Renewable energy certificates or ‘RECs’ have become the currency of the renewable power industry, allowing power providers to expand their product offerings and offer ‘green’ power irrespective of whether or not they can physically generate it. RECs also assure consumers who opt to buy renewable power, that that power has either come directly from a renewable generator, or if a renewable generator is not servicing their facility, that it is offset in the market by power from a renewable source, such as wind, solar or hydro, in another geographic area.

1. RPS AND RECS
MANAGING AN INCREASING
REGULATORY BURDEN
WHITE PAPER
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2. RPS and RECs – Managing an Increasing Regulatory Burden A ComTechAdvisory Whitepaper
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INTRODUCTION
Renewable energy certificates or ‘RECs’ have become the currency of the renewable power
industry, allowing power providers to expand their product offerings and offer ‘green’ power
irrespective of whether or not they can physically generate it. RECs also assure consumers
who opt to buy renewable power, that that power has either come directly from a renewable
generator, or if a renewable generator is not servicing their facility, that it is offset in the market
by power from a renewable source, such as wind, solar or hydro, in another geographic area.
As described by the US EPA, a “REC represents the
property rights to the environmental, social, and other
nonpower qualities of renewable electricity generation.
AREC,anditsassociatedattributesandbenefits,canbe
sold separately from the underlying physical electricity
associatedwitharenewable-basedgenerationsource.”1
By separating nonpower qualities from the underlying
physical electricity, RECs create value and benefits for
both the producer of green power, whose investment is
supported by selling RECs, and consumers who wish to
enjoy the benefits of green power but who may not have
direct access to renewable power.
1
http://www.epa.gov/greenpower/gpmarket/rec.htm
2

3. RPS and RECs – Managing an Increasing Regulatory Burden A ComTechAdvisory Whitepaper
The driving force behind the development of the REC
and its underlying market has been the development
of state level renewable portfolio standards (RPS).
The standards either 1) mandate a certain level of
electricity servicing the markets in that adopting state
be from renewable sources, or 2) set voluntary goals
for electricity sold in the states from
renewable sources. As of September
2020, 38 states and the District of
Columbia had established an RPS
or renewable goal, and in 12 of those
states (and the District of Colombia),
the requirement is for 100% clean
electricity by 2050 or earlier. (Figure
1)2
.
Lawrence Berkeley National Labora-
tory estimates that under the current
mandatory RPS programs, the current
RPS demand growth from 2019
through 2030 will require roughly 90
GW of new renewable energy (RE) capacity and will
require total U.S. non-hydro RE generation to reach
17% of electricity sales (compared to 12% in 2019)3
.
Relative to US Energy Information Agency (EIA)
projections,thisamountstoroughlyone-thirdofprojected
RE growth over the next decade. Much of the demand
for meeting these renewable portfolio standards will be
met by the renewable generation resources within the
states; however, even within those state boundaries,
physical renewable power may not be available on the
grid for a particular marketer or utility due to geographic
constraints. By utilizing RECs, marketers without direct
access to renewable generation can still offer consumer
the option of certifiable green energy, or the regulated
load serving utility in that state or region can meet their
mandated renewable obligations.
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Figure 1 – US Renewable Portfolio Standards
2
http://www.eia.gov/todayinenergy/detail.cfm?id=4850
3
https://emp.lbl.gov/publications/us-renewables-portfolio-standards-3
3

