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The recent Green Champions Breakfast hosted by Invested and Accelerate Cape Town in partnership with icologie was run on renewable energy.  Previously you needed to erect a wind turbine or PV panels to generate your own green energy, but this has been made easier through the concept of renewable energy certificates (RECs) that can be purchased from GreenX Energy.

icologie sponsored the purchase of 1 REC representing 1 MWh of certified green power generated from Solar Home Systems owned and operated by the Nuom RAPS Utility in Northern Kwazulu Natal (REC Champions Breakfast).  Green energy or renewable energy is made from renewable sources such as wind or solar.  RECs have become popular with events or companies wishing to use renewable energy at their business.

SOME FREQUENTLY ASKED QUESTIONS

What is Green Electricity?

Green Electricity – also called Green Power – is electricity which is derived from renewable energy resources and which is generated in a sustainable manner.  The Association of Issuing Bodies (http://www.aib-net.org/) defines green electricity as that generated by wind, solar, water (small hydro, wave, tide), geothermal, biomass.  It excludes electricity generated from nuclear energy and landfill waste.

What are RECs and how do they work?

Renewable Energy Certificates (RECs) represent units of certified green electricity.  In essence, a REC is an auditable financial instrument that reflects the attributes of green energy independently of the actual units of energy – i.e. the ‘greenness’ value is separated from the electrons.  RECs are normally denominated in 1MWh units.

A green generator (suitably registered as such) produces electricity which is distributed into the national grid and becomes undifferentiated from normal coal generated electricity.  However at the time of generation the green generator also produces a certificate (REC), which certifies the quantity and type of green electricity produced.  This certificate can be marketed and sold separately from the associated electricity.  A consumer purchases the certificate and when electricity is consumed together with the purchase of the green certificate, effectively green electricity has been consumed.  The REC is redeemed at this point and the consumer is able to claim the benefits (environmental and others) at this stage.

Why the REC concept?

By using renewable resources, generation directly avoids climate change emissions.  Because the certificate is transferable, it allows the consumption to be separated from generation – i.e. it isn’t necessary to have a renewable generator on one’s premises in order to realise the benefits of green electricity.  The concept is designed to stimulate investment in renewable energy projects by providing a revenue stream for developers thus stimulating the renewable energy generation industry.  Further it directly matches buyers and sellers in the most efficient and cheapest way, and finally enables customers to use any quantity of green electricity up to 100%.  The green benefits experienced by the consumers are as real as they would be with direct local supply.

What are the benefits of purchasing RECs?

RECs provide proof of an enterprise’s procurement choice in terms of energy.  Using green electricity, as reflected in terms of RECs, makes a significant contribution to a company’s sustainability targets and triple bottom line reporting.  RECs have the significant advantage that there is no physical impact on the customer – i.e. no additional equipment required.  It is the cheapest way to procure renewable energy as it optimises the use of existing transmission and distribution infrastructure.

By outsourcing the local carbon issue to achieve economy of scale, the REC based certificate system allows generation to be at optimal sites and the benefits to accrue at a customer site anywhere.  Further, greater system diversity provides protection against future fossil fuel price uncertainty as well as supply security in the economy.

How does a generator get registered in order to produce RECs?

Renewable energy generation plant may be registered as a Green Power Generator (known as a Renewable Energy Production Device) by completing the Renewable Energy Declaration process and the Registration of a Renewable Energy Production Device. This document is completed on the basis of an in-depth inspection of the generation system under the auspices of the South African Tradable Renewable Energy Certificate Issuing Body (SATIB). Currently SATIB is in the process of being formed – the Department of Minerals and Energy (DME) in South Africa has commissioned a study to examine the industry and confirm the appropriate governance mechanism.

How are RECs priced?

Currently in South Africa, electricity generation is by the state utility Eskom and is based on low grade coal production.  As a result Eskom electricity is amongst the cheapest electricity worldwide.  The costs of renewable energy generation are considerably higher than that supplied by Eskom.  RECs are priced at the differential between the cost of new renewable energy generation and the Eskom supplied cost for existing coal-fired plant.  This premium will provide the new green energy generation an income stream to ensure that the generation project goes ahead.

Normal administration and marketing costs are added to arrive at the final REC price.  The cost of Eskom power will rise significantly in the near future as the costs of investment in new capacity are factored into the pricing structure.  This will have the effect of reducing the apparent premium on Green Power.

Is there an independent governance body and, if so, what is its role?

