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• Overview
• Federal Markets — SO₂, NO_x and Mercury
• Renewable Energy Credits (RECs)
• US GHG Markets
• California RECLAIM Trading Credits (RTCs)
• Houston - Galveston Area (HGA) NO_x Allowances
• New York State NO_x and SO₂
• Emission Reduction Credits (ERCs) and Discrete Emissions Reduction Credits (DERCs)

Renewable Energy Credits (RECs)

Compliance markets are the result of states passing Renewable Portfolio Standards (RPS) that obligate load serving entities (LSEs) to purchase a set yearly percentage of their power from renewable energy sources. The resulting commoditized attribute is the Renewable Energy Credit.

RPS Compliance Market Specifics

• 1 MWh = 1 REC (renewable energy certificate)
• Renewable Energy has both "green attributes"(RECs) and Electricity (brown power)
• RECs are the environmental, social and other benefits of renewable energy generation.
• "Unbundled RECs"- RECs that are traded without the underlying electricity
• "Bundled Power"- Power + RECs
• Renewable generation facilities produce "green energy" that includes power and RECs
• RECs revenue can help finance new green projects

Renewable Energy Credits

• Again, 1 MWh = 1 REC
• Each REC has a "vintage" or year in which it was generated. Ex: 5000 CT CLASS 1 2005 RECs
• RECs are quoted by market eligibility (Class) and by resource type.

Renewable Portfolio Standards (RPS)

• Of the active RPS markets, PJM, NEPOOL, and ERCOT all have different renewable standards with different eligible resources and corresponding pricing.
• Compliance buyers are generally Load Serving Entities or Competitive Retail Sellers of Electricity.
• Each RPS has created a different pricing market. The impact of an RPS is a function of a supply (eligible resources) and demand (percentage requirements).
• The penalties for not complying are enforced by an Alternative Compliance Payment (ACP) ex: $55 per REC in CT.

• What are RECs?
  • PJM:
    Maryland, New Jersey, Delaware, Illinois, Indiana, Kentucky, Michigan, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and District of Columbia. Of these states in the PJM power pool New Jersey and Maryland are the most active though compliance obligations in DC and DE are expected to begin this year.
  • NEPOOL:
    Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. Of the states in NEPOOL Connecticut, Massachusetts, and Maine are the most active with Rhode Island's requirement obligation beginning in 2007.
  • ERCOT:
    Texas
• California REC markets
• Voluntary
• Looking forwards

How can TFS Energy help you develop a Renewable Energy Strategy

TFS Energy offers comprehensive advice and transaction services designed to assist clients in developing the customized financial structures that best meet their needs. We excel in helping clients utilize RECs and power as a tool for project finance by focusing on forward structures that enable developers and market participants to determine project viability. Our electricity group's experience in closing long-term deals for the underlying power products has proved to be a great asset in this regard. TFS Energy can also assist in all post-transaction logistics, including contracting and escrow services. Our team has a broad-based background in both regulatory affairs and financial markets, with over 25 years combined energy market experience

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