Why a Residual Supply Mix Cannot Be Valid in a Multi-Vendor Certificate Environment

A Residual Supply Mix (RSM) is the emission factor assigned to electricity consumers who do not have retired certification to support a renewable energy claim. It is calculated by subtracting all certificated generation from the gross generation of the grid.  What remains is attributed to uncertificated consumers. The mathematical integrity of this calculation depends entirely on one non-negotiable condition: every certificate type must be tracked in a single, consolidated registry that prevents the same megawatt-hour (MWh) from being counted more than once.

In New Zealand's current market, three distinct certificate instruments co-exist — NZECS RECs (administered through BraveTrace), iRECs (issued under the international I-REC Standard), and REGOs (hourly-matched instruments through PATtech). Each operates within its own registry and ruleset, with no mandatory cross-registry deduplication or consolidated retirement ledger. This structural reality renders any RSM calculation fundamentally unverifiable.

‍

‍

What is a RSM and Why It Matters

The RSM is a downstream accounting construct. Under the GHG Protocol Scope 2 Guidance and related market-based frameworks, electricity consumers may either:

•       Retire a certificate (REC, iREC, REGO) to claim the renewable attributes of specific generation,

•       Accept an uncertificated position and report using the RSM emission factor — the carbon intensity of the grid after all certificated generation has been removed.

The RSM tdirectly determines the Scope 2 emissions reported by every entity that has not retired a certificate. It is the emission factor of last resort for the majority of electricity consumers. Its accuracy is the foundation of the market-based accounting system. If the RSM is wrong, every uncertificated consumer's reported emissions are wrong.

The RSM Formula

‍

A key component to this calculation is all certificated generation. If any certificates are missed, the residual is overstated (too much renewable energy is left in the residual, making uncertificated consumers appear greener (lower emitters) than they are.

‍

The Multi-Vendor Problem: Structural Incompatibility

Three Instruments, Three Registries, One Grid

The New Zealand electricity grid is a single physical system. Every MWh generated by a renewable facility is a single physical unit of electricity. Yet in the current certificate landscape, that same MWh may give rise to certificates in any one, or potentially more than one of the following instruments:

‍

There is no central NZ authority that receives retirement notifications from all three systems, reconciles them against a common generation meter record, and enforces that the aggregate certificates issued do not exceed 100% of each facility's metered output in any period. The registries are operationally independent. Their data does not flow into a common ledger.

The Double-Issuance Risk

In the absence of consolidated registry controls, a generation asset registered in more than one certificate system can — whether through oversight, commercial structuring, or system design — result in the same MWh underpinning certificates in multiple registries. This is not a theoretical edge case. The following pathways illustrate the risk:

•       A wind farm is registered with BraveTrace to issue NZ-ECs for its annual output, and separately registered on an iREC-approved platform for international offtake. Without registry-level cross-checks, the same MWh could be issued as both an NZ-EC and an iREC.

•       An asset issues REGOs hourly through PATtech but also holds a BraveTrace registration. If both systems issue certificates for the same generation interval without a shared exclusion rule, a consumer retiring a REGO and another retiring an NZ-EC from the same period are at risk of claiming the same electrons.

The Under-Count Risk Is Equally Damaging

The inverse failure is equally possible. If the entity responsible for calculating the RSM draws data from only one or two registries, certificates retired in the other system are invisible to the calculation. The certificated generation pool appears smaller than it truly is. The residual supply appears larger. The RSM emission factor is then too low, unfairly rewarding uncertificated consumers who are implicitly benefiting from either RSM calculation.

Neither outcome,  over-subtraction or under-subtraction, is acceptable for a market-based accounting framework that governs corporate Scope 2 disclosures, carbon tax base calculations, and regulatory compliance.

Why consolidation to a central registry is the only solution.

A valid RSM requires that the subtraction step be exhaustive and non-duplicative. This can only be guaranteed by a central registry that:

•       Maintains a single, authoritative register of all generation assets eligible to issue certificates, regardless of which instrument or platform is used.

•       Records every certificate issuance event NZ-EC, iREC, or REGO, against the originating asset, time interval, and metered generation volume.

•       Enforces a hard constraint: the total certificates issued across all instruments for any asset in any period cannot exceed 100% of that asset's verified metered output.

•       Records every certificate retirement event across all instruments and makes retirement data available in a single consolidated ledger for RSM calculation.

•       Publishes an auditable, reconciled RSM figure with full transparency about which certificates were included, from which registries, and covering which generation periods.

Without all five capabilities operating simultaneously, the RSM number cannot be verified. It is not a matter of improving methodology or adding footnotes — the underlying data architecture does not support a reliable calculation.

Why no alternative RSM should be published

In environments lacking consolidated registries, a RSM publisher might attempt to calculate an "alternative" figure using only the data available to them typically from their own activity. This is sometimes presented as better than no figure at all. The argument is seductive but incorrect, for several reasons.

It creates false confidence

A published RSM even one accompanied by methodology caveats, signals to users that the calculation is reliable enough to use for Scope 2 reporting. Corporate sustainability teams, auditors, may be tempted to apply it. They will not reliably scrutinise methodology notes to discover that an unknown volume of iREC or REGO retirements was excluded from the calculation. The figure will be treated as authoritative because it is the only published figure.

It cannot be audited

Third-party verification of Scope 2 disclosures requires tracing the emission factor back to its source. An alternative RSM calculated from partial registry data cannot be audited against a complete dataset, because no complete dataset exists. An assurance provider cannot sign off on an emission factor that is materially incomplete by design. Publishing it forces users into a position where their assurable metric rests on a foundational figure that is itself unassured.

It violates the principle of additionality and non-displacement

The RSM serves uncertificated consumers precisely because certificated consumers have already claimed the renewable attributes of specific generation. The two populations must be mutually exclusive. In a multi-vendor environment, the boundary between certificated and uncertificated consumers cannot be drawn cleanly. Some generation may be claimed by no certificate holder (properly in the residual), some by one (properly excluded), and some, in double-issuance scenarios, by two (which should be excluded once but may be excluded twice, or not at all). There is no mechanism to enforce mutual exclusivity without a consolidated registry.

The Integrity of the Entire Market-Based System Is at Stake

Publishing a RSM that cannot be validated does not support the market  it corrupts it. It provides a false baseline that inflates or deflates the value of certificates depending on the direction of the error, and it exposes corporate reporters to audit findings when the methodology is scrutinised by sophisticated assurance providers.

Recommendation

No alternative or partial RSM should be published in the New Zealand market while NZECS RECs, iRECs, and REGOs operate across separate registries without consolidated cross-registry deduplication. Publishing a figure under these conditions overstates the precision of the methodology and exposes users to material accounting risk.

Conclusion

The RSM is not a figure that admits of approximation. It is either calculated from a complete and deduplicated dataset of all certificate retirements across all instruments, or it is not calculable. There is no methodologically defensible middle ground.

New Zealand's current certificate landscape, in which NZECS RECs, iRECs, and REGOs operate through separate channelss with no consolidated cross-instrument reconciliation means that the preconditions for a valid RSM are not met.

The appropriate regulatory and market response is clear: accelerate the establishment of a central, consolidated registry architecture.

Refrain from publishing any RSM until that architecture is operational and has produced a fully auditable result; and require corporate reporters to document the absence of a valid market-based metric for any period during which the consolidated registry is not yet functional.

Publishing an alternative RSM under current conditions would not support the market. It would undermine it — providing false precision, enabling greenwashing, and exposing reporters to material audit risk. The integrity of New Zealand's certificate-based electricity accounting framework depends on getting this right, not getting it done quickly.

‍