David C. Schanbacher, P.E. TNRCC Air Program Coordinator Renewable Energy Credit Trading Program

Roy McCoy Manager, Congestion & Renewable Credits Graphics Courtesy of

Required by Texas Restructuring Legislation Goal: Develop 2000 MW new Renewable Capacity in TX by 2009 Full Program began January 1, 2002 Renewable Energy Credit (REC) Program

New Capacity Ratchets Year MW Cumulative New Renewable Capacity

TX Definition of Renewable Renewable energy technology—Any technology that exclusively relies on an energy source that is naturally regenerated over a short time and derived directly from the sun, indirectly from the sun, or from moving water or other natural movements and mechanisms of the environment. Renewable energy technologies include those that rely on energy derived directly from the sun, or wind, geothermal, hydroelectric, wave, or tidal energy, or on biomass or biomass-based waste products, including landfill gas. A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources.

Affects Competitive Retail Providers & Renewable Generators Texas-wide (includes non-ERCOT areas) Requires Generators to be Certified by PUC Requires Competitive Retailers to submit RECs annually for Compliance REC Program Overview

Generated from Renewable Resource: –Hydro, Solar, Wind, Geothermal, Biomass 1 MWh renewable energy = 1 REC Each REC is good for two compliance periods after the year of generation (“three year life”) REC Attributes

REC Program: Annual REC Compliance Requirement for Competitive Retail Providers –Submit RECs annually in proportion to retail load served in TX PUC Labeling Initiative: RECs will (likely) be used for verification of advertising claims for green power REC Uses

PUC appointed ERCOT as REC Program Administrator in May 2000 Register Program Participants Create REC accounts Track MWh of renewable energy generated Create unique REC IDs for each MWh Distribute RECs to generators, quarterly Determine annual REC Allocation for Competitive Providers Retire RECs submitted for compliance Retire REC’s as they expire REC Program: ERCOT Administrator Responsibilities

Maintain public information –Website Monthly report of MWH load in Texas List of REC account holders with contact information List of Facility ID Numbers, and associated information Report to the PUCT – Compliance Verify that Competitive Retailers meet REC compliance requirements Administrator Responsibilities Continued

Apply to PUCT for certification as a REC generator Apply to ERCOT for REC account Generate & Sell Energy Separate Energy from Attribute as Renewable Two revenue streams for the same “product” Flexible pricing—lower Energy cost and recover difference through sale of RECs Receive RECs Sell RECs Participant Responsibilities: Generators

Competitive Retail Providers  Annual REC Compliance Requirement  Apply to ERCOT for REC account Other Entities  No Restrictions on Participation  Apply to ERCOT for REC account Participant Responsibilities: Competitive Retailers & Others

REC Software Design: Account Holder Functionality All Activities Online –Account Registration Secure Portal for REC Account Holders –Enable Account Activities: View, sort, batch, or singly identify RECs to Transfer or Retire

At outset—assume 1000 MW generation * 35% CF * 8760 = 3,066,000 unique IDs in year 1 If trade 3 times before retirement: 9 million transactions for Year 1 RECs alone! All data available online for 3 years No limits on REC Account Applications Software Scaling: Potential Transaction Volumes

REC Software Design: ERCOT Perspective ERCOT Load and Generation Data used to calculate annual REC requirements (Siebel output) Nonmetered and nonERCOT data: API or manually

Questions?