Who's Getting Credit(s)?

Since my recent post about the SCE solar PV program, several readers and journalists have asked me to clarify my point that building owners who participate in the program can't claim their building is any "greener" as a result. It strikes some people as counter-intuitive--after all, the building's roof is loaded with solar panels generating clean electricity, right?

The answer depends on who is buying the output of the system and whether they're buying the Renewable Energy Credits (RECs), in addition to the electricity.

In terms of physics, "green power" is no different than "dirty power" when it's flowing down a wire--they're both a stream of electrons. What makes green power different is that its generation doesn't result in any harmful emissions being spewed into the atmosphere. Thus for every unit of clean electricity generated, we refer to the "green benefit" as the avoided emissions that would have otherwise have been created if that same electricity had come from a conventional fossil-burning source.

To keep everyone honest, it's important that we have a way of tracking how much renewable electricity has been generated and who can claim the benefit of their avoided emissions. To do this with renewable power, the market uses a simple tracking system called Renewable Energy Credits (RECs). For every megwatt-hour of clean electricity generated by a solar or wind power plant, we grant the owner of the system one REC. The person who buys the REC from the owner is the only one who can claim the benefit of the avoided emissions.

Why is this important? It keeps the accounting of all those avoided emissions from getting fuzzy. Take the SCE example--a large solar array is installed by a utility on the rooftop of an industrial building that houses a shipping company. Without RECs, we might end up with each party--the utility, the building owner, and the shipping company--claiming to have reduced their emissions footprint. That would obviously be triple-counting because only one set of emissions has been avoided. RECs provide a simple and accurate way to make sure avoided emissions are counted only once. Only the buyer of the RECs from the project gets to claim the emissions reductions.

Under SCE's program, SCE is taking ownership of the RECs and using them to meet their obligations to regulators under California's renewable generation rules. So, neither building owners nor their tenants can claim to be any greener because they're still using the same quantities of electricity from the utility.

Comments

[Brian Willis]

This is an interesting post, but what is more important is making sure there is a solar future. Without the Solar Investment Tax Credit, the entire industry will stagnate. Thomas Friedman agrees, Congress needs to stop bickering, find compromise, and pass the Solar ITC...

Link:
http://www.nytimes.com/2008/04/30/opinion/30friedman.html