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Small scale self-consumed solar methodology, by PeerCo #2

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269 changes: 269 additions & 0 deletions PeerCo/small_scale_self_consumed_solar.md
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<!--

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# Small scale solar self-consumption methodology

**Name**: *Small scale solar self-consumption*

**Developed by**: *[PeerCo](www.peerco.earth)*

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Let's discuss when development attribution should be stated. My thought is that it makes sense for this early stage where we should have a central champion to answer questions, but eventually we want these to be generic/coming from the EAC Alliance

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Sample for once we get there:

"This methodology was developed by the Technical Committee on Solar Consumption, under the jurisdiction of the Strategic Steering Committee, and has been formally approved by the Technical Committee.

If needed This methodology has been developed in compliance with XYZ (Level 10, Green-e etc.) requirements."

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In the voluntary carbon markets, the people who develop the methodology are paid a small licensing fee of some kind to recover costs of developing the methodology in the first place. In this model, the group that develops and approves this would be compensated. Does the initiating company get some form of 'lead author' or 'initiating company' designation so that any questions can go back to us specifically. Some of the people in the technical committee might be representing their personal views, whereas PeerCo is initiating this as a company. There needs to be a clear distinction or understanding. One to be discussed in the steering committee.


**Revision date**: *June 7th 2024*

**Sectoral scope**: *Energy / Energy Distribution / Energy Demand / Carbon Capture and Storage*

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Is CCS an appropriate Sectoral Scope for solar self consumption? Is this referencing a particular/well known methodology for scope?

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This was from a sectoral scope linked to the carbon market / clean development mechanism methodologies we based this on. We can remove sectoral scope if it isn't relevant or remove CCS specifically

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@Pierre-VF Pierre-VF Jul 9, 2024

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CCS is now removed (revision here) - for the general relevance of the sectoral scope, there is a bigger question whether we want to have it in all methodologies or whether it is not regarded as a relevant element by the alliance.



## Summary description

This methodology for measurements and verification of self-consumed small scale solar generation on a given site. The purpose of this methodology is to generate environmental attributes from this solar energy, which can then be used in reporting or traded.

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Think we should state explicitly that the purpose is to generate an Environmental Attribute Certificate representing the environmental attributes of the specific generation and consumption (such as location and time) of on-site solar energy.

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Agreed. This is addressed in a new version here


## Definitions

This section provides definitions of the key aspects of this methodology.

### Normative language

The following terminology is used throughout this document to outline requirements and guidelines (accordingly with common standardisation practices):
- **shall** indicates a *requirement*,
- **should** indicates a *recommendation*,
- **may** indicates an *option* that is permitted.

### Acronyms

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Comment for OpenEAC committee rather than on this specific method: should there be a central library of acronyms & glossary, to avoid a future situation where we are seeing the same terms used with different definitions?

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good idea

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In principle, that's a good idea. However, for validation purposes given that methodologies with a given version are considered normative, there would be a need to always synchronise a given methodology version with the corresponding glossary/acronym list etc.
The current approach where methodologies are self-contained allows us to circumvent that complexity.


*(this section shall contains the list of acronyms in alphabetical order)*

| Acronym | Full text |
|---------|---------------------|
| CDM | Clean development mechanism |
| EAC | Energy attribute certificate |
| GHG | Greenhouse gas(es) |
| PV | Photovoltaic |
| UN | United Nations |

### Glossary

- **Digital certificate** is a generic term designating environmental attributes in digital form generated using this methodology. Examples of these include EACs and carbon credits.

- **Emission intensity** (or *carbon intensity*) is a measure of how clean grid electricity is. It refers to how many grams of carbon dioxide equivalent (gCO2e) are released to produce a kilowatt hour (kWh) of electricity. In this methodology, an *average* measure of this factor *on the demand side* is considered at every point in time, meaning that this number reflects the carbon intensity of the *average kilowatt-hour consumed* in a given time period.

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Can we define demand side here? Also point in time, aka hourly?
"Average kilowatt-hour consumed" in a grid subregion? In a balancing region?

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Addressed here.
We deliberately kept flexibility for the zone definition as this fundamentally depends on the geography and the data (e.g. emission intensity data) available. However, I added a requirement to disclose this choice at EAC level.


