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Subject: RE: [emix] follow-on question to 'green fountain' scenario
David,
I was
all set to answer then saw Ed's excellent use cases. That leaves only one
specific question you asked to be clear. A REC, or Renewable Energy
Certificate, is a certificate. The EPA has a good
intro here: http://www.epa.gov/greenpower/gpmarket/rec.htm
Is the
US, we are at a disadvantage to the extent that the only well organized markets
are RGGI and the Chicago Climate Exchange. The RGGI
auction allows ten states to determine the market value of REC's and
essentially establishes the value local carbon based utilities or generators
will pay in order to continue unfettered generation under that state's
Renewable Portfolio Standard mandate. The author of REC's are the state
governments, which then use the funds (or claim to) to incite energy efficiency
in buildings, homes, and industry. Presumably, that same money could go to
green generation as well, but RGGI is a case where the creation of the
certificate has nothing to do with clean generation. They are a state
issued "license to emit carbon" and are similar in mechanics to hunting or
fishing licenses since they imply permission to gain quantity
associated with an activity. The implied legal doctrine is
the government (people) is the owner of the "pristine state of the
environment" and uses permissions to pollute as a means of establishing the
value of that pristine state.
The
CCX in contrast, is a true commodities market in the sense that it creates
a financial derivative (REC) from an underlying commodity (electrons).
Carried to an extreme (or actual practice in the case of more mature financial
derivatives), such a certificate can be based on the actual production of the
commodity, the future production schedule of said commodity (sometimes years
ahead), or the potential, though unrealized, to produce. The greater the
certainty of production, and the closer to delivery date, the less volatility
exists in the market.
Given
there is a sophisticated communications language around financial products,
should we even be concerned about how to label electrons? Once produced,
or even before that, the commodity and the certificates of value around it go
their separate ways. It's true that some people want to buy actual green
electrons; but outside a closed system, the physics of this is impossible.
Could the answer be in creating an electronic adjunct to a metering system that
understands consumption then goes into the financial grid rather than the
electric grid, buys and retires REC's of enough value to meet the needs of
the consumer?
By
separating the function at the point of purchase, the energy consumers could buy
certificates independently of electrons and take advantage of market changes in
each and maintains an efficient market in both. This is analogous to the
function of a mutual fund manager who executes unrelated trades to realize a
portfolio that meets value targets.
Phil
Davis
Schneider
From: Holmberg, David
[mailto:david.holmberg@nist.gov]
Sent: Friday, February 19, 2010 5:12 PM To: emix@lists.oasis-open.org Subject: RE: [emix] follow-on question to 'green fountain' scenario So, I missed the emix meeting, so don't have those notes
yet, but I want If I have local generation, PV ·
All I can measure is active and reactive power at
the meter. ·
I can meter the solar panel, or mix it in with
the house meter. ·
The utility can buy me a separate meter and pay
me some premium price for my solar power, then they get the results certs.
·
They can pay for the solar panel and maintain it
and then I am just leasing them my roof. If I want to use green energy, clearly I get whatever
electrons are in the wire, pushed by the nearest and biggest power sources. If I
have a solar panel on the roof with a crappy inverter, then I get low-quality
green power. But, let’s just talk about what some grid-side service provider
might sell me. They can offer me the “green power” option, which means they are
trading RECs (certs whatever) in the background to make sure that the number of
kWh I purchase is backed up with kWh produced at some wind/solar/hydro generator
somewhere. They might have a RTP for this green power and communicate with that
price the info about where that power came from, or the serial number on the
RECs or something else. But there is no way to give me only green electrons, and
there is no way (I suppose) to even say, for a given customer, exactly where the
power IS coming from. If we pass cert serial numbers around, then we have
traceability to where the power came from (assuming we don’t have multiple
copies of the cert). How do RECs work, and what is the difference from that
with a cert? What are we certifying? We could have a minute by minute meter
history that puts a cert on each minute of power production. E.g., 31.52 kWh in
the past minute (timestamped) with PV installation ID, etc. That becomes a
fungible commodity. Physically that power is used instantaneously by nearby
loads, spread about. But practically, some entity will buy that quantity of
green power and throw the cert in a big bucket (let’s say it is the utility
selling me green power) and make sure that the number of kWh consumed by all
customers on the green power tariff is matched by the number of kWh certs in the
bag. Am I anywhere close to reality? But we still haven’t discussed the time and
price sensitivity. A cert is for a given minute where there was some specific
local wholesale nodal price (or some relevant price). That 31.52 kWh of solar
power on peak might be worth $30. The same power from wind at night might be
