It was observed by MPSC staff in 2012 that small renewable system owners, especially those not participating in a major utility program, were not yet gaining access to the Renewable Energy Credit (REC) market in Michigan. At that time, and after consultation with the Great Lakes Renewable Energy Association (GLREA), MPSC staff encouraged 5 Lakes Energy LLC to become an aggregator of RECs as a service to the industry.
Since then, the principals and staff of 5 Lakes Energy have engaged in extensive outreach to owners of small renewable energy systems, solar installers, municipal utilities, and organizations with voluntary REC needs (such as those seeking LEED certification). Through this process, we have gained valuable experience in REC aggregation and sales to both the compliance and voluntary markets.
Recently, 5 Lakes Energy completed two successful sales of aggregated RECs. Following is a summary of these two transactions and our key lessons from the REC aggregation program to this point. Note that participants contributing to the generation of these RECs included residential system owners and non-profit organizations, such as the Muskegon Rescue Mission.
Summary of Aggregated REC Transactions
Date: June 5, 2013
REC Purchaser: Ecology Center
Type of Purchaser: Voluntary (LEED Certification)
REC Technology Type: Solar
Special Issues: LEED regulations require RECs to be Green-e certified or the equivalent. 5 Lakes Energy, through the Ecology Center, submitted a Credit Interpretation Request (CIR) to the U.S. Green Building Council to certify that these 60 RECs meet Green-e standards for vintage, metering, etc. Note that Green-e requires that corresponding IRECs be retired (and not counted toward LEED). Approval of the CIR was received on April 2, 2013.
Quantity of RECs purchased/retired: 60 RECs were purchased. Per Green-e equivalency guidelines, 120 corresponding IRECs were also retired.
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Date: July 29, 2013
REC Purchaser: Sebewaing Light & Power
Type of Purchaser: Compliance (Municipal Utility – PA 295 of 2008)
REC Technology Type: Solar
Quantity of RECs purchased/retired: 190 RECs and 445 corresponding IRECs were transferred to purchaser’s compliance account in MIRECS (635 RECs/IRECs total).
Key Lessons from REC Aggregation Program (So Far)
In the course of our REC Aggregation work to this point, participant education has been both an opportunity and a challenge. There is a great deal of misinformation about the REC market out there, and participants and purchasers alike come to the table with unrealistic notions about price. When we started exploring the REC market in 2012, we heard ranges from 25 cents to $30 per REC. Currently, REC prices seem to be hovering around $7. Managing participant expectations on price will continue to be a focus for us going forward.
Additionally, the stark difference between the voluntary market, which does not recognize IRECs, and the compliance market, which gives full credit for IRECs, has led us to the recommendation that solar RECs be steered toward the compliance market (when possible) and that wind RECs (which generally do not generate significant IRECs) are more suitable for the voluntary market. To date, 5 Lakes Energy has focused solely on aggregating solar RECs, but plans to open a wind technology project in MIRECS in order to explore additional sales opportunities in the voluntary/LEED marketplace.
Overall, this has been a valuable learning experience for 5 Lakes Energy, the program participants, and the purchasers of aggregated RECs. While not a significant money-maker for participants (and a true labor of love for 5 Lakes Energy), there is value in reaching out to owners of small renewable energy systems and engaging them in the Michigan REC market. Through continued outreach and relationship-building, we are confident we can continue to strengthen the renewable energy climate in Michigan.