The CPA Desk

A Thought Leader Production by PKFTexas

Defining Renewable Energy Reserves – Total Energy Workshop

Next week is Total Energy USA! In addition to the workshop from Byron Hebert, we would like to spotlight a session on Thursday 11/21 we think you will find interesting – Defining Renewable Energy Reserves.

Below is a summary of the workshop:

Total Energy USA Workshop: Defining Renewable Energy Reserves
Thursday, November 21

Summary/background: An important initiative is underway at the UN to develop a proposal for measuring the energy potential in renewable energy in a way that’s consistent with how fossil energy is measured today.  This can be extremely influential in an energy company’s financial valuation and strategic decisions.

Today, well-established methodologies are used to assess oil & gas projects based on agreed criteria. A company’s fossil fuel reserves, described using specific terms such as Proved and Probable reserves (as defined in the Petroleum Resources Management System) are good indicators of its future earnings, and correlate with share prices.  Oil companies seek to move as many barrels as possible from the probable to the proved category, and as production depletes those reserves, they continually seek to replace them in order to maintain and/or increase their market value. The UNFC-2009 is the one reference methodology used to compare across all reserve types including oil, coal, gas and other minerals. While renewable energy sources are by definition not depletable, the idea is to look at future cumulative energy output at a project level and evaluate the cumulative energy output over its lifetime, classified as a reserve. In this way, different energy sources can be compared more easily, and renewable energy’s contribution can be more directly compared to that of fossil fuels.
The UN Expert Group on Resource Classification (EGRC) held a working session in Geneva in April 2013 where it considered the topic of measuring bioenergy / biofuels reserves and concluded that UNFC-2009 can be applied to renewable energy resources.  The EGRC recommended that a task force be established to develop the appropriate bridging documents for all renewables. So far, U.S. interests are significantly underrepresented especially given how large the U.S. renewables industry is compared to that of most of the rest of the world.  This workshop, the first in North America, while not an official UN meeting, is designed to create awareness about the concept of renewable energy reserves and identify the appropriate stakeholders to be recommended to the new UN task force to address this topic.  Its a significant opportunity for any company that has renewable energy generation in its portfolio.