May 14 2010
Texas Posts Record Increase in Voluntary RECs
State exceeds Legislature’s 2025 goal 15 years early
Texas retired nearly 15 million renewable energy credits in 2009 and posted a record increase in voluntary participation to support environmental initiatives, according to the Electric Reliability Council of Texas (ERCOT), grid operator for most of the state and administrator of Texas’s renewable energy credits registry.
In 2009, the state’s 150 competitive retail electricity providers retired 6.79 million renewable energy credits (RECs) to satisfy the state renewable portfolio standard’s annual mandate. An additional 8.94 million* RECs were retired in the voluntary market to substantiate “green energy” purchases, surpassing 2008’s record of 6.77 million, as reported in the Texas renewable energy credit program annual report, filed today at the Public Utility Commission.
With more than 10,000 megawatts (MW) of new renewable generation in the REC program, Texas has exceeded the Texas Legislature’s goal 15 years early. Texas passed the mandate for 5,000 MW by 2015 six years ahead of schedule, and the original mandate for 2000 MW by 2009, three years early.
“The Texas program was the first of its kind in the nation when it began in 2001, and it is now recognized as one of the most effective and successful in the nation,” ERCOT interim CEO Trip Doggett said. “It’s also one of the biggest influences on the rapid growth of wind energy in Texas.”
The program currently includes 103 REC generation accounts representing 10,069 MW of renewable generation from throughout Texas. In 2009, the REC program tracked 21.6 million megawatt-hours (MWh) of renewable energy, an increase of approximately 26 percent over 2008.
Renewable Capacity, 2009
9,915 MW of wind
80 MW of landfill gas
33 MW of hydro
40 MW of biomass
1 MW of solar
Renewable Energy Produced, 2009
20,595,909 MWh from wind
507,507 MWh from hydro
412,926 MWh from landfill gas
73,364 MWh from biomass
4,492 MWh from solar
What are renewable energy credits?
RECs are stock-like certificates that correspond to actual megawatts of renewable energy. Each REC represents one megawatt-hour of renewable energy produced. Producers of renewable energy can earn and sell the renewable energy credits to retailers on the open market as a separate commodity.
The range of REC prices is fairly wide since their cost is a function of demand. Prices ranged from $1 to about $5 each during the year with some going higher, so the financial impact of the REC trading program in the Texas market could be estimated somewhere between $22 and $108 million.
What is the renewable portfolio standard?
The Texas Legislature established the renewable portfolio standard as part of the restructuring of the state’s electricity market in 1999 to increase incentives for renewable energy production. The Texas Public Utility Commission implemented the renewable energy credit program, establishing ERCOT as the administrator for it.
Under the Texas program, retail electric providers must acquire and retire RECs based on their load-ratio share of the renewable portfolio standard annual mandate. Electric providers may also voluntarily retire RECs to substantiate claims of green energy to consumers.
Texas has led the nation in wind capacity since 2006. The ERCOT region, which represents 75 percent of the state’s land area and 85 percent of the electric load, currently has 9,117 MW of installed wind capacity.
* UPDATE: The original news release incorrectly stated the amount of RECs retired in the voluntary market as 8.14 million. The correct amount, as reported in the REC annual report linked above, is 8,942,836 RECs retired in the voluntary market.