Facilitating Clean Energy Purchases
This page covers three topics:
- 1.A description of energy attribute certificates (EACs)
- 2.Current challenges in EAC marketplaces
- 3.Examples of how EW-DOS is being applied to solve challenges in EAC marketplaces
When energy from a renewable energy source (e.g.,wind, hydro, solar) enters the electricity grid, it can no longer be distinguished by energy consumers from electricity that originated from fossil fuel combustion. Energy Attribute Certificates (EACs) are a way to account for the “greenness” of electricity from renewable sources. An EAC is a document that certifies that a specific unit of energy (typically a megawatt-hour) originated from a particular (typically solar or wind) source. “Tagging” clean energy in this way facilitates its tracking in accounting systems for carbon, renewable portfolio standards, corporate sustainability, and more. EACs also allow the low-carbon attributes of units of energy to be traded between parties in a relatively standardized manner.
EACs have different names in different markets, including guarantees of origin (GOs), renewable energy certificates (RECs), and solar renewable energy certificates (S-RECs). These are conceptually similar.
Currently, the energy industry relies heavily on EACs to prove that a given unit of electricity came from renewable sources. Energy market participants--including grid operators, electricity suppliers, individuals, organizations, and corporations--purchase EACs in various ways to 'decarbonize' their electricity consumption or to meet sustainability goals.
Renewable Energy Certificates allow end-users to prove their electricity comes from renewable sources
Today, EAC markets operate in centralized silos. Markets operate under specific regulatory constraints that vary across geographies and EAC types. Technological sophistication also varies from market to market. This makes for a fragmented global market for EACs, presenting several specific challenges to scaling EAC transactions and thus, global access to clean energy:
- 1.Lack of coordination across multiple stakeholders and systems: The bespoke, regional nature of EAC markets today creates challenges for buyers looking for efficient, low-cost access to clean energy attributes. EAC markets operate in a regional, heterogeneous manner, with certificates often stored in proprietary databases. These databases lack open, shared digital infrastructure to communicate and interoperate with one another. In addition to hindering buyer access to EACs, this lack of coordination limits EAC lifecycle transparency, creating mistrust between participants that is typically mitigated by EAC brokers and other intermediaries.
- 2.Limited market access: Current EAC markets have high administrative costs and often depend on brokers and intermediaries to create trust between parties. This creates a lack of transparency in market offerings and pricing and creates complexity for corporations, governments, and other buyers working to meet carbon/ renewables procurement targets. In practice, it also restricts participation to companies that can afford to participate, such as energy companies with regulation-mandated targets for renewable energy (RE) procurement or carbon reduction, and large corporations that can afford robust sustainability programs.
- 3.Outdated user experience and limited automation: EAC markets today rely heavily on manual processes for verifying generation data, completing transactions, and conducting settlement. Manual processes within market operations limits the EAC products that generators can bring to market. For example, small-scale RE installations are often unable to participate. Market participants also face outdated user interfaces and multi-step processes that make it difficult to acquire EACs at the scale needed by corporations and other buyers with aggressive sustainability targets.
EW-DOS provides a suite of modules (EW Origin) that addresses these specific challenges in renewable energy markets. The EW Origin modules provide technology to make existing and emerging EAC markets interoperable, scalable, automated, transparent and efficient for market operators and both buyers and sellers of renewable energy.
Below are three applications of Origin and applied industry use cases.
- Lack of transparency and streamlined coordination between stakeholders in the EAC issuance process
- Centralized and siloed storage of issued certificates
- Green energy generators
- EAC issuers/regulation bodies
- Marketplace Operators
In today's EAC schemes, issuing a certificate is a time-consuming, manual process involving multiple data streams and person-to-person interactions. Energy Web Origin's Issuer module addresses this pain point by enabling an open and automated issuance process that is compatible with any certification standard.
Certificate issuance is automated through the Issuer module's APIs, which handle data fetching and sending generating devices and with certification bodies. The request and issuance process depends on several factors such as regulation standards, the size of the generating device, and how generation data can be accessed, however the general issuance flow is as follows:
- 1.Generators register their devices with the issuing body using Origin's Device Registration Module
- 2.The Issuer module acquires data on the device’s energy generation. This can happen in several ways:
- 1.The generator manually inputs generation data;
- 2.The Issuer module API integrates directly with the generating device or its data system to receive generation data; or,
- 3.If the grid operator has data on the generating device and exposes it via a public API, the Issuer Module can ingest this data.
- 3.The Issuer module sends generation data as evidence to the certificate registration body to request certification
- 4.The Issuer module queries the registration databases for certificate approvals. If approval is found, it triggers a process for minting an EAC on the Energy Web Chain in the form of an ERC-1888 Transferable Certificate Claim (which is an extension of the ERC-1155 Multi token Standard)
- 5.Once minted, the generator claims the certificate.
There are several key benefits to having certificates on the blockchain:
- 1.The data on the blockchain is permanent, immutable and incorruptible
- 2.The ERC-1155 standard supports fungible and non-fungible components. The device’s kilowatt hours generated are stored as fungible tokens that represent certified green energy. Each hour or combination of hours can be split and sold to different customers. The device information, total energy volume and timeframe of generation are stored as an NFT asset, which cannot be split.