The green electricity certificate industry is in its infancy in South Africa. The South African Government has ratified the Kyoto Protocol and, through the Department of Minerals and Energy (DME), has published, in the Energy White Paper in 2003, a renewable energy target.  The DME has commissioned a study to examine the most effective way to stimulate the growth in renewable energy generation and as part of the study will consider the industry governance issues.  The SATIB (SA TREC Issuing Body) is in the process of formation and will ultimately be the governance authority for the industry.  It will be based on the European AIB (Association of Issuing Bodies).  In the meantime the registration of Production Devices is undertaken by suitably qualified energy consultancies and GreenX Energy maintains the central certificate register.

From where does GreenX Energy source RECs?

RECs can be sourced from any green generator that has completed the Renewable Energy Declaration process and has been registered as a Renewable Energy Production Device as laid out in the Principles and Rules of Operation of the AIB.

GreenX Energy currently sources RECs which are based on electricity generated in the sugar industry in South Africa.  Green electricity is produced from burning of bagasse (fibrous residue from the sugar production process) in boilers to produce steam which is converted into electricity in turbine alternators. Bagasse is a renewable energy source as the sugar cane plant is an annual crop which absorbs carbon dioxide in its growth cycle.  Each turbine has a calibrated meter which records the production output.

Currently, GreenX Energy is negotiating to purchase wind generated RECs from a new wind turbine in Namibia, as well as RECs generated from a rural Solar Water Heating project, and also looking at sourcing RECs from a small hydro plant.

Who are some of GreenX Energy’s clients?

GreenX Energy numbers amongst its client base multinational corporations such as oil major BP and pharmaceuticals giant Johnson & Johnson.  The agreements vary in duration but generally extend for between 3-6 years.  Longer term contracts are attractive because they recognize the essence of green electricity – price consistency over a long period.

In addition, GreenX Energy supplies RECs to numerous conferences that desire to operate a carbon neutral conference.

Emissions saving in South Africa from green electricity generation

Electricity in South Africa is produced primarily by the state owned utility, Eskom, using fossil fuels, mainly low grade coal.  By displacing “dirty” electricity through the use of green electricity, the emissions eliminated and resources saved per 1 MWh – i.e. per REC, are as follows:

  • Water consumption saved: 1290 liters
  • Coal consumption saved: 500kg
  • Ash production avoided: 142 kg
  • Ash emitted avoided: 0.28 kg
  • SO2 emissions avoided: 8.22 Kg
  • NO emissions avoided: 3.62 Kg
  • CO2 emissions avoided: 1000 kg (including transmission losses)

(Source: Eskom Annual Report)

What is the difference between RECs and carbon offsets via CDM?

Certified Emission Reductions (CERs) form part of the Clean Development Mechanism (CDM) process establish at Kyoto.  RECs and CERs are different but complementary in as much as RECs provide a mechanism to supply green electricity within a voluntary market (in Southern Africa) and CERs provide a framework for funding and transacting global emission reductions in terms of the Kyoto Protocol.

In essence, CERs can be generated from any project that reduces emissions (the project needs to be duly registered as part of the CDM process) whereas RECs access the wide ranging benefits associated with green electricity generation e.g. not only emissions reductions but also increased price certainty, generation diversification, better job creation opportunities and the establishment of a viable renewable energy generation industry.

How long has GreenX Energy been in business?

GreenX Energy is a privately owned company (100% subsidiary of AGAMA Energy (Pty) Ltd) with offices at the Green Building in Westlake, Cape Town, South Africa.

It was established in 2003 based largely on the experience derived from a pilot Green Power trading project in 2002.  The project supplied 854 RECs (corresponding to 854 MWh of electricity) to two of the main venues for the World Summit on Sustainable Development (WSSD) in Johannesburg in 2002.  Glynn Morris, one of the founders of GreenX Energy, secured a budget and was the project leader of the Green Power for the WSSD Project.  The project was implemented by AGAMA Energy and other partner organisations including the National Energy Regulator (now the National Energy Regulator of SA, NERSA).

What is the nature of the GreenX Energy business?

Essentially GreenX Energy markets and sells green electricity certificates, Renewable Energy Certificates (RECs), also known as RECs, green tags, or green certificates.  The primary aim of the company is to value the ‘greenness’ or non-energy benefits of renewable energy production and provide a commercial mechanism for trading this value in a Green Power market.  Initially, GreenX Energy’s customers are predominantly multi-national corporations (in retail, manufacturing and commerce).  We are currently looking at ways to provide Green Power solutions to the individual household customers.

What products does GreenX Energy market?

As already mentioned, GreenX Energy sells Renewable Energy Certificates (RECs) which attest to the fact that the customer is paying for the benefits of green (or cleaner) electricity.

Where can I get more info?

For additional info about green energy, renewable energy certificates or GreenX, contact GreenX Energy (Pty) Ltd, The Green Building, 9b Bell Crescent Close, Westlake Business Park, 7945, South Africa, or visit the website on www.greenxenergy.com

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