- **PV asset** is a set of photovoltaic arrays and associated inverter(s) converting solar irradiance to electrical power.

## Applicability conditions

This section lays out the requirements on a given context for this methodology to be applicable.

### System eligibility requirements

The system to which the methodology is applied shall meet the following requirements to be eligible:

1. the rating of the PV is between 30 kWp and 5 MWp

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Add kWp and MWp to the acronym table?

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We had considered it obvious in our context, but it's potentially good to remind in an international context. This is now added here

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@Pierre-VF what is the reason for these sizing constraints? Is this purposely meant to exclude residential solar?

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@Pierre-VF Pierre-VF Aug 29, 2024

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We're actually removing the lower bar now (we want small scale to happen - I'll update the PR). However, the upper bar is basically to explicitly exclude large-scale


2. the system is a fixed installation, meaning that the PV system is mounted on a unique specific site where it will operate throughout the project

3. generation is measured by a digital meter with hourly (or sub-hourly) resolution whose data can be communicated automatically by digital means

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Open to discussion, but why does the data need to be communicated automatically by digital means? Could imagine a solar system which stores hourly data but is read manually each month

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Agreed we should be able to have a way to not have full technical integration if this becomes a huge cost/barrier. Verification would therefore need to be robust enough to not allow 'gaming' of the spreadsheet that is read manually.

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Agreed, automatic data communication can be a barrier which we don't want to have. 'Gaming' is in practice as much of a concern for automatic communication as it is with spreadsheet (unless a trusted 3rd party API is used - e.g. with large established inverter manufacturers where the extra context provides extra robustness).

I've addressed this here and here, where I also added a requirement on metering of the site demand and export (so we're sure to not include the exported fraction in our EACs)


4. the asset owner documents the following:

a. PV asset type and brand

b. location of the installation (address, or GPS coordinates if an address is not available)

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Smart. Maybe require both? Also, we should state that the address must be complete, and maybe we should put the onus on the asset owner to report the grid and grid subregion e.g. Zone J NYISO

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It's easy to retrieve one from the other using an API, so for user practical/convenience reasons we're sticking to one mandatory here.
Regarding the disclosure, I wouldn't put that burden on the asset owner, as (1) not all of these might have that kind of fluency, (2) the choice also depends on the carbon intensity data available for the zone, (3) the zone details might change over time (e.g. geographical granularity becomes better) while we wouldn't want to have to update an agreement with the user if this changes (as the elements disclosed in this list are likely to be part of a written contract with an asset owner, it's good to stay minimal)


c. date of installation

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No idea if this would be significant, or if it's just unnecessarily pedantic (!), but should "installation" be more specific? eg. it could be physically installed one day, but not fully operational until a later date. Date on which high frequency data generation commences?

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Good point, that phrasing was not sharp enough. It is now updated (as well as a few other places for consistency) here


5. the power produced by the PV asset does not displace other on-site power generation (i.e. there is no on-site power generation whose output is affected by the generation of the PV asset)

6. the asset owner or operator is not already being rewarded for self-consumption by another entity (e.g. government subsidies, ...)


### Requirements on the system during the project lifetime

During the whole duration of the project, the PV asset owner shall demonstrate proof of ownership of the asset and continued operation of the self-consumption. This documentation shall be made via all of the following:

- sharing of consumption data throughout the period,

- in the case of usage of the environmental attribute in reporting:
- contractual renunciation to the possibility of transfer of the environmental assets to a third party.

- in the case of sales of the environmental attribute to a third party:
- contractual transfer of the environmental attribute ownership of the self-consumed generation,
- carbon accounting for the site (location and market-based) should reflect the sale of the carbon reduction corresponding to the transfer of the certificate.


### Requirements on the operating context

The project country shall meet the following criteria:
1. delivery of micro-solar is not a requirement for building development or to meet an enforced carbon quota,
2. emission intensity data is available at the hourly (or sub-hourly) level for the national or local grid.

