REC Buyers in Compliance and Voluntary Markets

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REC Buyers in Compliance and Voluntary Markets

• NAFI Conference
• Monterrey, Mexico
• Matt Williamson
• mwilliamson_at_natsource.com

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Natsource At a Glance

• Global reach
• 100 employees
• New York, Washington, Ottawa, Calgary, London,
  Tokyo
• Energy broker
• Natural Gas
• Coal
• Electricity

• Environmental commodity broker
• Top REC Broker (Environmental Finance, Dec. 2001
  2002)
• Top GHG Broker (Environmental Finance, Dec. 2000,
  2001 2002)
• Also, SO2, NOX , ERCs, RECLAIM, HGA...

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Presentation Outline

• Renewable energy and RECs definitions
• Demand drivers
• REC pricing in representative markets

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RECs vs Renewable Power

• Whats the difference?
• Renewable Power
• Physical generation and delivery of energy from a
  renewable resource
• Requires a contractual and a physical
  transmission path to end-use customer
• Green Tags (or RECs) are an unbundling of the
  electricity into two parts
• Delivery of system power
• Delivery of a statement of generation from a
  renewable source

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The Environmentally Preferable Product
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Concise definition of REC

• Unique and exclusive proof that 1 MWh of
  electricity was generated from a renewable
  source.
• Quantized Vintaged
• Separable from power (in most cases)

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Why buy RECs?Mandatory demand drivers

• Mandates
• State RPS and Renewable Goals
• State-level procurement
• Federal procurement EO 13123
• Choices
• Green marketers
• Utility green pricing programs
• Procurement as Corporate Sustainability Strategy

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State Renewable Portfolio Standards
MN 550 MW by 2002 400 MW by 2012
ME 30 by 2000
WI 2.2 by 2011
MA 11 by 2009
CT 13 by 2009
IA 250 MW
PA varies by utility
NJ 6.5 by 2008
NV 15 in 2015

• 25 of retail load in US covered
• CA 40

AZ 1.1by 2007
NM 5 as available
TX 2,880 MW by 2009
RPS enacted
RPS pending
Source Lawrence Berkeley National Laboratory
Recent Press Reports
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Why else?Voluntary demand drivers

• Mandates
• State RPS and Renewable Goals
• State-level procurement
• Federal procurement EO 13123
• Choices
• Green Marketers
• Utility green pricing programs
• Procurement as corporate sustainability strategy

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Voluntary Green Tag Markets

• Cater to client desires to buy green and/or clean
  energy rather than fossil status quo
• Multiple branded products on market
• Price and product differentiation
• Significant market education involved
• Guiding rules in absence of law
• NAAG, NGOs (Green-e), etc...

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Price characteristics

• Prices vary by region, technology and vintage
• RPS states are at significant premium
• Voluntary markets pricing has proven weak at
  wholesale

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Current pricing in Nepool
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Recent Bid/Ask Progression
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Recent Bid/Ask Progression
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Voluntary Market Pricing
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For More Information
Matt Williamson Director, Renewable Energy
Desk NATSOURCE LLC 212.232.5305 www.natsource.com