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 New Zealand Energy Certificates (NZ-ECs) transacted 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.
Parties wishing to report on the emissions intensity of grid-supplied electricity can now rely on either the RSM, or the specific information contained within NZ-ECs provided to them by their supplier. These two options market-based factors are in line with requirements for dual reporting as laid out by the Greenhouse Gas Protocol.
2021/22 Annual Residual Supply Mix
The annual RSM has been calculated for the period from 1 April 2021 to 31 March 2022. This was the third year in which NZ Energy Certificates (NZ-ECs) were transacted in New Zealand, and the difference of RSM from the NSM continues to grow in line with growth in the number of transacted certificates. The table below compares the RSM figures between the Production Years 2019/20 - 2021/22.
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.
Renewable electricity generation in New Zealand made up almost 83% of total supply, up on the previous year and almost back to 2019/20 levels. This saw the emissions factor for the underlying National Supply Mix (the NSF) drop to 108.83kg/MWh.
A threefold increase in the volume of certificates transacted in this Production Year leads to a larger difference between the NSF and the RSF this year, almost 2%. This gap is expected to continue to widen over the coming years.
The table below shows electricity generation by type for each of the last three Production Years.
Total electricity generation by fuel type: 2019/20 - 2021/22
Multiple sources of generation and emissions data
The NZECS provides a source of emissions information that is adjusted for all market-based claims, however we recognise the existence of other sources of similar data. Both Transpower and MBIE publish information on grid generation and emissions, and MfE provides emissions factors for grid-supplied electricity.
Certified Energy has performed an initial evaluation of these data sources and their variance, published below. As part of ongoing efforts to provide a common view on emissions ownership, we will seek to further reconcile and harmonise our data and others.
Variance note - 2021/22 Production Year (published June 2022)
2021/22 Monthly Residual Supply Mix (update)
In addition to the annual RSM calculation shown above, Certified Energy has trialled the development and publication of a monthly RSM throughout the 2021/22 Production Year. These monthly figures have now been updated with final end of year certificate transaction volumes.
Availability of the RSM on a monthly basis have been positively received by stakeholders, and Certified Energy will be engaging with NZECS Participants on the publication of an accurate monthly RSM. In the short-term, users should be aware that the monthly RSM will be subject to significant change at the end of each Production Year as final transactions are performed throughout the year.
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.
**Rolling 12 month average values are inclusive of the month of display.
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 is provided 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 2021/22 calculation)
Additionally, further information can be found within the NZECS RSM technical note.