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intensity data at the national level does not align with my understanding of how OpenEAC was intended to function (maybe it's me that's wrong there!). If this would be sufficient in exceptional circumstances, we need to say clearly what those are

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As a specific example of country-wide data: France where regional data is not available today. Data granularity varies a great deal from one place to another, and we therefore need to support a variety of cases - with, of course, the principle that good local data is always better than national or worse.

More details on this in the next answer to your comment below


In cases where this methodology is used to generate carbon credits, extra requirements shall be met:

3. PV arrays are not installed on more than 10% of all buildings in the market of operation

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Interesting, why is this? Also, we should state that that these arrays are not installed on more than 10% of all buildings "during the hours when carbon credits are generated" or similar

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Again, in the carbon markets there is a goal of not investing in things that are already 'mainstream' but for these Energy Attribute Certificates there are other goals for the certificates (like hourly matching) which means we should remove this.

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The methodology has now been made EAC specific (so these carbon credit-related requirements are removed) - see changes here



## Project boundary

GHG sources included or excluded from the project boundary.

| Source | Gas | Included | Justification |
| -------------------------- |---------|----------|------------------------ |
| Grid electricity displaced | $CO_2$ | Yes | Main emission source |
| Grid electricity displaced | $NO_x$, $SO_x$ | No | Emissions data is not sufficiently granular and available the half hour or hour |

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Have you thought about the emissions due to other life-cycle phases e.g. manufacturing, installation etc?

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@Pierre-VF Pierre-VF Jul 16, 2024

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Whether these are taken into account depends on the emission intensity data. ElectricityMaps uses lifecycle data (from IPCC) so that it would take this into account if you use that specific factor of theirs. Other providers typically take a fuel-based approach (i.e. more or less scope 1), which would not account for the lifecycle.
On this level, we're therefore bound by what's available for a given geography.

Speaking of lifecycle, we would then need to also have a model of the emission intensity for the PV panels (lifecycle impact of the installation / expected MWh of production over lifetime) which adds significant complexity. At this stage, data available on most installations wouldn't allow us to accurately compute such a number - so I would not advocate for making it a mandatory requirement (however, optional might make sense, just like EnergyTag does)


## Measurement

This section introduces the underlying data requirements.

### Asset data

PV production data shall be acquired via automatic digital communication to PeerCo's cloud once the project is established. However, in the initial phase of setting up a project (qualifying the site, its data and quantifying the benefits of the scheme), offline extractions of the data in an open format (which may be CSV, XLSX, etc.) may be accepted.

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Since the method is meant to be general, we could say that the data needs to be made available to multiple via a certain format but not declare where it should be stored.

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@Pierre-VF Pierre-VF Jul 5, 2024

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Here's where we had some uncertainty about how much the approach consists in disclosing one's own methodology (i.e. with the details of one's context) versus making it generic for anyone to use.
We therefore chose the first approach (also made further visible by the use of a "PeerCo" folder), which implied that we'd specify PeerCo's cloud. I can however see that your vision differs on this, which makes it worth bringing this up in the Steering Committee

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Agree that we should discuss in the steering group meeting.


All self-consumption data (and related generation data) shall be quality controlled prior its usage to generate verified certificates. This verification shall include:
1. the maximum PV generation is in line with the PV asset's nominal rating,
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2. self-consumption is always lower than the total consumption,
3. no significant PV generation is happening when there is no solar irradiance (e.g. at night).

Where data is missing, filling of the gaps sall be allowed under the following conditions:
1. data is not missing more than 5% of the time,

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Propose adding in a time period, i.e. over a trailing week or month period.

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@Pierre-VF Pierre-VF Jul 5, 2024

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Agreed. I'm adding a "per calendar month" in a new commit.

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Thank you, Pierre!

2. gaps are filled with data whose daily profile and magnitude is consistent with the rest of the asset generation,
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It'd be great to include some guidance on some proposed methods around filling those gaps!

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There will be different methods depending on how the gaps appear. How detailed should this methodology get in defined the acceptable methods or is this up to the verification party?

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@Pierre-VF Pierre-VF Jul 8, 2024

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My thought at this stage further to Stephen's input was to propose a few options in appendix. I just haven't written them in there yet. What is clear to me is that we need to restrict to 'explainable' methods (i.e. blackbox AI is a no-go) for accountability reasons.

