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ATTRIBUTES OF RESIDUAL SUPPLY

NZECS Residual Supply Mix for electricity certification

The NZECS has, as one of its core objectives, the goal of increasing information and understanding around the way electricity is generated in New Zealand. 

To this end, we make sure that generation attributes contained in certificates purchased through the NZECS are not also claimed by non-participating energy users. The mechanism by which we do this is called the Residual Supply Mix, or RSM.

The RSM describes the nature of the electricity for use by reporting energy consumers who do not purchase NZ Energy Certificates directly from generators. It is a key part of how greenhouse gas emissions are accounted for in New Zealand.

2020/21 Annual Residual Supply Mix

The annual RSM has been calculated for the period from 1 April 2020 to 31 March 2021. This was the second year in which NZ Energy Certificates (NZ-ECs) were transacted in New Zealand, and so the RSM remains similar to the NSM. The table below compares the RSM figures between the Production Years 2019/20 and 2020/21. 

National Supply Mix (NSM): the total mix of electricity generation supplying New Zealand's domestic demand.

National Supply Factor (NSF): the emissions factor of the National Supply Mix.

Residual Supply Mix (RSM): the mix of electricity generation minus volumes transacted within the NZECS.

Residual supply Factor (RSF): the emissions factor of the Residual Supply Mix.

The big change year-on-year was the difference in the underlying generation mix of New Zealand. The RSF in 2019/20 was 99kg CO2-e/MWh. In 2020/21 this increased by almost 30% to 125kg CO2-e/MWh. While the purchase of certificates contributed to the increase in carbon content of the RSF, the major driver was the reduced availability of renewable energy resources throughout the course of the year, with hydro lake inflows dropping to approximately 90% of the historical average over the period. The drop off in hydro generation was made up by increased levels of thermal generation comprised of coal, gas and oil. Consequently, the proportion of renewable generation dropped from 83% during 2019/20 to 80% during 2020/21, as shown below.

Total electricity generation by fuel type: 2019/20 vs 2020/21

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2021/22 Monthly Residual Supply Mix (trial)

In addition to the annual RSM calculation shown above, Certified Energy is trialling the development and publication of an RSM on a monthly basis.

The calculation and publication of the monthly RSM is undertaken on a trial basis to test with stakeholders the value of having more recent and granular emissions information available. Use of the monthly RSM would allow electricity users to report the specific monthly emissions factors for their reporting period, without lag.

The interactive chart below shows the RSM for each month starting from 1 April 2020. This chart will be updated in the first half of each month with the RSM data of the preceding month.

 

Click on the toolbar at the bottom right of the chart to download a full-sized workbook showing the version history.

Read a blog article on the intent behind the monthly RSM.

*Cogeneration is an energy efficient technology in which heat and electricity are by-products of the process. However, its primary functionality is not to produce electricity. Thermal generation uses heat produced by burning coal, diesel or natural gas as fuel to produce electricity. Cogeneration is a subset of thermal generation. 

Monthly RSM - calculation methodology

The Monthly RSM is calculated using the same basic approach as the annual RSM - building up a model of supply by adding up generation and emissions data from each of the generation facilities in New Zealand, and adjusting for the volume of certificates redeemed within that month.

This method is highly transparent, and flexible to improve over time, as we will seek to improve individual assumptions in order to improve the accuracy of the output figures.

The calculation of the underlying national supply mix is performed by EnergyLink to our specifications, and incorporates transaction data produced and held within the NZECS Registry. For this reason, these national supply factors will vary slightly from numbers produced by the Ministry of Business, Innovation and Employment (MBIE), due to differences in underlying inputs and assumptions.

A description of the methodology taken in the link below. 

 

This document also discusses potential approaches to improving the RSM methodology. 

NZECS Residual Supply Mix methodology - approach review and detail

(Prepared Dec 2019, current for 2020/21 calculation)

Additionally, further information can be found within the NZECS RSM technical note.