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Supplier Newsletter: July 2024 07.22.2024
The Powertrust Glossary 07.22.2024

Unleashing the Power of Renewable Energy: Key Terms to Know

Energy Attribute Certificate (EAC)

  • Energy Attributes Certificates are issued as proof of electricity generated by renewable sources. 
  • When an eligible energy producer generates electricity, it receives certificates for the corresponding volume produced that can be kept by the producer, released on the market or transferred to third parties such as final consumers.
  • The most common types of EAC’s are: Guarantee of Origin (GO), RECs, and I-REC

 

Renewable Energy Certificate (REC)

  • RECs are the main tool used in North America 
  • RECs are a market-based instrument that certifies the owner owns one megawatt-hour (MWh) of electricity generated from a renewable energy resource. 
  • Once the power provider has fed the energy into the grid, the REC received can then be sold on the open market as an energy commodity. RECs earned may be sold, for example, to other entities that are polluting as a carbon credit to offset their emissions

 

IREC (International Renewable Energy Certificate)

  • An International Renewable Energy Certificate (I-REC) is a market-based instrument that certifies the generation of one megawatt-hour (MWh) of electricity from renewable energy sources. I-RECs provide a standardized way for organizations and individuals to demonstrate their commitment to using renewable energy and support the global transition to cleaner energy sources. By purchasing I-RECs, buyers can claim the environmental benefits associated with renewable energy generation, helping to reduce their carbon footprint and meet sustainability goals.
    • I-RECs were created to support utility scale projects, but a significant portion of renewable energy development in the global south is Distributed Renewable Energy. Which is why we created the Distributed Renewable Energy Certificate (D-REC) **see D-REC section below**  

 

Distributed Renewable Energy Certificate (D-REC) 

  • A D-REC is a third party-certified, verifiable, tradeable market instrument that can mobilise new sources of capital to support the deployment of new distributed renewable energy. 
  • D-RECs are not a new standard, but rather a verification label that acts as an onramp to the I-REC ecosystem. 
    • The end result will be that I-RECs are generated but with the ability to see that it is from a distributed renewable energy source. 

 

Emissionality 

  • Emissionality is a quantitative measurement that compares the impact of renewable energy projects on reducing emissions. Coined by WattTime, it highlights how the location of a renewable energy project can significantly influence its carbon reduction potential. Due to the uneven distribution of clean energy in the world, placing renewable projects in regions with higher reliance on fossil fuels can lead to greater emissions reductions. For example, building a solar in a high-emission can replace more fossil fuel-generated electricity than in regions already rich in clean energy. 

 

Additionality 

  • In renewable energy procurement, “additionality” means that buying renewable energy results in new renewable energy generation that wouldn’t have happened otherwise. It ensures that the purchase supports new projects or expands existing ones, rather than just shifting ownership of current renewable energy. This concept is crucial to guarantee that investments lead to real environmental benefits like reduced greenhouse gas emissions and less reliance on fossil fuels.

 

Scope 2 emissions

  • Scope 2 emissions are the indirect greenhouse gas emissions from the consumption of purchased electricity, steam, heat, and cooling. These emissions occur at the facility where the energy is generated, not where it is used.
    • Purchased Electricity: Emissions from the generation of electricity purchased and used by an organization.
    • Purchased Steam: Emissions from steam that is purchased and used by an organization.
    • Purchased Heat: Emissions from heat that is purchased and used by an organization.
    • Purchased Cooling: Emissions from cooling that is purchased and used by an organization.

 

Scope 3 emissions 

  • Scope 3 emissions are the indirect greenhouse gas emissions that occur in a company’s value chain but are not covered by Scope 1 or Scope 2. They include all other indirect emissions that result from activities such as:
    • Purchased goods and services
    • Business travel
    • Employee commuting
    • Waste disposal
    • Use of sold products
    • Transportation and distribution
    • Investments
  • These emissions occur from sources that the company does not directly own or control but are related to its operations

 

Distributed Renewable Energy 

  • DRE refers to a variety of different technologies that generate electricity at or near where it will be used. 
  • Distributed generation may serve a single structure, such as a home or business, or it may be part of a microgrid (a smaller grid that is also tied into the larger electricity delivery system), such as at a major industrial facility, a school, or a hospital.

 

Solar Home Systems (SHS)

  • Solar home systems are stand-alone photovoltaic systems that offer a cost-effective mode of supplying amenity power for lighting and appliances to remote off-grid households. In rural areas that are not connected to the grid, SHS can be used to meet a household’s energy demand fulfilling basic electric needs.

 

Virtual Power Plant (VPP)

  • A Virtual Power Plant (VPP) is a network of decentralised, medium-scale power generating units such as wind farms, solar parks, and Combined Heat and Power (CHP) units, as well as flexible power consumers and storage systems. 
  • The objective is to network distributed energy resources in order to monitor, forecast, optimize and trade their power. 

 

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Our partner

OMC Power is part of the Powertrust Energy Network, delivering high impact renewable energy projects to our portfolio for our customers. OMC Power is driving economic development in underserved rural areas of India by providing access to reliable electricity. They have commissioned over 400 power plants, positively impacting millions of lives in India. 

The Project

Micro, small and medium enterprises make up a significant portion of India’s economy. However, the lack of reliable electricity is a considerable obstacle to their growth. Economic growth is highly dependent on energy consumption, and access to renewable energy provides a sustainable option for economic growth. 

Powertrust is partnering with OMC on a project to electrify Micro, Small, Medium Enterprises (MSME’s) located in rural areas of Uttar Pradesh. Although the electrical grid extends to these villages, the power supply is limited and the residents often depend on diesel generators to operate their businesses. These diesel generators are extremely carbon intensive, and also very expensive for the entrepreneurs. These businesses primarily focus on agricultural, agro-processing and grinding mills. 

How is Powertrust revenue making a difference to the project? 

The average size of each project ranges between 10-25kW, creating an aggregated volume of 5000MWh coming from around 250 installations. OMC will use revenue from Distributed Renewable Energy Certificates (D-RECs) to manage the operations, monitoring and maintenance across all the installations. 

The Powertrust purchase also helps drive additionality. OMC will give around 66% of D-REC revenue to the MSME’s to contribute to their costs. Considering the high borrowing rates offered by micro-lenders to rural businesses, the supplementary income generated from D-RECs will help facilitate the adoption of solar systems. This additional income will enable small businesses to partially repay their debts using the revenue from D-RECs. Since many of these businesses operate seasonally, the extra revenue will act as a safeguard against loan repayment difficulties during slow periods. 

Learn more about OMC Power