@ssuffian - if you guys have some specific ones already, I'm happy to reference them here too. Probably not down to code details, but a reasonably sharp method description allowing to reproduce and assess specifically enough.

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We don't have anything super specific at WattCarbon yet, as our approach has been to only mint EACs for hours that we have actual data.

I imagine for solar it might be safe to do something as simple as a linear interpolation if an individual gap is no more than an hour long, and for longer gaps possibly using a previous day, same hour value, and as a last resort, some sort of solar+weather model to predict? I think it'd be important to make sure that the output data indicates whether a value was measured or computed, as that might change the end value of that EAC.

I was at the most recent meeting for the LF Energy OpenEEMeter and they had something cool but a bit more complex related to auto-correlation, it might be worth it to reach out to them: https://lfenergy.org/projects/openeemeter/ if we want to come up with a general approach.

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Thanks @ssuffian for the input.

At this stage, given that others do not consider gap filling, that other methodologies (even OpenEEmeter has carefully avoided formalising this in their latest version so far) do not do it either, and that we want to keep the discussion focus on essential points (governance etc - rather than such technical details which can be divisive), we decided to withdraw the acceptance of missing data with a threshold.

This is reflected in this commit.

@ssuffian, we may however want to address this in a future version, once we have the big picture agreements in place and gather experience as an alliance. Happy to take the discussion again when we get there

3. if accumulated values are available for the relevant energy measurements, the sum of the generation over the missing data periods shall equate the generation indicated in the accumulated measurements.

When carrying out this asset data verification, a tolerance should be given for numerical purposes (e.g. to account for rounding of measurements by digital systems). This tolerance shall however not be of a magnitude that significantly impacts the volume of the certificates generated.

### Emission intensity data

The emission intensity data used in calculations shall originate from the source in the table below for the geography corresponding to the location of the assets.

| Geography | Emission intensity source |
|---------------|--------------------------------------------------------|
| Great Britain | [National Grid ESO's *carbonintensity.org.uk* API](https://www.carbonintensity.org.uk/) |
| Germany, Nigeria, Portugal, Spain, South-Africa, Switzerland | [ElectricityMaps API](https://www.electricitymaps.com/) |

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We can add the EIA for the US

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I'm not sure we should be specifying particular data sources. Think we should just define the requirements these data sources need to meet.

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@Pierre-VF Pierre-VF Jul 5, 2024

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I agree that this would make the method easier to scale to new countries without amending.

I proposed an update of this in a new commit.

@mattwc-openeac - happy to add the EIA if you provide me the link to that dataset.

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agree


The source of the carbon intensity data shall be recorded as part of the digital asset generated.


## Verification and additionality

This section provides the key aspects of the verification methodology, based upon the data of the previous section.

### Baseline scenario

The baseline scenario considered is a scenario where the PV asset is not installed, therefore zero generation happens from this asset and electricity is imported from the grid instead.

### Quantification of GHG emission reduction and/or clean energy produced

This methodology supports the generation of EACs accounting for the energy consumed on site, which also account for the avoided carbon emissions (as an extra information embedded in the certificates).

The clean energy generation accounted in this methodology shall be limited to the self-consumed part of the PV asset (i.e. exports are thereby excluded, as they may already be accounted for in another certificate scheme).

Certificates shall be generated for specific time periods, where the length of these time periods shall not exceed one hour. In contexts where the electricity market's settlement period is less than an hour (e.g. 30 minutes for Great Britain), the certificates may be issued for durations matching this settlement period.

For each period *i*, the certificate's energy content shall be:
> EAC energy content[i] [kWh] = Self-consumed PV asset generation[i] [kWh]

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It seems to me that the offset should be based on the difference between the amount of grid electricity that would have been consumed in the counterfactual no-solar-panel world, and which is not consumed because of the installation.

Is that number the same number as the total self-consumption? I think it could be, but I could also imagine a customer self-consuming more electricity than they otherwise would have without panels. You could even end up with a perverse incentive where people deliberately self-consume more and more electricity to fraudulently generate larger credits. Have you thought about checking for this?

