By Andrea Romano, CSVP Team
When community solar subscribers sign up for project shares, they will likely feel proud to be “getting solar,” even if the project itself is far from home. The question for utilities is, are these subscribers really getting solar? And if program shares include something less than REC-bundled kWh, how should you describe them in marketing materials? Ever since the advent of renewable energy certificates (RECs) in the late 1990s, confusion has surrounded these questions, because, according to REC guidelines, electricity is only renewable the RECs are included and retired.
Yet policymakers and program designers know that most solar supporters are eager to get the REC value, and would gladly trade away this arguably esoteric distinction. Should the utility use REC purchases to sweeten the community solar offer—or not? The Community Solar Value Project (CSVP) just released a new factsheet, Understanding Renewable Energy Credits, to address this issue. It is posted with this blog and in the CSVP website Library.
The REC, defined as the renewable energy attributes of one megawatt-hour (MWh) of renewable electricity generated and delivered to the grid, is a concept originally developed for three main reasons: 1) Federal agency, business and industry interest in purchasing "green power," 2) state-sanctioned accounting to meet renewable energy mandates, 3) added economic benefits in negotiating power purchase agreements to cover renewable energy project costs.
Today, all claims of using renewable electricity depend on the RECs associated with that electricity. Even if a renewable generator produces electricity on-site, the project owner is not considered to be using renewable energy if the RECs are not associated with the electricity and retired on behalf of the customer. RECs are a credible way to buy and sell renewable electricity because RECs can be uniquely numbered and tracked. The electricity associated with a REC may be kept bundled with the REC or sold separately. If it is kept bundled with the REC then it is called renewable electricity or “green” electricity. If the electricity is split from the REC, it is considered standard energy.
REC guidelines apply to all renewable energy, including community solar. The most common REC allocation options for community solar programs include:
According to a September 2015 NREL Report, RECs for community solar projects are most often used to meet RPS compliance. Considerations affecting how specific programs treat RECs include program goals, regulatory orders, negotiations with solar developers, and program economics. Many utilities with community solar programs claim that customers either don’t understand or don’t care about the RECs. In some cases, RECs are retained by the utility and aren’t even explained to customers.
Xcel Energy’s Community Solar Garden program in Minnesota has taken an interesting approach, allowing third-party community solar project operators to decide whether to retire RECs on their customer’s behalf or to sell them to the utility for $0.02-$0.03/kWh. Initially the Xcel managers thought most third-party project operators would sell the RECs to the utility to improve their economics, but subscribers have been more interested in retaining the RECs than originally assumed. The jury is still out regarding how the Minnesota community solar market will develop. But no matter what your utility decides to do with community solar program RECs, it is important to engage customers and stakeholders honestly in the discussion–early in the program-design process. Clearly explaining the concept and treatment of RECs to community solar subscribers is an important component of marketing any community solar program.
Yet policymakers and program designers know that most solar supporters are eager to get the REC value, and would gladly trade away this arguably esoteric distinction. Should the utility use REC purchases to sweeten the community solar offer—or not? The Community Solar Value Project (CSVP) just released a new factsheet, Understanding Renewable Energy Credits, to address this issue. It is posted with this blog and in the CSVP website Library.
The REC, defined as the renewable energy attributes of one megawatt-hour (MWh) of renewable electricity generated and delivered to the grid, is a concept originally developed for three main reasons: 1) Federal agency, business and industry interest in purchasing "green power," 2) state-sanctioned accounting to meet renewable energy mandates, 3) added economic benefits in negotiating power purchase agreements to cover renewable energy project costs.
Today, all claims of using renewable electricity depend on the RECs associated with that electricity. Even if a renewable generator produces electricity on-site, the project owner is not considered to be using renewable energy if the RECs are not associated with the electricity and retired on behalf of the customer. RECs are a credible way to buy and sell renewable electricity because RECs can be uniquely numbered and tracked. The electricity associated with a REC may be kept bundled with the REC or sold separately. If it is kept bundled with the REC then it is called renewable electricity or “green” electricity. If the electricity is split from the REC, it is considered standard energy.
REC guidelines apply to all renewable energy, including community solar. The most common REC allocation options for community solar programs include:
According to a September 2015 NREL Report, RECs for community solar projects are most often used to meet RPS compliance. Considerations affecting how specific programs treat RECs include program goals, regulatory orders, negotiations with solar developers, and program economics. Many utilities with community solar programs claim that customers either don’t understand or don’t care about the RECs. In some cases, RECs are retained by the utility and aren’t even explained to customers.
Xcel Energy’s Community Solar Garden program in Minnesota has taken an interesting approach, allowing third-party community solar project operators to decide whether to retire RECs on their customer’s behalf or to sell them to the utility for $0.02-$0.03/kWh. Initially the Xcel managers thought most third-party project operators would sell the RECs to the utility to improve their economics, but subscribers have been more interested in retaining the RECs than originally assumed. The jury is still out regarding how the Minnesota community solar market will develop. But no matter what your utility decides to do with community solar program RECs, it is important to engage customers and stakeholders honestly in the discussion–early in the program-design process. Clearly explaining the concept and treatment of RECs to community solar subscribers is an important component of marketing any community solar program.
