©2005 pjm eis generation attributes tracking system generation certificates / monetization of re...

©2005 PJM EIS

Generation Attributes Tracking System Generation Certificates / Monetization of RE Benefits

Presented at: Association of Power Exchanges

Annual MeetingOrlando, Florida

Oct. 31, 2005

Joseph J. Kerecman

Vice President

PJM-EIS

2©2005 PJM EIS

What is a Certificate?What is a Certificate?

Power

Green / EnvironmentalAttributes

Power

3©2005 PJM EIS

What’s in a Name?What’s in a Name?

• Green Tags• Green Tickets• Renewable Credits• Certificates• Renewable Certificates• Tradable Renewable Certificates (TRC)• T-RECS• Renewable Energy Certificates (RECs)• GATS Certificates

5©2005 PJM EIS

The Benefits of The Benefits of CertificatesCertificates

• Facilitate renewable energy markets.

• Creates a common form of currency.

• Monetizes the value of attributes.

• Creates liquidity in markets.

• Assigns emissions to each MWhr.

• Independent of geographic boundaries.

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Applications for CertificatesApplications for Certificates

• Substantiate compliance with RPS.

• Supply Green Pricing programs.

• Provide options for voluntary markets

• Provide attribute information on each MWhr. For disclosure

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Certificate Tracking in North AmericaCertificate Tracking in North America

• Canada: British Columbia and Alberta are participating in WREGIS, and Manitoba is participating in the northern Midwest system.

• Mexico: northern Baja is participating in the WREGIS system.

8©2005 PJM EIS

Certificates and Compliance MarketsCertificates and Compliance Markets

• 13 states with certificate-based RPS compliance mechanism - PJM States (NJ, MD, PA, DC, DE) - ME, MA, CT, RI, NV, AZ, WI, TX, CO

• 5 states likely to use certificates once regional tracking system is operational- CA, MN, NM, MT, IL

• 3 states undecided or have other methods to show compliance - NY, HI, IA

9©2005 PJM EIS

Size of the REC Market

Source: NREL Energy Analysis Office

The Renewable Certificate (REC) MarketThe Renewable Certificate (REC) Market

2004 REC Market

Size(Million MWhs)

2004 REC Market Value

($ Millions)

2010 REC Market

Size(Million MWhs)

2010 REC Market Value

($ Millions)

Compliance Market

8-13 $140 45 $600

Voluntary Market

3+ $15 - $45 20$100 - $300

Total 11-16$155 - $185

65$700 - $900

10©2005 PJM EIS

Pricing on Renewable CertificatesPricing on Renewable CertificatesVoluntary REC Offers (MWh) vs. Compliance

Fuel Type REC Type Location Price

New Wind Voluntary WA/CA $2.50 -$5.00

New Solar Voluntary CA $25.00

Compliance MA $48-51.00

Compliance Texas $11.85

Class I Compliance NJ $7.50

Solar Compliance NJ $170-260.00

Source: Evolution Markets LLC www.evomarkets.com/mmu

11©2005 PJM EIS

Why the Price Disparity?Why the Price Disparity?

• Geography of low-cost renewables• Supply/demand• Volume of purchase• Voluntary vs. compliance markets• Type & vintage of renewables• Regulatory (e.g. penalty levels for non-

compliance with RPS)• Regional markets - State specific

requirements / limitations

12©2005 PJM EIS

Needs of the PJM Needs of the PJM States / MarketStates / Market

• PJM initiated the GATS project in response to state regulatory commission inquiries and effected stakeholders

- Fuel Mix and Emissions Disclosure

• Delaware: fuel mix • Pennsylvania: fuel mix• Maryland: fuel mix and emissions• New Jersey: fuel mix and emissions• Ohio: fuel mix and emissions• Virginia: fuel mix and emissions• Illinois: fuel mix and emissions• District of Columbia: fuel mix and emissions

- Renewable Portfolio Standards• New Jersey: began in 2004.• Maryland: requirements go into effect in 2006• Pennsylvania: requirements go into effect in 2006• District of Columbia: requirements go into effect in 2007• Delaware: requirements go into effect in 2007• Illinois ?

13©2005 PJM EIS

PJM-EIS GATS SummaryPJM-EIS GATS Summary

• PJM Environmental Information Services, Inc. (PJM EIS) owns and administers the Generation Attribute Tracking System (GATS).

• PJM EIS is a wholly-owned subsidiary of PJM LLC

• PJM-EIS was capitalized independent of PJM LLC

• PJM-EIS is a non-regulated company

• Use of GATS is on a voluntary basis, and through subscription

• State regulators at their discretion may require the use of GATS certificates.

14©2005 PJM EIS

What is GATS?What is GATS?

• GATS - a regional environmental registry and information system that will track the environmental and fuel attributes of generation.

• The system will:• assist Retail Load Servers (LSEs) in their compliance

with applicable emissions and fuel disclosure requirements and with state-level Renewable Portfolio Standard (RPS) regulation or renewable policy

• enable voluntary bilateral markets and marketing claims for renewables.

• provide state agencies with reporting and verification• provide renewable generators with a means to

monetize their renewable attributes and qualification

15©2005 PJM EIS

GATS DesignGATS Design

• GATS is designed to:• Ensure accurate accounting and reporting of generation

attributes• Facilitate bilateral transactions of attributes via certificates

between market participants• Support the current requirements of various state agencies and

have the flexibility to accommodate varied and evolving state policies and programs

• Mitigate seams issues with adjoining markets to allow the potential of trading certificates across regions

• Promote a robust renewable market• Leverage PJM market settlement information and environmental

information from the US-EPA

16©2005 PJM EIS

Provisions of the SystemProvisions of the System

• Banking certificates to accommodate varying certificate life spans as determined by state policy or regulation.

