Renewable Energy Tracking Systems
How is renewable energy tracked in the United States?
There are two accepted approaches for tracking renewable electricity and its ownership in U.S. energy markets:
- Certificate-based Tracking Systems
- Contract-path Tracking Method
Certificate-based Tracking Systems
Tracking systems are typically electronic databases that register basic information about each megawatt-hour (MWh) of renewable generation in a specific U.S. geographical region (see map). These tracking systems issue renewable energy certificates (RECs) to the generator, signifying that a MWh of renewable electricity has been delivered to the grid. Several U.S.-based tracking systems also register and track generation from fossil-fuel fired resources. These are referred to as “all-generation” tracking systems.
Electronic tracking systems allow RECs to be transferred among account holders similar to how currency is transferred within our online banking system. To avoid ownership disputes, renewable energy tracking systems assign a unique identification number to each REC, or MWh generated, in a particular region. As such, a uniquely identified REC can only be in one tracking system account (e.g., owned by one account holder) at a time.
Each REC issued by the tracking system includes specific information regarding the renewable energy attributes for which it represents. A REC generally includes information such as:
- Renewable facility location
- Generation technology
- Facility owner
- Fuel type
- Nameplate capacity
- Year the facility began operating
- Month/year the MWh was generated
Regulators also use tracking systems as a registry of eligible generating facilities and as a means of verifying compliance with state renewable portfolio standards, for aiding in the creation of electricity disclosure labels, and for other purposes such as verifying wholesale supply for green power products.
Tracking systems are not substitutes for third-party certification and verification, as tracking systems only monitor wholesale transactions—individual retail green power customers generally do not hold accounts on tracking systems and thus cannot participate directly through this mechanism. RECs that are destined for sale in retail energy markets generally make their way through several wholesale intermediaries or brokers until they are sold to retail electricity suppliers, who in turn sell them to an eventual end-consumer. To learn more about third-party certification and verification, please visit the certification and verification Web page.
Tracking systems are emerging as the preferable method for tracking wholesale renewable energy because they can be highly automated, contain specific information about each MWh, and are accessible over the Internet to market participants. For more information about tracking system developments in North America, please visit the Environmental Tracking Network of North America website Exit.
Contract-path Tracking Method
The contract-path method of tracking and tracing renewable energy is widely used and is the oldest method utilized in the market to verify, track, and trace the chain of custody of renewable energy ownership from a generator to the end-consumer.
Generally, a buyer's green power portfolio mix is the sum of its energy supply contracts. The contract-path approach is characterized by a third-party audit supported by declarations, sworn statements, contract receipts, and other proof of generation and transfer of ownership (e.g., between a generator, intermediary, or final marketer) to the ultimate end-consumer. Metered generation data are often used to support and verify such attestations and supply contracts.
The cost of contract-path accounting is usually borne by an intermediary supplier or end-consumer. Fees for such auditing services in the United States can vary widely. Buyers of retail renewable electricity should seek, as a best practice, suppliers that sell independently certified and verified green power products. End-consumers that buy third-party certified and verified green power products can be assured that the green power they are buying has been found to meet nationally accepted standards for product quality, that their purchase is supported by renewable energy supply contracts that meet the retailer's advertised product, and that their purchase is uniquely their own (not double counted). To learn more about third-party certification and verification, please visit the certification and verification Web page.