4. RPS and RECs – Managing an Increasing Regulatory Burden A ComTechAdvisory Whitepaper
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Renewable power generators produce two separate products - physical power and RECs. With
every 1,000 kwh produced, a new REC is created by that generator, and once created, the
generator can bundle the REC with the produced power, essentially certifying that power as a
renewable product and receiving the premium that accompanies that designation. Alternatively,
power producers can separate the two products, selling their generated power without the
certificate and receiving the rates that would be applicable for non-green electricity. They can
then sell that REC in the secondary market, allowing generators or marketers without access to
physical renewable power to sell a green energy product to their customers.
HOW DO RECS WORK?
Each REC produced is effectively an accounting of
the power generated, and will generally contain the
following information:
• The type of renewable generator that produced the
power
• The date the certificate was created (its vintage)
• The date the generator was first put into service or
its vintage
• The physical location of that generation unit
Once created, the REC becomes a tradable commodity
and can, as previously noted, can be sold with the
physical power or separated for sale in the RECs trading
markets. Some states allow RECs that were produced
in other states to be utilized to meet their RPS programs
requirements, though the eligibility varies greatly and
impacts the growth of liquidity in the RECs markets.
While there is some exchange-based trading of RECs
occurring, primarily on the Intercontinental Exchange
(ICE), most RECs are traded bilaterally or over the
counter (OTC), and generally on a periodic basis. In fact,
most RECs are purchased in bulk, with the regulated
load serving utilities purchasing the majority directly
from renewable energy generators to meet their RPS
requirements. Other RECs are purchased by electric
cooperatives - smaller utilities that operate primarily
in rural areas. Brokers and aggregators also operate
in this market, servicing utilities, industrial consumers
and power marketers who purchase the certificates to
service their green energy programs.

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North Carolina established a mandatory renewable standard in 2008, becoming the first state
in the Southeast to adopt a Renewable Energy and Energy Efficiency Portfolio Standard (REPS).
Under this law, investor-owned, load serving utilities in North Carolina are required to meet
up to 12.5% of their energy needs through renewable energy resources or energy efficiency
measures. Smaller rural electric cooperatives and municipal electric suppliers are subject to a
10% REPS requirement.
A LOOK AT ONE STATE’S PROGRAM
To ensure compliance and proper management of
the REPS, the North Carolina Utility Commission
established the Renewable Energy Certificate Tracking
System or NC-RETS in 2010. The NC-RETS function
is to issue and track renewable energy certificates and
energy efficiency certificates (EECs) created within the
state. Registered renewable energy producers use NC-
RETS to create RECs (in digital form) that meet the
requirements of North Carolina’s portfolio standard,
and the state’s electric utilities use the system track
their activities related to, and demonstrate compliance
with, the renewable energy portfolio standard. The NC-
RETS is currently working to integrate with all other
renewable energy certificate tracking systems in the
U.S. to allow for the import and export of RECs to and
from North Carolina.
With the renewables standards, power utilities and cooperatives in states with mandatory
standards are faced with a significant compliance burden – a burden that cooperatives may
particularly unprepared and understaffed to meet. In some cases, these electric cooperatives
have joined forces to form “green services” companies as leverage improved economies of
scale to help them meet their energy efficiency and renewable energy goals and obligation
under the new regulations.
MEETING THE COMPLIANCE AND
TRACKING CHALLENGE
One such green services company in North Carolina
was founded to help the electric cooperatives in the
state develop energy efficiency programs, evaluate
renewable energy projects, and meet regulatory and
compliance obligation and milestones, including the
purchasing and management of RECs for each of its

6. RPS and RECs – Managing an Increasing Regulatory Burden A ComTechAdvisory Whitepaper
almost two dozen member cooperatives.
Like many of the other electric suppliers operating in
states with RPS, this firm was faced with managing
a complex array of tasks and issues, from helping
the electric cooperatives develop energy efficiency
programs to evaluating renewable energy projects
and meeting regulatory and compliance milestones,
including the purchasing and management of the RECs
that are vital to ensuring each member cooperative can
meet their REPS mandates.
Compared to larger utilities operating in North Carolina,
this new green services firm faced some unique
challenges in managing their business. The largest of
these was the requirement to manage their operations
at two separate levels:
1. the purchase of RECs for the whole of their
membership and the management, tracking and
valuation of that inventory on an aggregated basis,
and
2. the need to disaggregate and allocate that portfolio
of RECs to each member based on their needs,
ensuring that each individual member can meet
their state obligations.
In addition to executing many large long-term purchases
of RECs for their members, the firm is also occasionally
tasked with purchasing certificates at the request of its
individual members. These requests necessitate the
tracking of those individual purchases, including the
specific assignment of the RECs to member companies
within their respective aggregated portfolios. Further,
once allocated to those members, the certificates
must be managed as part of the combined portfolio
for retirement in the state’s tracking system and in
reporting to the state’s utilities commission.
As is often the case, when the company first started
operations, they were utilizing spreadsheet to track the
acquisition, accounting, and allocation of certificates
to the member cooperatives. However, the company
knew the complex tasks and analysis involved in their
business would soon outgrow the capabilities of those
spreadsheets. To address the company’s evolving
needs,theybeganamarketsearchforavendorsupplied
and supported REC portfolio management solution.
After an extended search for a solution, the company
discovered that most of the energy trading and
risk management (ETRM) solutions from the other
vendors had little or no ability to address their complex
requirements mandated by the NC-REPS. However,
one options, RECTracker from Hitachi Energy
(previously known as Pioneer Solutions), a global
ETRM & CTRM solutions provider, had the specialized
solutions that addressed a majority of their needs and
a technical infrastructure that could be customized to
address their unique requirements.
Their representative described the process of selecting
Hitachi Energy’s RECTracker as follows, “They
demonstrated a system that allowed customization
to capture the deal and the intent….it allowed us to
take the aggregated deal apart for allocation to our
member companies and then re-aggregate the RECs
for reporting and retirement purposes. The system,
once fully implemented, allowed us to not only capture
© Commodity Technology Advisory LLC, 2021, All Rights Reserved. 6