- 3.The owner of the certificate has full control over the certificate. Transference cannot happen without their cryptographic consent
- 4.Certificates are interoperable with any decentralized application that uses the certificate standard. Users can trade certificates using any digital wallet that supports the ERC-1155 and its smart contracts. This means that certificates are no longer siloed within centralized and proprietary databases.
ERC-1188 Token Non-Fungible and Fungible components
The Issuer module also supports private issuance to accommodate scenarios in which the device owner does not want the generation data publicly available on a blockchain. In this case, the device information (the NFT component) is stored on-chain, while the generation data (the kilowatt hours produced) are stored privately off-chain in the operator’s database.
Currently, most EAC sales are facilitated by third-parties who purchase EAC certificates directly from generators and then sell them onwards to EAC buyers. This structure and a lack of a shared marketplace prevents price and market-need transparency: EAC buyers are limited in their ability to source and compare certificates with specific attributes that meet their procurement needs (such as device model, device location, hours of generation, etc.). Current markets also do not accommodate small-scale participants, both sellers and buyers, or high frequency and high granularity trading activities due to the limited technical capabilities.
- Green energy generators
- EAC buyers
- Marketplace Operators
The Origin Exchange module was developed to support transparent and competitive platforms that let buyers interface directly with sellers to purchase EACs. The module sets up a real-time, open order book via a matching engine algorithm: sellers post their expected prices for volumes of generated energy, and buyers can then accept those prices or bid differently in an open interface. All orders are collected and ordered by price in an order book, and a match is made if the seller and buyer agree on a price. As a result, current market demand is seen by all.
This format is advantageous for large-scale and small-scale buyers and sellers alike:
- Price transparency allows smaller generators to compete in the marketplace because they are better able to see demand and price trends, and then make attractive bids
- Buyers can state their specific requirements proactively to stimulate bids by generators. For example, if a buyer wants to buy EACs from solar production exclusively--or even exclusively locally-produced solar EACs-- she can post that demand rather than waiting for a generator to post qualifying supply.
The Exchange module's matching engine can not only match orders by price, but also by specific, granular EAC criteria such as vintage and location, not unlike how additional filters can be used when searching for a flight, hotel, or rental car online.
The Exchange module tracks all inputs and outputs of the exchange on the EAC itself, which is minted as an ERC-1188 certificate on the Energy Web Chain. (You can read more about Origin's implementation of EACs as ERC-1888 tokens here.) This provides easy-to-observe traceability that improves transparency and confidence among renewable energy buyers, sellers, regulators, and other stakeholders.
Logic for the order book and the bid/ask algorithm, which needs to be as fast as possible, is abstracted away from the blockchain for optimal performance.
- PJM - large scale regional transmission operator for the Mid-Atlantic, Great Lakes and Northeast region of the US. Coordinates movement of wholesale electricity for distribution
- PJM Environmental Information Services, Inc - subsidiary of PJM; administers the Generation Attribute Tracking System (GATS) (US-based REC trading and tracing platform)
This pilot project was a collaboration with PJM Environmental Information Services (PJM-EIS). PJM-EIS administers the Generation Attribute Tracking System Bulletin Board, a platform used to track and trade Renewable Energy Certificates (RECs) in the United States. (REC is a specific standard of Energy Attribute Certificate in the United States.) The Bulletin Board is an interface on GATS where REC buyers and sellers can post their bids and asks for specific REC volumes. Actually selling or buying those RECs remains the responsibility of the counter-parties in bilateral agreements.
The Bulletin Board was designed to facilitate trading of voluntary RECs in GATs, but historically it has been underutilized. This pilot assessed how improving the technical functionality and user experience of the Bulletin Board could remove market barriers and grow the local REC market.
Energy Web Origin provided the back-end infrastructure for the marketplace functionality and the Energy Web Chain to digitize the RECs in GATS and anchor the proof of any REC transactions that occurred on the pilot Bulletin Board system. We designed a 'marketplace' exchange interface so that buyers and sellers could post their specific bids and asks. Settlements occured in the existing GATS interface, but blockchain-based proofs of each transaction were created on the Energy Web Chain.
Basic basic logic and interfaces for exchange functionality
Implements exchange-core. Provides order book-based exchange functionality for certificates
Basic logic and interfaces for backend (managing users, certificate, requests and devices)
Implements backend-core. Provides runnable backed API using NestJS framework
Backend utility functions
Current EAC markets need integrated, end-to-end solutions for device registration and EAC issuing, tracking, trading, claiming, and reporting. This means that there is no existing system that generators and EAC buyers can use to access the state of an EAC at any phase of its lifecycle, making it difficult to gather and generate data on a marketplace to support efficient EAC transactions.
- Green energy generators
- EAC issuers/regulation bodies
- EAC Consumers
- Marketplace Operators
Integrate the Origin Registration module, Origin Exchange module and the Origin Issuer module into a comprehensive EAC issuing and trading platform that supports full transparency and streamlined transactions for renewable energy generators/sellers, buyers and marketplace operators.
