Six European Countries to Test Green Energy Trading

ROTTERDAM, The Netherlands, December 20, 2000 (ENS) - Six countries in Europe will start trading renewable energy certificates on January 1.

Italy, Denmark, Sweden, Norway, Greece and the Netherlands will start a test phase of trading on a continental level under the administration of the Renewable Energy Certificates System (RECS).

Green power suppliers in France and Belgium have expressed interest in the system and may join at a later stage.

RECS is a voluntary initiative that will promote the use of renewable energy in Europe. The unique feature is that the environmental benefits of electricity from low impact sources is marketed separately from the energy itself.

solar

The world's largest residential solar photovoltaic development serves 500 homes in Amersfoort, Netherlands (Photo courtesy BP Solarex)
The power is traded and consumed locally under common tariffs, while the environmental value is reflected in certificates that can be traded internationally with the value determined by market forces. This feature enables market participants of all sizes to participate in the renewable energy market.

The cost effectiveness of a renewable energy project depends on the cost of the production unit and its maintenance. Market forces within the RECS certificate market stimulate cost reduction, and will motivate the development of any supporting technological improvements. Certificates can be issued for projects supported by government funds to help monitor renewable energy developments.

RECS has a target of trading 100 gigawatt hours of green power during the 18 month test period. One third will be traded internationally, predicts the organization’s Jos Benner. One certificate is issued for every 1,000 kilowatt hour produced by a renewable generating facility.

International trade in renewable energy supports liberalization of the energy market and stimulates overall production of green power by promoting projects at the most productive and economic sites, while removing the need to transport energy over long distance, Benner explains.

The separation of energy and certificates leads to greater renewable energy production for the same investment.

National trading systems are already in place or being implemented in the six countries, but harmonization of different rules was required for successful cross-border trading. Certification will come from national issuing bodies in each of the countries according to common rules adopted by RECS.

RECS’s definition of renewable energy is deliberately broad, and excludes only nuclear energy.

Countries and individual market participants have the flexibility to refine this definition to exclude other types of green power facilities or plants of a certain age, which may lead to a situation where peat or other specific types of renewable energy can only be traded in certain countries.

biomass

Wood chips ready for combustion at biomass power plant in Uppsala, Sweden (Photo by Art Wiselogel courtesy National Renewable Energy Lab)
Under RECS, a generator of electricity issues a Renewable Energy Declaration to confirm that it is producing renewable energy that meets the definition. The issuing body then uses that declaration and meter readings to issue the certificate. It also audits the trades and removes certificates from the market when they have been redeemed.

The initiative to form RECS started early last year in The Netherlands, Denmark and England, and has since expanded to Verbund of Austria, Electrabel, SCA, Ecowatt, 3E and the Flemish Government of Belgium, Elkraft, DEF, Eltra, DEA and DWTMA of Denmark, Fortum of Finland, Total Fina of France, RWE, HEW, ESSH, Bayernwerk, Oeko-Institut, Unit Energy and VdTUEV of Germany, Shell International, Eirtricity of Ireland, ENEL, GRTN, SONDEL, UNAPACE, APER, CESI, Edison and API Holding of Italy, EnergieNed, Nuon, REMU, Essent Energie, ECN, Ecofys, KEMA, Rabobank, APX, E-Connection, Nv EPON, PAWEX, Vattenfall and Eneco of the Netherlands, Norsk Hydro, Statkraft, Enfo, Lyse Handel, SKM, Statnett, Oslo Energi, BKK, Nordpool, Agder Energi and Produksjon of Norway, Arnesson, Vattenfall, Birka Ensec, Svenska and Kraftnät of Sweden, and Powergen, Natsource and Green Certificate of the U.K.

Current members are mainly government authorities, energy agencies and energy companies.