Electricity Tracking

It is important to define what is meant by electricity tracking and several other terms and acronyms used in the E-TRACK Project. In it’s descriptions the E-TRACK Project will follow interpretations that are generally accepted by the industry, but it is also necessary to introduce new terms and add further detail to some interpretations, as well as harmonise the use of terms across the EU-30.

A glossary of terms and acronyms is separately available, but the ten most important terms are also explained briefly below. Each of the terms will also be explained in the documents prepared by the project partners.

Terms

Electricity tracking

Electricity tracking is the process of assigning electricity generation attributes to electricity consumption.

Systems for assigning generation attributes to electricity suppliers and consumers respectively are required in order to facilitate a variety of policies such as:

  • Electricity Disclosure, which provide details about the overall fuel mix of the supplier and the respective environmental impact to final consumers (Directive 2003/54/EC); and
  • Guarantees of Origin for electricity from renewable energy sources or high efficiency cogeneration (Directives 2001/77/EC and 2004/8/EC).

This process of assigning attributes may be based on various forms of allocation and tracking. Three main processes can be distinguished (and are further explained below): contract-based and certificate-based tracking, which are both forms of explicit tracking, and implicit tracking. Existing systems are generally made up of a combination of such allocations.

Please note that electricity tracking does not involve the tracking of electrons or physical flow of electricity across networks.

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Electricity generation attributes

Electricity generation attributes are pieces of information about electricity generated. Attributes generally include the energy source and technology used for generation and the greenhouse gas emissions and nuclear waste associated with the generating process, information on which is required for electricity disclosure.

More detailed information may also be given depending on the purposes which might require tracking of such information, for example a support attribute may specify whether the unit of electricity is eligible for one or several support schemes (such as obligations or feed-in tariffs), and whether such support has actually been used. In the case of RES-E, a target attribute can specify whether the underlying generation can be credited towards the fulfilment of the indicative target for the expansion of RES-E under the Renewables Directive (2001/77/EC).

Under a disclosure scheme, a disclosure attribute might contain a unique proof that a unit of electricity has been generated, which can be used to allocate this generation to a unit of electricity consumption for disclosure purposes.

Depending on the design of tracking schemes, some of the attributes for the respective unit of electricity may be separated, for example in a separate tracking scheme, so that not all attributes are necessarily allocated in parallel. This can be the case where, for example, a tracking system is in place for electricity disclosure while a tradable renewable electricity certificate (TREC) system is in place for supporting RES-E.

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Explicit tracking

Tracking of electricity attributes from an explicit (set of) electricity generating plant which were allocated to a unit of electricity. Explicit tracking includes certificates or contract-based methods and is opposed to implicit tracking.

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Implicit tracking

Tracking of electricity attributes which were allocated using averages and statistics, as opposed to explicit tracking. Implicit tracking could utilise for example national or European data on the overall generation mix.

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Contract-based tracking

Contract-based tracking is a procedure for tracking electricity attributes along (in parallel with) the contracts which are concluded between parties on the electricity market. This is generally interpreted as electricity contracts specifying the attributes of the traded electricity using (non-standardised) information which is exchanged bilaterally between the seller and buyer of electricity. However, it may also be based on standardised sets of information (which can be similar to certificates) which would be transferred in parallel to the electricity under the contract.
Due to the high complexity of the electricity market and volume of trades, contract-based tracking can be very complex and costly. However, may be applied relatively easily in the case of long-term bilateral electricity contracts. Certificates, which are transferable independent from the electricity market are the most common alternative to contract tracking.

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Certificate-based tracking

Certificate-based tracking is a procedure for tracking electricity attributes using certificates. Such certificates represent a set of attributes for a unit of electricity, and the attributes can be claimed by the owner of the certificate. Generally, certificate-based tracking is interpreted as a system whereby the attributes (in the form of certificates) can be freely transferred/traded between market actors, independent from electricity flows. However, a certificate-based system may also have limited transferability.

The usual life cycle of a certificate is: issuance, transfer(s), redemption. Any certificate must be redeemed if its value is used, e.g. for disclosure purposes. All certificate systems should specify exactly which attributes are contained in the certificate and for which purposes certificates can be redeemed.

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Electricity Disclosure

Electricity Disclosure is a requirement implemented in the revised Electricity Market Directive (2003/54/EC). All suppliers of electricity to final customers have to disclose to their customers the contribution of different energy sources to the portfolio of the supplier in the preceding year. They must also disclose related environmental impact indicators, at least in terms of CO2 emissions and the production of nuclear waste.

The objective of disclosure is to provide consumers with relevant information about power generation and to allow for informed consumer choice, and for choice not to be based on electricity prices alone. In a liberalised market, disclosure requires some sort of tracking of the required attributes from generation to the supplier.

Member states have implemented national legislation on disclosure in different ways, sometimes also allowing for disclosure of differentiated product information (e.g. a green power product and a standard product).

While green power quality labelling is based on subjective quality criteria, which usually exclude a significant part of the electricity market from labelling, disclosure is an objective information scheme for the whole electricity market, providing consumers with information which they can use following their individual preferences.

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Guarantees of Origin

Guarantees of Origin were introduced by two European Directives: for RES-E, the GO is defined in Directive 2001/77/EC, Art. 5, and for high efficiency cogeneration in Directive 2004/8/EC, Art. 5. Based on the text of the respective Directives, the GO shall enable producers of electricity from renewable energy sources or from high efficiency cogeneration to demonstrate that the electricity they sell is produced from the respective sources or technologies within the meaning of the Directives. The GOs as defined by these Directives are issued on request only and therefore will most likely cover only part of the respective markets. Because the Directives do not specify the instrument of the GO in much detail, the implementation of GO in member states and their potential application shows a significant variation (see the report from the REGO project for details, http://www.re-go.info).

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Multiple counting

Multiple counting is a situation where certain attributes from a single unit of electricity are counted several times either for the same purpose or for several purposes which are conflicting or overlapping. The use of attributes for several non-conflicting or overlapping purposes is not classed as multiple counting. Multiple counting usually leads to false information for participants in the electricity market and/or governments, and may lead to unjustified income for certain actors. Energy policies and tracking systems should be designed in a way as to minimise the risk of multiple counting.

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Residual mix

The residual mix is the set of electricity attributes which have not otherwise been attributed to electricity supplies. The residual mix therefore is a specific procedure to combine implicit tracking with mechanisms of explicit tracking.

The use of a residual mix requires a system for explicit tracking held in a central registry. After the allocation of the explicitly-tracked attributes, all units of electricity which are not covered by explicit tracking can then be assigned with a default value for the required attributes. This default value can be determined based on a statistical average, e.g. all power generation in the respective country, corrected by all attributes which have been tracked explicitly (this correction is the origin of the name “residual mix”). By applying this correction, unintentional multiple-counting of attributes occurring when implicit and explicit tracking are used in parallel can be largely avoided.

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For further information on these terms and background, see the glossary.

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