the environment. The RECs are often bought to offset a certain percentage of an entity’s energy use, usually electricity. There are several companies that buy and sell these types of RECs including Sterling Planet and Mainstay Energy.

The other market segment for RECs is driven by states with renewable portfolio standards (RPS) laws – requirements for electricity suppliers to purchase a percentage of their power from renewable resources. State RPS laws and regulations require that a portion of the electricity sold by utilities be generated using renewable resources or that the utilities purchase RECs to offset a portion of electricity generated using nonrenewable resources.

DELAWARE’S RPS

Applicable Utilities

Applies to all Delaware utilities except that the Delaware Electric Cooperative (DEC) and the nine municipal utilities can be exempt from the RPS if they offer a voluntary green energy electricity product and contribute to the Green Energy Program or establish a program similar to the Green Energy Program. DEC and the municipal utilities have chosen to be exempt from the RPS and have established programs similar to the Green Energy Program.

The RPS does apply to customers of Delmarva Power and Retail Electric Suppliers (who are supplying electricity to customers in Delmarva’s service territory), although industrial customers with peak loads above 1500 kW that can choose to be exempt from the regulation.

Eligible Energy Resources

The following energy sources located within the PJM* region or imported into the PJM region and tracked through the PJM Market Settlement System are eligible to meet Delaware’s RPS:

• Solar energy technologies that employ solar radiation to produce electricity (solar thermal not eligible).

• Electricity derived from wind energy.

• Electricity derived from ocean energy including wave or tidal action, currents, or thermal differences.

• Geothermal energy technologies that generate electricity with a steam turbine, driven by hot water or steam extracted from geothermal reservoirs in the earth’s crust.

• Electricity generated by a fuel cell powered by Renewable Fuels.

• Electricity generated by the combustion of gas from the anaerobic digestion of organic material.

• Electricity generated by a hydroelectric facility that has a maximum design capacity of 30 megawatts or less from all generating units combined that meet appropriate environmental standards as determined by DNREC.

• Electricity generated from the combustion of biomass that has been cultivated and harvested in a sustainable manner as determined by DNREC, and is not combusted to produce energy in a waste to energy facility or in an incinerator.

• Electricity generated by the combustion of methane gas captured from a landfill gas recovery system.

*The PJM is the operator of the regional transmission system and wholesale energy market.

Eligible Customer-Sited Generation

Is defined as a generation unit that is interconnected on the End-Use Customer’s side of the retail electricity meter in such a manner that it displaces all or part of the metered consumption of the End-Use Customer. An End-Use Customer is defined means a person or entity in Delaware that purchases electrical energy at retail prices from a Retail Electricity Supplier. Therefore, only customer-sited generation in Delaware is eligible for Delaware’s RPS.

How to Certify an Eligible Energy Resource

Any Generation Unit seeking certification as an Eligible Energy Resource must submit an Application for Certification as an Eligible Energy Resource under the Delaware Renewable Energy Portfolio Standard (Application) to the Delaware Public Service Commission (PSC). This includes Customer-Sited Generation such as a residential PV system. The Application and instructions can be found at http://www.state.de.us/delpsc/electric/delrps.shtml

How RECs are Tracked

For Delaware and other states in the Mid-Atlantic with a RPS, the PJM-Environmental Information Services, Inc. (PJM-EIS) Generation Attribute Tracking System (GATS) will be used to track RECs and Eligible Energy Resources. Buyers and sellers of RECs are therefore subject to the rules and fees of GATS. RECs are only issued for 1 MWh of energy generation (no partial MWhs). GATS creates generator-specific electronic certificates that identify the relevant generation attributes necessary for electricity suppliers to satisfy a RPS. PJM-EIS has a subscription fee but exempts the fee for generators that qualify in any state portfolio standard program as renewable generators and that have aggregate generating capability of less than 10 MW. There are also volumetric fees, but those fees are paid by the Load-Serving Entity (the utility or competitive retail electric supplier) for load applicable to the RPS.

For more information on GATS, see http://www.pjm-eis.com/documents/downloads/gats-operating-rules.pdf

Small Eligible Energy Resources (100 kW or less)

Delaware RPS specifies that aggregate generation from small Eligible Energy Resources, 100 kW of capacity or less, may be used to meet the requirements of the RPS, provided that the generators or their agents, on an annual basis, document the level of generation, as recorded by appropriate metering.

Probable Solar REC Prices

This section is under revision.

SOLAR RECs IN SURROUNDING STATES’ RPS

This section is under revision.

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