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Should Battery Resources be eligible to receive Renewable Energy Certificates (REC)?

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  • Oct 7, 2021
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All RECs are not created equal. For example, the California Low Carbon Fuel Standard (LCFS) program, and Oregon's Clean Fuel program impose a credit requirement on the fossil-fuel industry and allow renewable/clean generation (maybe even nuclear) to supply these credits based on carbon intensity. These credits are high value (e.g., ~$150/ton) when compared with other programs which may have less quantifiable metrics.  Each REC or REC-like program has its own requirements.

 

Should battery resources be eligible to receive RECs? I agree with Willian and Bob -- no, not on their own (e.g., a utility-scale battery farm). However, EV charging activities (California and Oregon programs) are eligible because they displace use of fossil-fuels. 

I agree with William that REC's are based upon generation of electricity by renewable sources and batteries should not qualify for REC's because batteries do not generate electricity.

NO... RECs are based on the generation of each MWhr.  Batteries do not generate energy, just store them.  RECs are a tool in incentivizes and financing the generation of renewable energy, and they need to remain a generation incentive so that we continue to replace fossil fuel generation.  I understand that batteries help increase generation.  But battery providers can also negotiate a share of the RECs with generators if that is important to them.  

Bob Meinetz's picture
Bob Meinetz on Oct 8, 2021

William, RECs are indeed a subsidy for wind and solar. But it's a common misperception that either wind or solar is replacing fossil fuel generation. Both have only increased dependence on natural gas, and placed a hard limit on emissions reductions.

 

William Buchan's picture
William Buchan on Oct 8, 2021

Bob, RECs are not a subsidy.  A subsidy would suggest that tax payers/rate payers are paying for their operation.  This is not the case.  RECs generated from wind, solar, and other renewable means are primarily bought these days buy utilities that have to meet RPS requirements and large firms with strong ESG policies.  I know this because I arrange the sale of RECs for clients.  RPS states are trying to incentivize more renewable energy generation, so they are not going to allow rate increases for those utilities that fail to buy or generate renewable energy.  

As for your fuel mix statement on generation, you are right that natural gas consumption is increasing on the grid.  But your data fails to show all fossil fuel sources.  Note that coal has dropped 50% from historic levels and petroleum in near zero.   Renewables and natural gas, which is the cleanest of fossil fuels, has replaced coal and petroleum as fuels for the grid.  And we can all breath cleaner air for it!   As utilities learn how to balance the grid with renewables, renewables will eventually replace natural gas as well, particularly in states with strong RPS standards.  Most of these states have compliance dates 2030 to 2050. 

Bob Meinetz's picture
Bob Meinetz on Oct 8, 2021

William, by permitting RECs to qualify for RPS mandates California is indeed "assist[ing] an industry or business [wind and solar] so that the price of a commodity or service may remain low or competitive." As you note, California allows rate increases for utilities that are RPS-compliant, and whether assistance comes directly from the government or government-approved rate increases hardly matters. A subsidy is still a subsidy, by any other name.

"renewables will eventually replace natural gas as well, particularly in states with strong RPS standards."

Renewables haven't replaced gas anywhere in the world, and they can't. Despite promises of magical, affordable grid-scale battteries: be it 2030 or 2050, the sun will still go down each night, and the wind occasionally won't blow, and gas will be there to make up the difference.

Given the imperative we face with climate change, that isn't remotely acceptable.

 

 

William Buchan's picture
William Buchan on Oct 8, 2021

Bob,

 Technology innovation will drive the ultimate replacement of natural gas by renewables.  As innovation continues, batteries will increase in storage capacity and become cheaper.  As I work professionally with start-ups in the clean technology arena, I see these innovations already.  It will happen by 2050 if not sooner.

 

By your definition of subsidy, I have no problem with RECs.  They do indeed help finance renewable projects, and that's good..."Given the imperative we face with climate change".

Bob Meinetz's picture
Bob Meinetz on Oct 9, 2021

William, that you work professionally with start-ups is all well and good, but it's not a matter of innovation or seed money, it's a matter of fundamental physics. You will discover a startup that can cure the fatal flaw of intermittency in renewables, as soon as you find one that can teach humans to fly by flapping their arms.

Forget venture capitalists, ask a physicist - someone who doesn't lie for a living.

Me, I have a big problem with RECs. Pretending one can separate the "clean energy attributes" from solar energy and sell them to a coal plant to "offset" the dirty energy they generate at night would be a joke, if it wasn't misleading well-meaning people to believe renewables are twice as effective as they are.

If electricity was a toy for rich people I wouldn't care. But it isn't, any more than are clean water, sanitation, fire prevention, or education. Solar and wind developers and their fake RECs are making electricity more expensive for the people who can least afford it - and that, I freely admit, pisses me off.

Andrew Blakers's picture
Andrew Blakers on Oct 9, 2021

The following statement is demonstrably wrong: "Renewables haven't replaced gas anywhere in the world".

Exactly this has happened in Australia, where renewables are headed for 50% in 2025 and gas is at 5% of generation and falling. Details here.

 

Roger Arnold's picture
Roger Arnold on Oct 10, 2021

Well, yes and no. Bob's statement would have been more accurate had he said that renewables haven't replaced gas generation capacity. They have certainly replaced a good deal of actual gas-fired generation, measured in terms of MWh of energy delivered. But they've done so by reducing the CF of gas-fired generation. The generators sit idle more of the time, or throttled way back to serve as spinning reserve. But their full output is still needed at times.

