Preface: LEED CS v3.0 Project in Massachusetts.
Our project is designed to produce 16% on-site renewable energy. The energy is fed directly into the building and used by the building. The system is located fully within the project boundary. However, the State awards the owner 1 REC per 1,000 kWh produced on site as an incentive. Questions are below:
1) Can our project count all 16% on-site energy production toward our LEED credits under EAp2/c1/c2?
2) If the above answer is NO, we will need to buy RECs. Do we need to buy a REC for 1% of the anticipated project energy cost to get 4 points, OR do we need to buy a REC for all 16% that's produced on site? The language in the LEED template leads me to believe that we are expected to repurchase all 16% as new RECs, which seems completely counter-intuitive from a financial standpoint.
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
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May 19, 2015 - 4:37 pm
The owner does get the solar RECs but the incentive is selling them. Who is the owner of the system and the RECs? If they have been sold then you have to replace them. I suppose that you could just replace the RECs for the amount of on-site energy you need to earn the points you want. Be careful of any EAp2 adjustments that might affect this outcome.
Usually the solar RECs sold are worth more than any old RECs you can buy so it should not be break even.
Brian Salazar
President, LEED AP, WELL APEntegra Development & Investment, LLC
56 thumbs up
May 19, 2015 - 4:55 pm
The owner of the system and RECs are the same party.
EAp2 doesn't get to this level of granularity regarding REC sales/purchases. It only ascribes estimated dollars offset by virtue of the design of the system. So, you're suggesting that if we only claim 1% under EAc2, we would also only be able to claim 1% under EAp2?
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
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May 19, 2015 - 5:01 pm
So the RECs have not been sold? Is the system leased or otherwise not owned by the owner of the building? Is there a PPA?
Yes you can only count for EAp2 what counts for EAc2 but that is not what I was referring to.
Since your EAc2 % is based on your EAp2 final result make sure that you have some cushion in your EAc2 submission if you are submitting them during the same review phase. This is similar to EAc6 when you purchase the exact amount of RECs you need for 35% and then find out that the reviewer adjusted your EAp2 result and now you need to buy more RECs.
Brian Salazar
President, LEED AP, WELL APEntegra Development & Investment, LLC
56 thumbs up
May 20, 2015 - 7:02 am
What if I don't submit EAc2? I don't see anything in the reference guide that says that I have to submit EAc2 if I have PV under the cost calculations for EAp2, unless I am missing something.
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
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May 20, 2015 - 1:34 pm
The LEED documents are not really clear on this issue. However, it sounds like you may be missing the point in pursuit of points.
If the solar RECs are sold then technically the building owner is not receiving any solar power even though the electrons are feeding their building. The environmental aspects of the solar system are owned by someone else and the owner can not claim them. This is why you have to replace the RECs for EAc2.
Could you get away with it if including the PV under EAp2 and not pursuing EAc2? Perhaps - as the RECs may not be questioned in that scenario. Including enough PV to earn EAc2 points for EAp2 will likely generate a comment pointing out that EAc2 points could be earned. The Reference Guide under EAp2 refers to the definition of qualifying renewables under EAc2, but is generally silent on the REC replacement requirement under EAp2 and EAc1. My opinion is that not selling the RECs is part of the definition of qualifying renewables for LEED in general so they would not count anywhere across all the credits/prerequisites.
Others could reasonably disagree. Maybe a LEED Interpreation is in order.
Brian Salazar
President, LEED AP, WELL APEntegra Development & Investment, LLC
56 thumbs up
May 20, 2015 - 2:01 pm
Thanks Marcus
I'm not saying that your interpretation is wrong, in fact, that probably is the way the USGBC thinks.
But look at this from the building owner's perspective. They are spending their resources (money, time, personnel) to design and implement a PV system that is totally optional to them. They take on the risk, both in terms of construction and financing, to put the system in place for the "greater good." They then exercise a financing measure in the RECs to finance the project and achieve a non-linear payback because otherwise the payback would be decades out. This financing measure is being construed by the USGBC as negating the Owner's ownership of the system even though the system still lives on their property, was paid for by their money, and after a period of time is owned by them outright? In truth, we don't know where the electrons go.
Using this logic, nearly any LEED construction project that's bank financed should be stripped of its credentials. If an owner of an apartment building develops the building using 100% bank financing, then the "owner" in LEED parlance doesn't own the building, the bank does. So how can they rightfully claim any LEED credit at all?
Sorry for the rant. I do truly appreciate your responsiveness,
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5902 thumbs up
May 20, 2015 - 2:26 pm
I personally agree with you position on this. I think that you should be able to sell the RECs ans still count the renewables everywhere for LEED for the reasons you cite. But this is not how LEED sees it. Counting the renewable under EAp2 seems to be a grey area.