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We are assuming there are other incentives at play that make the maximising for self-consumption aligned with those other incentives. If they have a battery, they will also be trying to use that and discharge rather than using the grid. If they have an electric car, they may be trying to charge it. For SMEs the idea of having contextual data so that we can show their per unit energy and carbon intensity (and that it is going down) will also be possible.

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@paulteehan - the counterfactual in this methodology is indeed assumed to be grid import for the whole value for the PV production (i.e. we assume that no demand change happens following the installation of PV - neither in amount or time of demand).

Here, we need to remember that the credits are either used in reporting or trading.

  • When reporting, they wouldn't really profit from more demand, as that's a cost implying more import or less export (while no profit from EAC sale).
  • For trading, the same applies (bearing in mind that the EAC value is likely going to be significantly under the kWh value for the electricity itself - so that they would actually make a loss by gaming). On top of this, entities that need to report would therefore give away the 'greenness' of that demand (as the attribute is sold) which would then result in degrading their carbon reporting further and have even less incentive to game it.

Does that make sense to you?

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We discussed this in the open EAC alliance meeting today and the following points came through:

  • It's not obvious if the assumption of no demand change following PV installation is valid or not.
  • Because these EACs will be used as carbon offsets, any optimistic over-counting of emissions reductions will result in double-emissions so it's important to get the numbers right
  • The group recognizes that the burden of evaluating counterfactuals is significant, especially if you get into the full protocol of 12 months of baseline data, max bias and error thresholds, non-routine event adjustment, etc. Some people think this analysis is necessary and some take a more pragmatic approach to getting the projects done.
  • Are there studies that exist which could validate the assumption?
  • Perhaps this could be an issue for residential but not commercial customers
  • Perhaps customers that make material changes e.g. EV installation following installation should be excluded

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Thanks for the summary of your subgroup's reflection yesterday. We definitely agree that counterfactual building is a difficult task where the method and outcome depend on the application case (eg. residential, industrial process, commercial,...). Without resorting to a full-scale literature review, the following demand changes can be named: demand flexibility to match local production (which in practice is a combination of PV installation and the introduction of a demand control scheme), further electrification on site (EV, heat pump, ... - where again a combination of actions is happening), increase in demand (either due to rebound effect on power cost, or production expansion for industry). While some of these are a combination of actions, where solar might have acted as a trigger, it isn't clear how and where to draw the line of the solar-specific change.

Having said that, and witnessing the agreement on the complexity of the matter, there's a question whether we could specify counterfactual models precisely enough to be transparent while covering most cases. Another question arising then is whether this would reach a methodology size, consensus level and complexity that is compatible with our review process. On this level, we would expect that the answer is far from a 'yes' within a reasonable time horizon.

This is why we propose to stand by the current counterfactual, maybe making it more explicit so that it doesn't appear to be a blind spot but rather a mindful choice. The specification of this counterfactual could be a more central/defining element of this methodology (eg by also adjusting the title to signal this), so that it'd be clear and transparent to users and EAC buyers. For applications where counterfactual building can be specified and agreed upon more easily, we should promote the creation of new versions as opportunities arise.

From a tradeable instrument perspective (rather than carbon credit), it is also worth bearing in mind that the counterfactual might need to be thought of differently and more from a market based approach. Specifically here, what the EACs represent is the solar power that was used on a site (rather than importing) which is transacted with another party as a way to 'swap' their import of power with the solar production on the other site. Adopting this perspective does raise much fewer questions as to the validity of the current counterfactual.

However, this is more of an EAC discussion than an M&V one.

Please let us know what your thoughts are on the above.

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Hi @Pierre-VF , I'm happy to give my personal perspective on this approach, with the caveat that I'm not sure what happens when I do - do we have to reach a kind of consensus in order to move the method forward, or is it more that you might take my comments under advisement? I might make a critique in the interests of maximizing rigour, but I wouldn't necessarily want to be an obstacle, and I'm just a practitioner with a perspective which is as valid as anyone else's here. Perhaps a question for someone from WattCarbon (@ssuffian ?)

