ERCOT Renewable Energy Credit Program Most Active in US: Update*
Record increase in voluntary participation
The Electric Reliability Council of Texas (ERCOT), the grid operator for most of the state, retired more than 13 million Renewable Energy Credits (RECs) in 2008, including a record increase in voluntary participation to support environmental initiatives.
The state’s 135 competitive retail electricity providers retired 6.74 million RECs in order to satisfy the annual mandate within the state’s renewable portfolio standard. An additional 6.77 million RECs were retired in the voluntary market to substantiate “green energy” purchases, far surpassing last year’s 1.6 million.
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.
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. In addition, electric providers may retire RECs voluntarily to substantiate claims of green energy to consumers.
The REC trading program was established as part of the Legislature''s restructuring of the state’s electricity market in 1999 to increase incentives for renewable energy production through a renewable portfolio standard. The Texas program was the first of its kind in the nation when it began in 2001.
The original statutory goal of the program was to install 2,000 megawatts (MW) of additional, new renewable resource generation in Texas by the year 2009. That goal was surpassed three years ahead of schedule in 2006. The Legislature more than doubled the goal in 2007, making the target 5,000 MW by 2015 and 10,000 MW by 2025, including 500 MW from non-wind renewable resources such as solar, biomass, landfill gas and geothermal.
Texas has rapidly moved beyond the original goals and now has 8,275 MW of wind capacity registered in the REC program, including the area outside of ERCOT but within Texas. The installed wind capacity in ERCOT is currently 8,006 MW and is expected to be 9,225 MW by the end of 2010 (includes planned wind generation with signed transmission interconnection agreements). More than 7,000 MW of wind power has been added since 2001. Texas passed California in 2006 as the leading state in installed wind generation.
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, ERCOT CEO Bob Kahn said, so the financial impact of the REC trading program in the Texas market could be estimated somewhere between $13 and $65 million.
“The REC program in Texas is the longest running and the most active in the nation,” Kahn said. “And it is accomplishing its goal of helping to bring clean, renewable resources into Texas at a record pace.”
Additional Information Online:
Renewable Energy Credit Program
* This story was corrected in the first paragraph to clarify that 13 million represents the number of RECs retired in 2008. The number issued in 2008 was 17.2 million. An additional clarification was added in the seventh paragraph to indicate that the 8,275 MW of wind capacity in Texas includes all the wind capacity registered in the ERCOT REC program, which includes generation outside the ERCOT region but within Texas.
ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.