Managing your utility’s Renewable Energy Credits
WAPA hydropower now officially considered a renewable resource
Hydropower has always been considered by most a renewable resource. River flow naturally produces clean energy. However, that claim has never been official.
Because electricity flows through the grid with no way of knowing its origin, renewable energy certificates (RECs) are used to validate renewable claims. RECs are the currency of the renewable energy market.
Only qualifying resources produce RECs. Until recently, hydropower facilities managed by Western Area Power Administration (WAPA) were not considered qualifying resources, and therefore, RECs were not associated with the energy produced.
Now they are. Therefore, if your community receives hydropower from WAPA, you can retire RECs to prove that your community, in fact, utilizes renewable energy.
What are RECs?
RECs play an important role in accounting, tracking, and assigning ownership to renewable electricity generation and use.
Electricity travels to your community through a system of transmission and distribution wires. Electricity from all different sources mixes together in the electric grid and there is no way to distinguish the exact source that your electricity came from.
This is where RECs come in. Each REC represents a specific amount of electricity produced and delivered to the power grid by a renewable resource. For every megawatt-hour of electricity produced, one REC is generated.
Typically, the owner of a renewable resource can keep or sell this REC. RECs are part of every renewable energy purchase and are a credible way to buy and sell renewable electricity because RECs are uniquely numbered and tracked.
Once a REC is sold or retired, a system records it, and it can no longer be sold or used by someone else.
Municipal utilities with a WAPA allocation received an email regarding RECS, including a Renewable Energy Certificate letter and option form to complete and return.
Now that WAPA’s hydropower is considered a qualifying resource for renewable energy, you have a few options.
Because renewable energy is not “officially” considered renewable until the associated REC is sold or retired, some steps have to be taken to prove your use of renewable energy.
RECs are now available to WAPA customers up to their yearly Contract Rate of Delivery (CROD) allocation. WAPA will store RECs but will not manage them for customers.
There are four options available to you. The first is to do nothing and your RECs will sit unused.
The remaining options include:
- Manage your RECs. This requires a M-RETs account which costs $2,200 per year plus a fee for every REC that is retired.
- Assign Heartland Energy as your “Designated Entity” to manage your RECs
- Assign another entity as your “Designated Entity” to manage your RECs
Heartland Energy currently maintains a M-RETs account to manage RECs from the Wessington Springs Wind Energy Center. We are willing and capable of managing this program for our customers at no cost.
There is a fee associated with voluntarily retiring RECs, but it is nominal at roughly $0.015/REC and Heartland Energy will not charge you for your participation.
Which option is best?
Heartland Energy recommends selecting Option 2 above, assigning Heartland Energy as your designated agent.
Once that is done, a dialogue can be opened regarding your goals for renewable energy. Each utility’s availability of RECs will depend on their WAPA CROD allocation. Each utility’s goals will also be different.
RECs generated by WAPA hydropower cannot be sold so there is no monetary value associated with them. They can only be stored or retired. Retiring them allows your utility to officially validate the amount of renewable energy utilized by your customers. Heartland Energy can retire as many or as few RECs on your behalf, depending on your desires.
Should you have any questions about which option is best for your utility or how to proceed, please contact Heartland Chief Operations Officer Nate Jones at 605-256-6536.