How to Track RECs in Scope 5

REC purchases can be tracked in Scope 5 using the scope 2 dual reporting functionality.

In this article, we walk through how to do so for each of the following scenarios:

• RECs are purchased for a portion of energy consumption (less than 100%)
• RECs cover 100% of energy consumption
• More RECs were purchased for a reporting period than energy was consumed

This article shows how to track RECs when they are applied to individual facilities. This configuration works only when either RECs are tracked at the facility level or RECs are applied to groups of facilities that share the same electricity resource configuration. The reason for this is described at the end of the article.

The approach described below can also be applied to all the different renewable energy instruments, such as RECs, ReGOs, IRECs, PPAs, VPPAs. Please reach out to your account manager for personalized support.

The General Idea

• Energy is consumed by a facility
• RECs are purchased to cover energy consumption at that facility
  • In some cases, more RECs are purchased than energy is consumed
  • In some cases, more energy is consumed than RECs are purchased
  • In other cases, the goal is for RECs to perfectly match energy consumed.
• The approaches described below will allow you to:
  • Determine whether RECs are greater than, equal to or less than energy consumption
  • Report absolute energy consumption
  • Report location based emissions for all energy consumption using grid average emissions factors
  • Report market based emissions for REC purchases as 0 (and the remainder using a supplier specific or residual mix emissions factor, where relevant)

When RECs Cover 100% of Energy Consumption (or are Over-Purchased)

Configuring Trackers

1. Configure a standard, non-dual reporting tracker for energy consumption at each facility for which you'd like to (eventually) apply RECs. Point this tracker to the appropriate location-based resource and enter activity records for the absolute energy consumed at this facility:
   
2. Set up a scope 2 dual reporting tracker for the RECs purchases. Configure the tracker for a-periodic record keeping and make the tracker summing, accruing. 
   • • For the tracker's location based resource, use a custom REC resource with 0 emissions and 0 energy conversion factors, similar to the one below:
       
     • For the tracker's market based resource, use the same resource as the resource in the standard electricity consumption tracker (WECC Southwest, in the example above): 
3. Add the amount of RECs initially purchased for the marketplace to the REC tracker as a negative activity record. Date the activity record with the last day of the reporting period. In the example below, 200,000 kWh of RECs were purchased for calendar year 2020. This activity record is dated for the final day of the year:
   
   • Note: Loading the REC purchase as a negative number allows the RECs to be subtracted from market based energy and emissions reports (discussed shortly) without impacting location based results.
     

Understanding and Adjusting REC Deficits and Surpluses

1. Once the reporting year has ended and all activity data for the period has been entered into the standard energy consumption tracker, generate a scope 2 dual reporting distribution report for the reporting period that includes all scope 2 trackers:
2. If the total activity reported (the energy (kWh) column in the above example) is positive, the energy consumed by the facility was greater than RECs purchased for the facility. To have a perfect match between consumed energy and RECs, purchase the value expressed in the total of this column worth of RECs.
3. If the total activity reported (the energy (kWh) column in the above example) is negative, more RECs were purchased than power was consumed. To apply the "unused" RECs to the next reporting period, add the amount of “unused” RECs to the REC tracker as a positive record for the last day of the reporting period and as a negative record in the subsequent reporting period. Notes can be added to these records to keep track of their provenance:

Reporting on Final Results

1. Return to the scope 2 distribution report and click the Update Data link in the report header.
2. Now, the Total for the activity column should show 0. This means RECs purchased cover 100% of energy consumed by the facility.
3. Extract total energy consumed from the Energy (MWh) column. In the report below, 188.93 MWh were consumed in calendar year 2020.
4. Extract location based emissions from the Totals row for the CO2e(LB) column. In the report below, location based emissions were 82 tonnes in calendar year 2020.
5. Extract market based emissions from the Totals row for the CO2e(MB) column. In the report below, market based emissions were 0 tonnes in calendar year 2020. This means RECs covered 100% of consumed energy.

When RECs are Purchased for a Portion of Energy Consumption and You'd Like to Use a Market Based Resource for the Remaining Power

Configuring Trackers

1. Configure a dual reporting tracker for energy consumption at each facility for which you'd like to eventually apply RECs. Assign an appropriate grid-average resource as location-based and a supplier-specific or residual mix resource as market based. Activity records for this tracker will show the absolute energy consumed at this facility:
2.  Set up a RECs tracker for this facility. Configure this tracker for dual reporting with annual record keeping. Ensure the tracker's temporal settings are summing, accruing.
   • For the tracker's location based resource, use a custom REC resource with 0 emissions and 0 energy conversion factors, similar to the one below:
   • For the tracker's market based resource, use the same supplier specific or residual mix resource used by the grid consumption tracker configured in step 1:
3. Add activity data to the REC tracker by adding one activity record per year of the inverse of the amount of RECs purchased. For example, if you bought 400 MWh in 2021, an an activity record of -400 dated 12/31/2021.
   • Note: Loading the REC purchase as a negative number allows the RECs to be subtracted from market based energy and emissions reports (discussed shortly) without impacting location based results.