A couple of the other reviewers in my office do not agree with me, here is what one of them said. "My interpretation has been that if the RECs are sold you can’t count the energy as renewable in EAp2/EAc1 or EAc2. However, I would still think the energy produced would be considered as a “free” source of energy in EAp2/EAc1 if the building owner also owns the on-site renewable energy system, since they have essentially paid for the energy already by purchasing the system. In this sense it is serving as an energy efficiency measure but not a renewable energy source."
This interpretation avoids the whole definition of a renewable issue by calling it an energy efficiency measure. I'll do some more asking around to see how it is officially interpreted.
Brian Salazar
President, LEED AP, WELL APEntegra Development & Investment, LLC
56 thumbs up
May 20, 2015 - 2:38 pm
Game of Thrones is easier to decipher.
I appreciate it, Marcus!
Brian Salazar
President, LEED AP, WELL APEntegra Development & Investment, LLC
56 thumbs up
May 20, 2015 - 3:08 pm
If the RECs are repurchased, what is the time frame required? 1 Year?
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5902 thumbs up
May 20, 2015 - 3:24 pm
10 years - see LEED Interpretation #2594
Brian Salazar
President, LEED AP, WELL APEntegra Development & Investment, LLC
56 thumbs up
May 21, 2015 - 11:59 am
For closure:
The client has elected to go the REC buy-back route.
The rate we are seeing is $0.70 per REC. Is that comparable to what others are seeing?
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5902 thumbs up
May 21, 2015 - 2:08 pm
If a REC = 1000 kWh then that sounds about right.
Brian Salazar
President, LEED AP, WELL APEntegra Development & Investment, LLC
56 thumbs up
May 22, 2015 - 9:41 am
Yes, so it seems we are on track! Many thanks again Marcus. You've kept me from going insane once again.
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5902 thumbs up
June 8, 2015 - 3:31 pm
I did submit this question for discussion/clarification on the next GBCI reviewer call but that is not scheduled until early July.
Kathryn West
LEED AP BD+C, O+M, Green Globes ProfessionalJLL
154 thumbs up
June 8, 2015 - 4:40 pm
Didn't the EPA /Green-e define RECs that way, not the USGBC? The whole point is that you're not selling a piece of paper you're selling the carbon benefit. Once you do so you can no longer claim it. It's really wonky and more complicated than it needs to be but as someone who has bought and sold a lot of RECs I want them to actually mean something. Some of us folks who can't put solar on our homes buy RECs and when we do so we "own" the environmental benefit. Yeah it's on your property but if you don't own the RECs you can't claim the environmental benefit. Otherwise there will be double claims on a single unit of renewable power. If you are still claiming the carbon benefit then what did I buy when I bought RECs? It's not a donation; it's a transaction. Nice Game of Thrones reference :)
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5902 thumbs up
June 8, 2015 - 6:11 pm
Green-e does define RECs that way. I understand the transactional nature of the REC purchase and the "ownership" issues. So I understand why LEED requires REC replacement.
On the other hand, it is hard enough to get the financing together for installing a PV array without taking advantage of all of the financial benefits associated with it. In some cases selling the RECs is the financial mechanism that enables the project to happen (without selling the RECs is may not happen at all). In the case of solar it is my understanding that many of the SRECs are sold to satisfy the mandatory markets in states with an RPS. Since Green-e covers the voluntary market, there may not be much overlap.
It is not the job of LEED to ensure that the same kWh is not claimed by two parties. LEED could certainly recognize that a solar system has been installed and grant credit for it independent of selling the RECs.
With all that said, if the market was working the way it was supposed to the SRECs would be worth more than other plain RECs and there would still be a financial benefit to selling them and buying cheaper ones. In some cases this is the case where SRECs have greater value due to meeting state minimums for the RPS.
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5902 thumbs up
July 8, 2015 - 11:52 am
Still trying to get an answer from USGBC on this issue. Here is a discussion of my point regarding counting the renewable electricity source as energy efficiency.
The question would be can a renewable energy system that sold its RECs be counted under EAp2 not as renewable but as an energy efficiency strategy? The reality is that the system is installed and offsetting the electrical consumption of the building. It functions very similar to energy efficiency in this regard (offsetting purchased energy from the grid). Selling the RECs means that you cannot claim to have a renewable energy system. It does not mean that you cannot claim some credit for the power saved. The project would not have to pay for the electricity generated and it offsets grid-purchased electricity. The project can claim all of the attributes of this power source except for its environmental attributes when selling the RECs. Among those attributes are the financial savings associated with the production from the system and LEED's metric is in dollars. So if the financial savings are real and the electrical offset is real why would this not be rewarded under EAp2 as a strategy that saves energy? Under this scenario no one would be claiming the strategy as renewable nor would the project be claiming the environmental attributes associated with the sale of the RECs.
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5902 thumbs up
July 9, 2015 - 5:05 pm
The initial feedback from USGBC is that if you sell the RECs then you can't count it under EAc1 or EAc2. There may be further internal discuss and I'll keep you posted if I hear anything different.