A Renewable Energy Certificate (REC) is a voluntary market-based system where the owner of the certificate has validation that they own 1 megawatt-hour of energy generated from a renewable energy resource. This is not electricity that you bought, it is a representation of the clean energy attributes of renewable energy, be it wind, solar, hydro-power, etc. I-RECs are designed as a tracking system to verify and clarify these renewable energy attributes distributed by an energy plant. The issuer in South Africa is the Green Certificate Company (GCC).
How does a certificate system work?
International Renewable Energy Certificates (I-RECs) is a certificate allocated outside of Europe and North America. According to the ECOHZ website, an “I-REC is a global standard being introduced in a growing number of countries in Asia, Africa, the Middle East and Latin America where no similar scheme exists. It is an effective and recognised tool to document your reduced greenhouse gas emissions and improve your sustainability rating.”
This system enables renewable energy generated sources to keep track of the amount of power supplied to the grid. Once they have supplied 1-megawatt hour, they can be issued with an I-REC. They can then trade these certificates, giving buyers evidence of the consumption of renewable energy. They might have a goal to reduce the amount of greenhouse gas emissions or to keep track of where their electricity is coming from. Homeowners, especially those who cannot acquire their own solar system, can also purchase these certificates, contributing their support to the renewable energy system.
A representation of such a system would look like the following:
Common attributes described in an I-REC include:
- Energy generation technology (e.g., solar PV, combined cycle gas turbine)
- Underlying energy source, if any (e.g., gas, coal)
- Production start and end dates
- Identification and location
- Source’s generation capacity (MW or GW)
- Source’s year of commissioning
- Date of installation start of operations
- Public policy support (e.g. feed-in-tariff, investment support)
In 2016, South Africa signed the Paris Agreement on Climate Change in New York. The agreement aims to substantially reduce global greenhouse gas emissions in an effort to limit the global temperature increase in this century to 2 degrees Celsius above preindustrial levels while pursuing the means to limit the increase to 1.5 degrees. South Africa’s Air Quality Act of 2004 put in place various measures to prevent pollution and national norms and standards for regulating air quality in the country. This, coupled with the Carbon Tax Bill that government wants to become legislation, makes for a perfect environment for Renewable Energy Certificates to support these aspects. Having an I-REC in your possession would be of great value.
The Department of Forest, Fisheries and Environment communicated in a press release on 22 April 2016 that South Africa will strive to lower its carbon emissions more actively. But currently, we are one of the 20 countries that emanates the most carbon in the world, mainly because of our heavy reliance on coal. However, there has been a recent significant movement away from fuel and towards gas and renewable energy. Having an I-REC in place would be essential to track these changes, substantiating the shift.
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