When community solar subscribers sign up for project shares, they will likely feel proud to be “getting solar,” even if the project itself is far from home. The question for utilities is, are these subscribers really getting solar? And if program shares include something less than REC-bundled kWh, how should you describe them in marketing materials? Ever since the advent of renewable energy certificates (RECs) in the late 1990s, confusion has surrounded these questions, because, according to REC guidelines, electricity is only renewable the RECs are included and retired.
Yet policymakers and program designers know that most solar supporters are eager to get the REC value, and would gladly trade away this arguably esoteric distinction. Should the utility use REC purchases to sweeten the community solar offer—or not? The Community Solar Value Project (CSVP) just released a new factsheet, Understanding Renewable Energy Credits, to address this issue. It is posted with this blog and in the CSVP website Library.
The REC, defined as the renewable energy attributes of one megawatt-hour (MWh) of renewable electricity generated and delivered to the grid, is a concept originally developed for three main reasons: 1) Federal agency, business and industry interest in purchasing "green power," 2) state-sanctioned accounting to meet renewable energy mandates, 3) added economic benefits in negotiating power purchase agreements to cover renewable energy project costs.
Today, all claims of using renewable electricity depend on the RECs associated with that electricity. Even if a renewable generator produces electricity on-site, the project owner is not considered to be using renewable energy if the RECs are not associated with the electricity and retired on behalf of the customer. RECs are a credible way to buy and sell renewable electricity because RECs can be uniquely numbered and tracked. The electricity associated with a REC may be kept bundled with the REC or sold separately. If it is kept bundled with the REC then it is called renewable electricity or “green” electricity. If the electricity is split from the REC, it is considered standard energy.
REC guidelines apply to all renewable energy, including community solar. The most common REC allocation options for community solar programs include:
- Utility owns and uses the RECs for current or anticipated regulatory compliance.
- Utility or customer sells the RECs into the local or regional REC market.
- Utility retires RECs on behalf of the customer.
According to a September 2015 NREL Report, RECs for community solar projects are most often used to meet RPS compliance. Considerations affecting how specific programs treat RECs include program goals, regulatory orders, negotiations with solar developers, and program economics. Many utilities with community solar programs claim that customers either don’t understand or don’t care about the RECs. In some cases, RECs are retained by the utility and aren’t even explained to customers.
Xcel Energy’s Community Solar Garden program in Minnesota has taken an interesting approach, allowing third-party community solar project operators to decide whether to retire RECs on their customer’s behalf or to sell them to the utility for $0.02-$0.03/kWh. Initially the Xcel managers thought most third-party project operators would sell the RECs to the utility to improve their economics, but subscribers have been more interested in retaining the RECs than originally assumed. The jury is still out regarding how the Minnesota community solar market will develop. But no matter what your utility decides to do with community solar program RECs, it is important to engage customers and stakeholders honestly in the discussion–early in the program-design process. Clearly explaining the concept and treatment of RECs to community solar subscribers is an important component of marketing any community solar program.
Yet policymakers and program designers know that most solar supporters are eager to get the REC value, and would gladly trade away this arguably esoteric distinction. Should the utility use REC purchases to sweeten the community solar offer—or not? The Community Solar Value Project (CSVP) just released a new factsheet, Understanding Renewable Energy Credits, to address this issue. It is posted with this blog and in the CSVP website Library.
The REC, defined as the renewable energy attributes of one megawatt-hour (MWh) of renewable electricity generated and delivered to the grid, is a concept originally developed for three main reasons: 1) Federal agency, business and industry interest in purchasing "green power," 2) state-sanctioned accounting to meet renewable energy mandates, 3) added economic benefits in negotiating power purchase agreements to cover renewable energy project costs.
Today, all claims of using renewable electricity depend on the RECs associated with that electricity. Even if a renewable generator produces electricity on-site, the project owner is not considered to be using renewable energy if the RECs are not associated with the electricity and retired on behalf of the customer. RECs are a credible way to buy and sell renewable electricity because RECs can be uniquely numbered and tracked. The electricity associated with a REC may be kept bundled with the REC or sold separately. If it is kept bundled with the REC then it is called renewable electricity or “green” electricity. If the electricity is split from the REC, it is considered standard energy.
REC guidelines apply to all renewable energy, including community solar. The most common REC allocation options for community solar programs include:
- Utility owns and uses the RECs for current or anticipated regulatory compliance.
- Utility or customer sells the RECs into the local or regional REC market.
- Utility retires RECs on behalf of the customer.
According to a September 2015 NREL Report, RECs for community solar projects are most often used to meet RPS compliance. Considerations affecting how specific programs treat RECs include program goals, regulatory orders, negotiations with solar developers, and program economics. Many utilities with community solar programs claim that customers either don’t understand or don’t care about the RECs. In some cases, RECs are retained by the utility and aren’t even explained to customers.
Xcel Energy’s Community Solar Garden program in Minnesota has taken an interesting approach, allowing third-party community solar project operators to decide whether to retire RECs on their customer’s behalf or to sell them to the utility for $0.02-$0.03/kWh. Initially the Xcel managers thought most third-party project operators would sell the RECs to the utility to improve their economics, but subscribers have been more interested in retaining the RECs than originally assumed. The jury is still out regarding how the Minnesota community solar market will develop. But no matter what your utility decides to do with community solar program RECs, it is important to engage customers and stakeholders honestly in the discussion–early in the program-design process. Clearly explaining the concept and treatment of RECs to community solar subscribers is an important component of marketing any community solar program.
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