The default way to facilitate and synchronize an end-to-end marketplace is to integrate the Origin Device Registry, Origin Exchange module and the Origin Issuer module. By doing so, the state of an EAC throughout its entire lifecycle can be visible to all participants, leveraging the full traceability and interoperability features of the Origin SDK.
- 1.Devices are registered in a given marketplace using the Origin Device Registry module
- 2.Devices submit data via the Issuer Module for EAC issuance
- 3.The issuing body approves the request
- 4.If the Origin Issuer and Origin Exchange module are integrated, issued EAC tokens are deposited to the Origin Exchange to be traded. The deposit is recorded on-chain and the exchange operator is now in the custody of the EACs.
- 5.After the EAC has been traded, the buyer withdraws the EAC from the exchange to claim it for environmental impact reporting purposes. This is equally recorded on-chain and the EAC is removed from the custody of the exchange operator to the ownership of the buyer. This way, the ownership change from the seller to the buyer is clearly tracked on-chain.
Depending on the requirements of the operator of the Origin Exchange, all trades that happen within the exchange can be private or be be recorded on-chain.
End-to-end lifecycle of EAC marketplace
- Green Certificate Company (one of the 2 local issuers in Thailand)
- EGAT (one of the 2 local issuers in Thailand)
PTT’s platform offers buyers and sellers of EACs a fully integrated solution that provides all the functionalities needed to track, trade, claim, and report EACs in a regulatory-compliant way.
- 1.In PTT’s platform, both buyers and sellers can register as users. Device owners can also register their generation devices with the I-REC Standard through the PTT platform. This is verified by the I-REC registry to ensure that only certified actors can participate in the marketplace. Identities and device information are stored in the Origin User and Device Registry respectively and are tracked on the Energy Web Chain without exposing any sensitive data. Device owners are also free to provide any additional data deemed valuable for buyers but not required by the I-REC standard. This can include granular generation data or social impact indicators.
- 2.Device owners that are registered and verified by the I-REC Standard can request certificates by submitting generation evidence through PTT’s platform. The integration between Origin and the I-REC registry allows certificates to be issued upon the approval by the I-REC Standard. The issuance of certificates is recorded on the Energy Web Chain without disclosing any volume information.
- 3.Device owners or brokers can then trade certificates by posting supply (“asks”) to the marketplace based on which certificates have been issued. Correspondingly, buyers can post demand (“bids”) based on their energy consumption and various purchasing criteria such as region, device type, desired RE portfolio proportions, etc. The platform automatically matches supply and demand based on specified criteria.
- 4.When a trade is confirmed, the change in certificate ownership is recorded on the Energy Web Chain without disclosing sensitive data. PTT’s platform auto-generates agreements for the buyer and seller to sign. Payments can be immediately executed via online payment system (payment gateway).
- 5.After a trade is executed, the new owner of the certificate can claim it and use it for sustainability reporting. Alternatively, the owner can also decide to push it back on the market and trade the certificate with interested parties.The integration of PTT’s platform with the I-REC registry makes it fully compliant with the I-REC Standard.
As sustainability targets for corporations and other buyer types increase in ambition, demand is growing for more sophisticated tools to support EAC purchases based on highly granular time intervals. For example, rather than purchasing a large volume of EACs to offset a month or a year’s worth of energy consumption, a buyer might wish to acquire certificates to match energy consumed on an hourly or even half-hourly basis. Similarly, some buyers wish to purchase EACs on a locational basis, acquiring renewables generated in the same region where consumption occurred, or from specific types of renewables only (e.g. only solar and not wind).
Meeting these needs requires a digital solution that can support a high number of transactions and granular timeframes. Since it is a niche and nascent market, few tools and solutions exist today that are capable of meeting these requirements.
- Green energy generators
- EAC Issuers/regulation bodies
- EAC buyers
- Platform operators
The 24/7 toolkit was developed to build applications that serve as 24/7 marketplaces. Built with Origin Core SDK modules, the toolkit provides functionalities for:
- 1.Digital onboarding of participants: Organizations, devices and users can be digitally onboarded with the help of decentralized digital identifiers (DIDs), which ensure participants are who they claim they are. More information about DIDs here:
- 3.Digital certificate issuance: Based on generation data, digital EACs are created on the Energy Web Chain. These on-chain EACs ensure that every unit of energy is documented with an exact timestamp, and can only be attributed to one owner. On-chain EACs show an accurate view of the energy’s lifecycle: where it is coming from (e.g., ID of the generation facility, exact location, etc), who receives it and claims the environmental impact
- 4.Matching consumption and generation: Once consumption and generation are captured for the same time interval, there is a simple matching algorithm facilitates a match.Each consumption facility has pre-defined generation device(s) that are “favorites”, which means their generation is prioritized for that consumer. These favorites can be chosen based on different characteristics. For example, a consumer might prefer smaller-scale assets in the nearest proximity
- 5.Reporting: Data about granular generation, consumption, matches, surpluses and deficits can be displayed in user-friendly and verifiable reports