If profitable, it might function a mannequin for different areas to outline what kind of cross-border REC transactions are considered as credible or permissible, trade gamers advised Eco-Enterprise.
“I feel Asean shall be fairly a great place to start out, given the proximity of the nations and the truth that they’re at related levels of their sustainability journeys,” mentioned Lim Tsu Might, a enterprise improvement skilled from Saxon Renewables, a subsidiary of Malaysia-based clear power agency Solarvest.
“The Asean member nations additionally made an enormous deal out of the Laos-Thailand-Malaysia-Singapore Energy Integration Challenge (LTMS-PIP). Since they already wish to promote the power, they may as nicely use it as a case for starting a cross-border framework,” she mentioned.
In 2022, Singapore started importing hydropower from Laos by way of Thailand and Malaysia utilizing current infrastructure, marking the primary multilateral energy commerce involving Asean member states. The 2-year energy buy settlement (PPA) below LTMS-PIP ended final June, the place a ultimate settlement for the phrases of an extension was on account of be reached by end-December, in keeping with media stories.
Antonio Beca Pereira, director of power administration and PPA origination of unpolluted power agency EDP Renewables APAC, mentioned that recognising RECs generated by cross-border power initiatives as akin to being produced throughout the Singapore perimeter is “very important” as the vast majority of the off-takers who allow the challenge by way of PPA commitments are based mostly in Singapore.
“They are going to be extra inclined to buy inexperienced power if they’re permitted to offset it in opposition to their in-country consumption,” mentioned Beca Pereira.
EDP Renewables APAC is without doubt one of the 5 Singapore-based corporations managing initiatives to import 2 GW of renewable energy from Indonesia to the city-state throughout the subsequent 5 years.
Talks to develop the framework started as early as 2022, when the Worldwide Monitoring Customary Basis (I-Observe Basis) – which operates the globally recognised I-REC system – fashioned a working group on cross-border RECs in Asean, the place members intention to “be the primary non-EU nations to transact cross-border RECs with RE100 recognition.”
RE100 is a world initiative led by non-profit Local weather Group and environmental disclosure platform CDP to carry collectively companies dedicated to completely utilizing renewable energy by 2050.
I-Observe Basis is among the many “like-minded companions” that Singapore has been working with “to check potential pathways to make sure high-integrity RECs,” in keeping with Singapore’s second minister for commerce and trade (MTI) Tan See Leng on the republic’s annual flagship power occasion final October. He added that different companions embrace nations like Australia in addition to teams just like the Asia Clear Vitality Coalition, RE100 and Semiconductor Gear & Supplies Worldwide (SEMI).
However a timeline for establishing the REC framework is “nonetheless being labored out and shall be introduced as soon as finalised,” learn MTI’s press launch in October.
In the meanwhile, RECs from abroad renewable initiatives are already being traded in Asia, albeit in an unbundled state, which means customers can declare environmental advantages with out really utilizing the 1 megawatt-hour (MWh) of renewable electrical energy they’re every meant to signify.
Underneath the framework offered by the Singapore Customary (SS) 673, renewable power claims utilizing cross-border RECs are allowed if the clear energy is contractually provided through a bodily interconnection to the city-state’s energy grid, or “the place sourcing throughout the similar geographical or market boundary just isn’t attainable”.
Equally, RE100 – which typically prohibits its members from utilizing cross-border RECs to fulfill their targets – has made exceptions for these claimed by nations inside a “single market”, just like the European Union or the USA, or with “little home power manufacturing and import a lot of their electrical energy”. Southeast Asian nations are at present not coated below these exceptions.
The brand new regional framework Singapore is mooting, nonetheless, is targeted on making bundled RECs attainable, the place the electrical energy is bodily bought along with the inexperienced certificates they signify.
Roble Velasco-Rosenheim, regional director of world partnerships and APAC at I-Observe Basis, advised Eco-Enterprise that the bodily cross-border commerce of unpolluted electrical energy, paired with corresponding RECs, might “present super advantages to the area”.
“A few of these advantages embrace extra sturdy power safety, regional decarbonisation and crucially, the power of rich nations and stakeholders to finance clear energy era in rising economies,” mentioned Velasco-Rosenheim. “In our view, making certain that RECs are transacted throughout borders, alongside bodily electrical energy, shall be essential to supporting the monetary viability of such thrilling initiatives.”
Andrew Glumac, head of power, CDP, additionally confused the necessity for cross-border transactions to be backed by the bodily transmission of electrical energy and accounting programs that allow distinctive claims to make sure transparency.
The important thing elements to make sure the credibility of renewable power claims to offset Scope 2 emissions – or emissions from a agency’s electrical energy consumption – from such transactions “embrace standardised emissions components, a strong system for REC, verification and reporting mechanisms, and bodily energy supply to keep away from double counting,” mentioned Glumac.
Cross-border commerce challenges
However this has confirmed to be a problem in Southeast Asia, the place grids are sometimes managed by a single nationwide operator, comparable to Tenaga Nasional Berhad (TNB) in Malaysia and SP Group in Singapore, mentioned Saxon Renewables’ Lim.
“The one grid is the provider of each the renewable and non-renewable power,” she mentioned. “This occurs to be a little bit of a priority to sure requirements or organisations, in that despite the fact that they’re paying the inexperienced premium and the grid is related to renewable power sources, they’re probably getting brown power electrons as a result of all the pieces is combined contained in the grid.”
Trade members have cited such uncertainty across the inexperienced attributes of power imports as potential causes for the muted response in Malaysia’s pilot public sale to export 100 MW of renewable power to Singapore, which noticed simply two of 16 eligible entities taking part within the bidding final April.
The framework that Singapore and its companions are formulating due to this fact must be “very clear” about what kind of cross-border transactions it might probably settle for and how you can calculate the proportion of inexperienced and non-green power utilized by a sure company energy, mentioned Lim.
She added that I-REC and RE100, that are at present the “market drivers” of unbundled RECs, can be vital gamers to get on board the brand new framework.
However established frameworks, like RE100 and Science Based mostly Targets initiative (SBTi), “could have extra standards for what they’ll require as a way to recognise a cross-border transaction,” mentioned I-Observe Basis’s Velasco-Rosenheim.
“We’re in dialog with a number of of the concerned actors to find out if new steerage would require the enter of extra knowledge onto the REC itself,” he shared.
To this point, CDP is the one main disclosure customary that has launched a working paper defining its aspirations for what could also be thought of a reputable cross-border transaction sooner or later. However Glumac mentioned that incorporating all the necessities and creating an internationally-recognised customary will take time.
“The APAC framework should accommodate various rules, much less mature renewable power markets, and restricted grid interconnectivity, specializing in capability constructing, infrastructure improvement, and coverage help,” he mentioned.