Understanding How RECs Impact Emissions

1. Once the reporting year has ended and all activity data for the period has been entered, generate a scope 2 dual reporting distribution report for the reporting period that includes all scope 2 trackers:
2. Notice the total for the first column, (energy (kWh) in the above example, is a positive number. This means more power was consumed than RECs were purchased. This column functions to affirm this condition.
3. The total for the second column, Energy (MWh), shows the absolute amount of energy that was used by this facility.
4. The total for the third column, Location Based Emissions, was calculated by multiplying the total energy consumption by the appropriate grid average emissions factor. From the tracker rows, we can see the electricity consumption tracker, Claremont - Electricity Meter #713095, contributed all of the emissions, and no emissions resulted from the Claremont RECs tracker.
5. In the fifth column, Claremont - Electricity Meter #713095 results are calculated by multiplying all power consumption by the supplier specific emissions factor. Claremont RECs results are calculated by multiplying the RECs purchased as a negative value by the same supplier specific emissions factor. When these are combined, the result is the emissions from the power not covered by RECs multiplied by the supplier specific emissions factor.

Putting it All Together

As a final note, each facility can have a different relationship between the quantity of REC purchases and energy consumption and the above-described conditions can be used in concert to produce correct results at rolled up levels. In the example below, Claremont shows that more energy was consumed than RECs were purchased, resulting in low but not 0 market based emissions, and Phoenix shows a one-to-one relationship between RECs and energy consumption:

Spatial Granularity of Tracking RECs in Scope 5

In Scope 5, RECs need to be tracked at the facility level or applied to groups of facilities that share the same electricity resource configuration. The steps described in this article will yield incorrect results if a shared REC facility (with a shared REC tracker) is created at a branch node under which electricity trackers to which the RECs will be applied use different resources. This section describes why.

The Configuration

Let's say I have two stores in North America, Claremont and Mobridge, and I'd like to purchase RECs to reduce market based emissions for both of them. REC purchases will not cover all power consumed by these two locations.

The Claremont tracker from above is located in the SRVC grid, which is its location based resource, and is served by Dominion Energy, which is its market based resource:

Mobridge is located in MROW and has Xcel Energy as its utility:

Instead of creating a REC tracker at each location, I decide to create a new facility called North America RECs under their shared branch of North America, thinking this will allow me to buy RECs for both locations and reduce my configuration in Scope 5:

At my new facility, I create a Stores Shared RECs tracker. Following the steps in the article, I choose the RECs (location based) resource for the location based resource. For the tracker's market based resource, I'm not sure what to do, so I pick the market based resource used by the Mobridge tracker. I enter an activity record of -1,000 to indicate that I purchased 1,000 MWh of RECs for calendar year 2023. I know this will cover a good portion of energy from the two facilities, but not all of it:

Now that I've configured my trackers, entered my energy consumption as activity data into the grid trackers and entered my REC purchases as activity data into my REC tracker, I assume I'm ready to report on the results.

Why It Doesn't Work

As in the above steps, I create a scope 2-type distribution report:

Claremont and Mobridge each show what I expect:

• The activity column shows the total activity (energy consumption)
• The Energy column shows the total grid energy consumption in MWh
• The location based emissions column shows the total power consumed multiplied by each tracker's location based resource (in this case, the grid average emissions factor)
• The market based emissions column shows the total power consumed multiplied by each tracker's market based resource (in this case, the supplier specific emissions factor)

Each of these is confirmed by inspecting the audit trail icon next to each tracker. I think, so far, so good.

Then I look at the Stores Shared RECs tracker. As expected, this tracker does not contribute to the energy total and contributes 0 emissions in the location based emissions column. In the market based column, I see -277.60. At first glance, this seems reasonable, but let's consider how it was calculated.

Here's what happened:

• The REC tracker activity (-1,000 MWh) was multiplied by its market based resource of Xcel Energy, Northern States Power Company (USRM), resulting in -277.60 tonnes CO2e for the tracker.
• When results are rolled up this tracker's results are subtracted from the total market based emissions.

This does not work because the Xcel-reduced emissions (-277.60 tonnes CO2e) are greater than the Xcel-produced emissions (237.17 tonnes CO2e). This means some of the market-based emissions that were calculated using the Dominion Energy, Dominion Energy (VA/NC) (USRM) resource are reduced by the Xcel resource, which is incorrect.

Here is what should have happened:

• 1,000 MWh should contribute 0 emissions.

• 252 MWh of power was consumed that should contribute emissions.

• As a reporter, I need to choose how much of those 252 MWh come from Mobridge and how much come from Claremont.
• Then, the remaining power for each facility should be multiplied by that facility's market based resource to quantify the total market based emissions.

This illustrates why tracking RECs at the facility level (or at a branch level where all facilities under that branch use the same resource) is essential.

What To Do About It

There are two options:

1. Track REC purchases at the facility level
2. If tracking results for groups of facilities, ensure they use the same resources.