• Enabling varying state programs, and their definition of preferred attributes / resources:

• Wind, Solar, Biomass, etc.• Waste coal, pump storage, fuel cells

• Moving certificates to non LSE’s, bilateral voluntary markets - direct sales to retail entities

• Behind the meter generation resources and Imports and exports

• A Bulletin Board to facilitate bilateral trades

17©2005 PJM EIS

Each MWh is given a unique electronic certificate This certificate may contain any information relevant to market participants and capable of being tracked by GATS.

- Certificates’ data will be compiled using PJM generation and publicly available data from EPA and EIA.

- Where data do not exist or are faulty, generators may choose to update their information based on agreed upon best practices.

- Default assumptions will be developed as a last resort for generators with faulty or no data who choose not to update their information.

Certificate No. 123456789

Pollutant lbs

NOx 1.5

SO2 0.01

CO2 1,900

Acme Generating Station

Fuel: Natural GasLocation: Example, PA

PA. Class I: No

PA. Class II: No

1 MWh

System Functionality OverviewSystem Functionality Overview

©2005 PJM EIS

GATS Certificate Creation CycleGATS Certificate Creation Cycle

Start of Monthly Start of Monthly Certificate Creation CycleCertificate Creation Cycle

Start of Monthly Start of Monthly Certificate Creation CycleCertificate Creation Cycle

Account Holder review Account Holder review periodperiod

Account Holder review Account Holder review periodperiod

GATS Certificates CreatedGATS Certificates CreatedGATS Certificates CreatedGATS Certificates Created

1010thth Business Day Business Day

Last Business DayLast Business Day

Repeated MonthlyRepeated MonthlyRepeated MonthlyRepeated Monthly

19©2005 PJM EIS

GATS SubscriptionGATS Subscription

Use of the GATS• All GATS users (“Subscribers”) must enter into the GATS Terms of

Use agreement to gain access to use the GATS.

• Subscribers will be charged an annual subscription fee and monthly volumetric fees for use of the system.

• Subscribers must also attest that any information they provide into the GATS database will be true and correct.

• Contractually commits all users to comply with all of the requirements of the GATS Operating Rules.

20©2005 PJM EIS

GATS Subscriber Group / State Agency Advisory CommitteeGATS Subscriber Group / State Agency Advisory Committee

• Subscriber Group • Open to all Subscribers• Meets at least semi-annually• Objectives:

• Provide input into the development and maintenance of GATS Operating Rules• Have access to information and training pertaining to GATS

• State Agency Advisory Committee• Participation by representatives of state agencies whose policies are being effectuated through

GATS• Meetings as needed or in conjunction with Subscriber Group meetings• Objectives:

• Provide input into the development and maintenance of GATS business rules• Analyze need for future system additions and modifications given evolving state requirments

21©2005 PJM EIS

PJM-EIS Website PJM-EIS Website

Access the PJM-EIS website by logging onto: Access the PJM-EIS website by logging onto: www.pjm-eis.com

The PJM-EIS website The PJM-EIS website provides links to the provides links to the ““GATS Operating GATS Operating Rules” and “GATS Rules” and “GATS Terms of Use” for your Terms of Use” for your referencereference

The PJM-EIS website The PJM-EIS website provides links to the provides links to the ““GATS Operating GATS Operating Rules” and “GATS Rules” and “GATS Terms of Use” for your Terms of Use” for your referencereference

22©2005 PJM EIS

GATS ReportsGATS Reports

There are three types of reports that are available:

Account Holder State Agency PublicAccount Holder State Agency Public

23©2005 PJM EIS


Account Holder ReportsAccount Holder Reports

There are ten There are ten different Account different Account Holder Reports Holder Reports

available in GATS. available in GATS. These reports These reports

provide updates provide updates and the status of and the status of current account current account

information as well information as well as transaction as transaction

HistoryHistory

There are ten There are ten different Account different Account Holder Reports Holder Reports

available in GATS. available in GATS. These reports These reports

provide updates provide updates and the status of and the status of current account current account

information as well information as well as transaction as transaction

HistoryHistory

24©2005 PJM EIS


State Agency ReportsState Agency Reports

There are seventeen There are seventeen different State different State

Agency Reports Agency Reports available in GATS. available in GATS.

These reports These reports provide updates provide updates and the status of and the status of current account current account

information as well information as well emissions reporting emissions reporting

informationinformation

There are seventeen There are seventeen different State different State

Agency Reports Agency Reports available in GATS. available in GATS.

These reports These reports provide updates provide updates and the status of and the status of current account current account

information as well information as well emissions reporting emissions reporting

informationinformation

25©2005 PJM EIS


There are eight different There are eight different Public Reports available Public Reports available in GATS. These reports in GATS. These reports provide general GATS provide general GATS updates and statistics. updates and statistics. These reports are also These reports are also

accessible from the accessible from the GATS Login PageGATS Login Page

There are eight different There are eight different Public Reports available Public Reports available in GATS. These reports in GATS. These reports provide general GATS provide general GATS updates and statistics. updates and statistics. These reports are also These reports are also

accessible from the accessible from the GATS Login PageGATS Login Page

Public ReportsPublic Reports

26©2005 PJM EIS

If you have any questions… Primary Contacts Primary Contacts

Jaclynn Geist

GATS Administrator / PJM-EIS

(610) 666-2245

[email protected]

Joseph J. Kerecman

Vice President / PJM- EIS

610 666-4772

[email protected]

©2005 pjm eis generation attributes tracking system generation certificates / monetization of re...

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