The Experience of State Clean Energy Funds with Tradable Renewable Certificates

Tradable renewable certificates (TRCs), also commonly referred to as green tags or renewable energy credits (RECs), represent the nonenergy attributes of electricity produced from renewable sources. They can be sold independently from or bundled with commodity electricity. Though perhaps most often used as a means of tracking compliance with Renewables Portfolio Standards and verifying wholesale renewable energy transactions more generally, TRCs also provide a green power purchasing option to both residential and non-residential customers. TRCs offer a simple, transparent verification tool for renewable energy transactions, facilitate liquidity and depth in renewable energy markets, potentially offer a new revenue stream for renewable energy generators, and can facilitate the purchase of green power by end use customers. As such, TRC verification systems and TRC trading are becoming increasingly popular across the United States. Several state clean energy funds are exploring their respective roles regarding TRCs, and different states have played widely ranging roles in this emerging market to date. This case study summarizes these activities. The states that are covered include California , Connecticut, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, and Wisconsin. Innovative Features State clean energy funds have taken a variety of approaches with respect to TRCs, including:

• Offering financial incentives to companies that sell TRCs directly to end-use customers;
• Funding education campaigns about TRCs;
• Supporting the development of accounting and verification systems for TRCs;
• Restricting the use or sale of TRCs from funded generators;
• Taking direct title to TRCs based on renewable energy project funding, either by default or by specifically purchasing the TRCs; and,
• Offering renewable energy projects or project intermediaries risk management products that mitigate the potential impact of fluctuations in the value of TRCs.