It takes quite a lot more online storage than is economically feasible at present to actually replace fossil-fueled generation capacity. What grid-scale storage is able to do at present is to avoid the need for spinning reserve. They buy enough time to bring up fossil generation when production from renewables drops below demand. They can sometimes bridge across temporary imbalances and avoid the need to bring up fossil generation altogether. But to use it that way is gambling on the duration of the imbalance. If storage capacity gets used up before the imbalance clears, the grid goes down. And even when the gamble works, all it does is to further reduce the CF for the fossil-fueled generators that remain on standby.

Bob Meinetz's picture
Bob Meinetz on Oct 11, 2021

Roger, agreed on all points.

Regardless of the costs of batteries, or replacement costs, or the added cost of grid-constrained energy (batteries in one distant location are worthless for meeting sudden demand in another) there could never be enough capacity to guarantee demand on the grid will always be met. Swapping dispatchable for stored supply makes that concession unavoidable, and it's one consumers never would, or should, be forced to accept.

Of course, commissioners on California Public Utilities Commission (CPUC) are not so naïve to believe dispatchable output from Diablo Canyon Power Plant can be replaced by batteries in 2024-25. Although their Integrated Resource Plan claims it will, that was never the intent. PacifiCorp, a subsidiary of Berkshire-Hathaway Energy, is currently building a high-voltage transmission project, the "Southern Gateway" from Wyoming to California, to replace it with coal-fired generation instead. "How could California possibly meet its 2030 emission target while importing 2GW of imported coal power?", you ask. Because PacifiCorp also owns wind farms in Wyoming there will no way to identify the source(s) of electricity imported on Southern Gateway. So it will be labeled unspecified sources of energy - a category specifically invented in 2009 (AB 62) to conceal dirty energy imports.

In planning for decades, details for replacing Diablo Canyon with Wyoming coal-fired power were finally worked out with the blessing of California's Independent System Operator (CAISO) in 2014. Because CAISO's Board of Governors, and comissioners on CPUC, the California Energy Commission, and the State Lands Commission are all appointed by Governor Gavin Newsom, prudence would demand a Conflict Of Interest disclosure by the Governor. But with so much money at stake, why would anyone let prudence get in the way?

Andrew Blakers's picture
Andrew Blakers on Oct 13, 2021

Numerous high resolution modelling has shown that gas capacity is not required to support 100% renewables, and storage requirements are modest.

On the pathway to zero fossil fuels, legacy coal and gas are useful. If their CF is (eg) 5% (like gas in Australia) then they don't contribute much CO2.

For example, here and here

Bob Meinetz's picture
Bob Meinetz on Oct 15, 2021

Andrew, "numerous high-resolution modeling" can be designed to produce any desired result. For example, analysts at Whitehaven Coal, Australia's largest independent producer, might program it to arrive at the conclusion that "legacy coal [is] useful". Other analysts at BHP Billiton might input numerous numbers that show "[gas doesn't] contribute much CO2," or even show that "the CF of gas in Australia is 5%".

Of course, they would hope no one would bother verifying their model's calculations. If someone did, they'd discover the true CF of gas in Australia is six times higher than what their model, and you, report it to be.


Australia total gas-fired electricity generation (2019): 54,358 GWh
Gas-fired power capacity: 21,441 MW
Annual gas-fired generation capacity: 21,441 MW x 8760 hrs = 187,823,160 MWh ≈ 187,823 GWh
Capacity factor: 54,358 / 187,823 ≈ 29%

https://energyinformationaustralia.com.au/natural-gas-and-australias-electricity-system/
https://en.wikipedia.org/wiki/List_of_natural_gas_power_stations_in_Australia

 

 

Andrew Blakers's picture
Andrew Blakers on Oct 9, 2021

However, the USA is not a good example because it is only slowly installing solar & wind per capita. To see what really will happen in the US when solar/wind really get going, look to Australia which is installing solar & wind 3X faster per capita. In Australia's National Electricity Market, renewables (mostly solar & wind) are heading for 50% in 2025. Gas is at 5% and falling. Nuclear is zero. Lots more pumped hydro, batteries and demand management is being introduced to balance solar & wind. Average woholesale spot price is around US$30/MWh. Emissions are falling. No nuclear accidents, waste, high prices or weapons spin-offs.

What is not to like?

More detail in a recent EC article is here.

Roger Arnold's picture
Roger Arnold on Oct 10, 2021

I don't see that RECs have placed a hard limit on emissions reductions. Increased renewables, in general, raise the capital and operational costs of the electricity system, because sufficient fossil generation capacity must remain available to meet worst-case shortfalls of RE generation. Energy storage capacity raises costs further, because it's never sufficient to provide backup throughout worst-case shortfalls. But each increment of RE generation does reduce the total megawatt-hours of fossil-fueled generation.

Bob Meinetz's picture
Bob Meinetz on Oct 11, 2021

"Sufficient fossil generation capacity must remain available to meet worst-case shortfalls of RE generation."

However you define "sufficient fossil generation" becomes a hard limit on emissions reductions. You'll never get to zero, to net-zero, to partial-zero, or even kinda-close-but-not-really-zero.

No one should be eligible to receive "Renewable Energy Certificates" - they're nothing but a subsidy that double-counts the value of wind and solar generation. They're a scam, with negative consequences for the environment.

Andrew Blakers's picture
Andrew Blakers on Oct 9, 2021

RECs are important to get solar & wind off the ground. With sufficient scale, prices come down and the industries take off.

RECs amount to a reverse carbon tax. The USA has no carbon tax, and RECs offset this enormous subsidy to fossil fuels

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