7. RPS and RECs – Managing an Increasing Regulatory Burden A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2021, All Rights Reserved. 7
and manage the processes involved in working with our
member companies, but it also allowed us to optimize
our portfolio and ensure we were best able to meet our
obligations to those members.”
The implementation of REC Tracker required only
about 5 months to complete and, “the system did
what it needed to do,” according to the company.
“The implementation went well. They developed the
detailed specs prior to building out new capabilities
or trying to populate data. The company consistently
provided quick responses to issues or questions that
arose, ensuring the project stayed on plan.” In addition
to deploying and implementing the software, the
combined team also worked to develop and implement
a programmatic interface from RECTracker to the NC-
RETS system, the first such interface to that system
that allowed the automated sending and receiving of
REC data to an external solution.
In highlighting additional advantages they found in
using the RECTracker system, the company pointed to
the ability for users to produce ad hoc reports, giving
those users and the company’s leadership deep access
to the data and information contained within the system.

8. RPS and RECs – Managing an Increasing Regulatory Burden A ComTechAdvisory Whitepaper
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State level Renewable Portfolio Standards do serve a positive social function, helping to support
the growth of renewable energy and reducing the US’s dependency on fossil fuels for power
generation. However, these standards come at a cost to power utilities and the customers they
serve.
SUMMARY
While the use of RECs is an effective method of
allocating those costs across the breadth of the market,
tracking and administration of those certificates places
a significant burden on power suppliers, particularly the
smaller utilities such as municipals and cooperatives.
As these standards increase in scope and volume
of renewables mandated, the burdens increase
proportionally, leaving many of these companies unable
toeffectivelymanagetheirbusinessandtheirregulatory
requirements on spreadsheets. Even for those with an
effective and modern ETRM solution, the unique nature
of emissions programs and renewables standards are
extremely difficult to model and often require additional
capabilities outside of those core systems. Fortunately
for these companies, there are a limited number of
providers, such as Hitachi Energy, that have focused on
these issues and can deploy a system that will address
the unique needs of this market.

9. ABOUT HITACHI ENERGY
Hitachi Energy is a global technology leader that is
advancing a sustainable energy future for all. We serve
customers in the utility, industry and infrastructure
sectors with innovative solutions and services across
the value chain. Together with customers and partners,
we pioneer technologies and enable the digital
transformation required to accelerate the energy
transition towards a carbon-neutral future. We are
advancing the world’s energy system to become more
sustainable, flexible and secure whilst balancing social,
environmental and economic value. Hitachi Energy
has a proven track record and unparalleled installed
base in more than 140 countries. Headquartered
in Switzerland, we employ around 38,000 people
in 90 countries and generate business volumes of
approximately $10 billion USD.
The Energy Planning and Trading portfolio comprises
the following integrated offerings for its customers:
• Energy Trading and Risk Management solutions
• Energy Market Analysis Software
• Market Intelligence Data
• Energy Market Outlook
• Strategic Advisory Services
www.hitachienergy.com

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Commodity
Technology
Advisory
LLC
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users and providers of the technologies that are crucial for success in the constantly evolving
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