California agrees to allow out-of-state renewable energy credits

• 14 years ago (2010-03-13)
• David Flin

North America 1021

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California utilities can now purchase some of the benefits of renewable energy without actually purchasing the energy itself. That’s the gist of a move by the California Public Utilities Commission to allow utilities to use tradable renewable energy credits (TRECs) to meet the state’s ambitious renewable portfolio standard. The state’s utilities had previously been allowed to use renewable energy credits (RECs), but those RECs had to be bundled with renewable energy generations. TRECs, on the other hand, can be unbundled from renewable energy generation.

California’s renewable portfolio standard mandates that the state utilities increase the amount of power they get from renewable sources to 20 per cent by 2010 and 30 per cent by 2020. By the end of 2009, it had become clear that the state utilities were not going to meet the 2010 goal. According to the Public Utilities Commission, Southern California Edison had increased its supplies from renewable sources by 16.8 per cent, Pacific Gas & Electric by 14.4 per cent, and San Diego Gas & Electric by 10.5 per cent. The Commission believes that the new ruling on TRECs will give utilities the flexibility to comply with the standard.

The Public Utilities Commission’s ruling initially limits the use of TRECs for renewable portfolio standard compliance to not more than 25 per cent of a given investor-owned utility’s annual procurement obligation. That limitation stops at the end of 2011, at which point the commission will reevaluate the REC market. The cap is intended to allow for the maturation of the market and a clearer understanding of the implications of that market’s operation.