My opinion is that if you have factors in your equation that are uncertain or unknown, such as rebound effects, additional electrification, etc, then you need to model these as accurately as you can, and issue a credit which is conservatively on the low end of your range to account for the unknowns. (This also holds for life cycle impacts mentioned above.) I don't think that measurement complexity or difficulty in obtaining good numbers are reasons to conclude that factors can be ignored completely or assumed to be zero. Rather these are arguments that an accurate calculation cannot be made at all, and therefore we should not be issuing credits at all. I do agree with the point about tradeable instruments; I would hold offsets or credits to a far higher methodological standard since they are associated with actual physical emissions and if the numbers are found to be overly optimistic that could undermine the integrity of the market and the goal of decarbonization itself.

If this was my project, my next step would be to try to get hold of some pre/post data for a sample of customers and see if I could measure the change in demand and determine whether increased self-consumption perfectly matches decreased demand, and if it's off, by how much. Or, perhaps find some reasonably proxies in the literature. Then I would include that error in my equations so that I'm reporting a pessimistic number.

and its carbon content shall be:
> EAC carbon content[i] [gCO2e] = (Self-consumed PV asset generation[i] [kWh]) x (Average grid emission intensity[i] [gCO2e/kWh])


### Information content of the digital certificate

The following conventions shall apply to the information provided:
- timestamps are given in UTC timezone
- dates are given in the local timezone where the asset is located
- "period" refers to the specific time range with explicit start (inclusive) and end (exclusive) where the corresponding amount of energy was generated
- energy amounts are expressed in Wh

The digital certificates resulting from this verification methodology shall contain the following information:

- PV asset informations:
- Name of the production device
- A unique identifier
- Address where it is installed (optional if GPS coordinates are provided)
- GPS coordinates of the installation (optional if full address is provided, as it will be inferred from it)
- Rated power (kWp)
- Date when the commercial operation of the system started

- Grid connection information for the site:
- Market bidding zone
- Identification of the grid connection

- Time information about the period:
- Start timestamp
- End timestamp

- Energy content:
- Amount of PV generation from the asset that was self-consumed over the period (in Wh)

- Emission intensity of the grid:
- Average emission intensity of the grid over the period
- Source of the average emission intensity data

- Details about certificate issuance:
- Timestamp when the certificate was generated
- Country for which the certificate is issued
- A link to this methodology (where the URL points to the specific version used to generate the certificate)

- Legal information:
- Reference to the contractual proof of ownership of the environmental attributes generated by the PV asset.


### Specific additionality criteria for generation of carbon credits

In cases where this methodology is used to generate carbon credits, the contract granting ownership of the environmental attributes derived from the project shall be signed prior to the start date of the electricity generation from the PV asset.


## References

*(None)*

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# Appendix

Contextual information is provided in the appendices below. These only contain informational elements which do not hold normative value.

## Appendix 1 - Underlying motivation for the methodology

**Market failure**

Small-scale rooftop solar generation costs more to deliver per kWh of electricity produced than commercial solar arrays, and the economic case worsens for urban sites where installation is usually more costly. Electricity generated from a solar array can either be consumed immediately on-site, stored in a battery for later use, or exported to the grid. When renewable electricity is sold to the grid, it effectively creates an Energy Attribute Certificate (EAC), which can be resold, with or without a sale of electricity, to cover either a green power purchase agreement or an EAC sale. In the case of the solar electricity, from the same array, which was self-consumed on-site or stored in a battery, it has the same attributes as the electricity sold to the grid and, likewise, has a linked EAC. Typically, because self-consumed electricity does not pass onto the grid there is no verification of its creation and therefore no revenue stream. PeerCo recognises that a carbon backed revenue stream either, in the form of an EAC or a carbon credit for self-consumed renewable electricity, has the potential to positively shift the business case for smaller sites including public buildings, schools, individual roof-tops within designated energy communities, commercial and industrial buildings, and a multitude of urban buildings were installation is expensive and roof-tops are small relative to overall building size.

There is no specific market tool other than the retail price of electricity that encourages self-consumption, even though decentralised solar has huge potential to both provide renewable electricity with less burden on the grid, improve resiliency, and reduce the carbon footprint of the building user. Furthermore, urban solar generation is providing renewable electricity at the points of consumption.