worth $1. If we want to actually have a positive effect on CO2, pollution,
energy reduction, then we have to buy certs from power produced on peak when the
power it is offsetting is used on peak. And thus we have to have certs tied to
time, with value of the cert tied to the price at the time the power was
delivered. Where is that relative to reality? To where we want to
go? So, you could sell me green power and send me cert IDs to
prove it, but likely you won’t bother sending such info with my price
signal—it’s really unrelated to the real-time price isn’t it? The price reflects
the cost of power (or of greener sourced power), but isn’t tied to any specific
generator. The cert says that some green power, with my name now on it, was
produced at the same time I used some power. If I take Toby’s example of only
running the fountain when the wind is blowing at the wind generator on the next
mountain, then all I have to do is buy certs from that generator for power
generated at the same time the fountain is on. What we need is a market
interaction that allows completing that transaction on the order of the time the
wind starts and stops so that I can know I got the power and run the fountain
pump based on fresh certs. I don’t want to run the fountain at 2:05pm only to
find out that the wind on the next mountain quit at 2:03pm, or that all the
certs from the now diminished wind were already sold to someone else. So, then,
if we envision being able to buy specific certs from specific generators, we are
really talking about a local auction, no? Oh well, too many thoughts… David -----Original Message----- Well, my head hurts now... We've had two kinds of customers in the past: one that
wanted green energy but specifically also that wanted to retire the associated
certificates (altruistic). The other was one that wanted fungible
certificates so that any excess over their target could be resold (mercenary).
With respect to local solar, suspect your points
would be addressed by the state PUC's and implemented by the LDC. It is not
practical to expect local generators (excluding those that are in the professional
generating business) to deal with the complexities of energy
markets. The result is that the "greenness value" is expressed in local
incentives (rebates, tax credits) which essentially replace the concept of
certificates for value or at least duplicates that function. Absent that,
you'd almost have to have a meter that could imbue net metered electrons with the
appropriate value added certificates and communicate that to some central
banker. We actually make meters capable of this and of distinguishing between
dirty and clean local generation, but the cost is beyond that which most
small installations would find feasible. Helpful? Phil Davis -----Original Message----- From: Anne Hendry [mailto:ahendry@pacbell.net]
Sent: Thursday, February 18, 2010 1:49 PM To: emix@lists.oasis-open.org Subject: [emix] follow-on question to 'green fountain'
scenario After today's discussion I wanted to try to get a bit more
clarity on the 'green content source' discussion, so thought I'd throw
out a hopefully simple example. In my area we have quite a bit of local solar. Up
until recently net metering was the predominant method for handling any
excess, although that is moving towards a direct monetary compensation model and
eventually one where all generation is put back to the grid first.
Now, the generator (local home, business) gets certs for that green energy
put back. Once that energy goes back to the pool, though, I don't believe
there is any tracking of how that energy was generated (other than the remaining certs). Are we envisioning
a future where that will change and all sources will be tracked through additional
mechanisms? [It may be the case that even if power does come from a
green source, there is no certificate or tracking because it has not been
'certified', perhaps because there has been no mainstream market established
for it, or the certification process is too onerous.] Even if there is tracking, the certs for the above example
go off into the financial carbon trading world where their validity and
value are manged by a financial mechanism that is a world unto its own, and
the energy takes a different route, back to the grid and then on to someone
else's home or business. So the financial value of the 'greenness' of this energy
has already been used up (by giving certs to the
producer). I would therefore assume the cost of that energy to the consumer would be
lower [than if it included the certs] because it has no certs
included/embedded -- that value has already been realized by someone
else. If the certs had not already been utilized, and came with the energy, then the
price of this energy would be higher because it would include valuable
carbon certs. So, then, going back to the 'green fountain' example, is
that consumer looking for utilized or unutilized 'green value', or does
it care? Is it driven primarily by economic reasons or altruistic
reasons? Another way to pose this, relative to what we're modeling,
might be: if the certs have already been utilized, is there still value
(and data) to be tracked due to the green source -- other than what went
with the value of the certs (this would be, basically, altruistic
value)? This assumes the price is adjusted at the time the certs are
removed. I felt at the end of the discussion that we may be talking
about two entirely different types of
scenarios/markets. Any comments/corrections welcome. -Anne --------------------------------------------------------------------- To unsubscribe from this mail list, you must leave the
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