The only real difference between self-consumed electricity and electricity exported to the grid is that the exported electricity flows through a payment meter and this provides verification. Self-consumed electricity also often flows through a sub-meter and can be captured through a range of smart meter and e-Car charging apps. The data is now there to fully account for this electricity. The UN Clean Development Mechanism does allow for generation of a carbon credit linked to grid connected, self-consumed electricity generation in Annex 1 Countries, and accounts for this value through its methodology. PeerCo is addressing this same carbon savings for small-scale arrays located in more countries provided that there is metered data and third-party verification.

**Tools and methods used as a reference**

This methodology used the latest version of the following tools:
- CDM methodological tool Demonstration of additionality of small-scale project activities
- CDM methodological Tool for the demonstration and assessment of additionality

This methodology is based upon approaches used in the following methodologies:

- CDM methodology for Grid Connected electricity generation from renewable sources
- CDM Methodology for zero-emissions grid-connected electricity generation from renewable sources in Chile or in countries with merit order based dispatch
- CDM Small-scale Methodology for Renewable Electricity generation for captive use and mini-grid.
- [AMS-IA: Electricity generation by the user --- Version 19.0](https://cdm.unfccc.int/methodologies/DB/1TIFADHWTMIW25TAL778RLEFJ6AWBB)


All of the relevant existing methodologies are published by the UN Clean Development Mechanism, which focuses on larger scale projects in emerging economies. The small-scale methodology for renewable sources can include projects such as tidal and hydro and can be as large as 15MW. These are still large installations when compared to the small arrays that are being placed individually on roof-tops of homes, offices, warehouses and commercial and industrial buildings.

The methodology being presented by PeerCo is for even smaller-installations than outlined in the CDM methodology, between 30 kWp and up to 4.9 MWp. The micro-versus small-scale is a key distinction as the economics are quite different. In this way, the PeerCo methodology is new, but fits within the same structure, aims and similar emissions calculations to the CDM methodologies.

The other key difference is that the PeerCo methodology is intended to be used in any country where the delivery of micro-solar is not a requirement for building development or to meet an enforced carbon quota.

**Additionality considerations**

The concept of additionality is that a project or investment would not have happened were it not for the additional carbon revenue stream. However, there is sufficient market evidence to prove that without subsidy, small-scale solar, particularly urban solar, has a long repayment period resulting in a marginal business case. Any user of this methodology should use direct carbon funding to those organisations that are making these marginal investments. In countries that are not Kyoto Protocol Annex 1 Countries, there is an even higher threshold for meeting additionality. PeerCo is addressing this point by retaining a percentage of any income stream linked to the use of this methodology and co-investing these funds into community owned energy companies or energy efficiency measures in social housing.

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That's an interesting strategy, can you say what percentage of income is re-invested and how you chose that number?

Do you see a possibility of free-riders in your programs and is this investment meant to balance against those?

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We were initially addressing this for carbon market audiences and because we are now purely looking at EACs, the point made here is more for the carbon markets and we should potentially remove this. We don't see people 'free riding' but we want to - as much as possible - prove an ongoing journey of electrification and decarbonisation which means we would like to see them build on their investments. One solar provider did want to offer this kind of proof of reinvestment and another wanted to use the proceeds to invest in more metering. but this is likely to be on a case by case basis.

Small-scale, self-consumed solar electricity is additional because it has the potential to enable grid systems to decarbonise faster by generating electricity at the location of consumption, within the low voltage, electricity network (after the substation). Small-scale, intermittent, solar electricity that is exported to the grid can create capacity problems in local areas, requiring investment, but its delivery at scale can also reduce the need for larger investments in the transmission network. Incentivising self-consumption of solar is a win-win where the local burden on the network is reduced in tandem with overall demand. Furthermore, more local solar PV and on-site use, supports Sustainable Development Goal 7 - Affordable and Clean Energy, by capturing the carbon value and making it more affordable.

Additionally, there may be situations where solar was delivered as a requirement for development approval for a larger project. PeerCo is valuing the carbon reduction that is delivered by choice, not as a requirement. In some countries and regions, there are financial incentives that may shift the financial case for a solar investment and self-consumption, and for these reasons, PeerCo is assessing the applicability of this methodology on a country by country basis.