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Community and Q&A

How to think about “Green Choice Energy Programs”?

jameshowison | Posted in General Questions on

In Austin we have a program where one chooses more expensive electricity and the utility commits to sourcing the household usage through low-carbon options (primarily wind power).  e.g.,  There are similar programs, each with a twist, around the country, e.g.,

I wonder if anyone knows the “technical” term for such programs, and if there are studies about their effects (maybe someone like Rocky Mountain Institute has studied them?).  I wonder how to think about them in two contexts:
– when looking at analyses that include local/state info on carbon intensity of electricity (e.g, Texas grid has dirty coal power, but my house has clean wind power?)
– vs considering solar installations on one’s house. ie. are they at all a source of reasonable claims of equivalence to “zero net energy”?

I’m thinking that it really depends on what the utility would have done without this program. I’m thinking that, at the margin, they are a source of free investment funds for the utility, meaning that they reduce the cost of borrowing to invest in renewable energy by whatever the utility would have had to pay in interest?  So figure out capital costs for renewable investments. take out interest on funds available through the green choice purchasing and then figure out the overall cost of the renewable investment? ie it makes wind/solar utility scale investments a little bit cheaper, and in aggregate makes the grid mix a little less carbon intensive?

But at an individual carbon load accounting level, how should we think of them?

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  1. Expert Member
    Dana Dorsett | | #1

    The accounting has to be different depending on the local regulatory structures within your state. In my state utilities are not allowed to own generation assets, and are not allowed to enter into power purchase agreements with merchant generators with terms longer than six months, and are required to pass along those charges at cost, no markup.

    But retail customers are allowed to enter into electricity contract of any term duration through electricity brokers, and it's possible to buy 100% renewable energy for less than the utility's standard grid-mix pricing.

    Even though I'm living in New England my current power contract is 100% wind costing less than the utility's standard mix, purchased through a broker in Florida that has a contract with a wind farm in Texas. While the notion that that power is being shipped to New England is an accounting fiction, the reduction in carbon emissions is better than if that power was being generated in my own county, since the average carbon footprint in the ERCOT (Texas) grid region is currently higher than than in the ISO-New England grid region, and the cost of onshore wind in Texas is lower than in New England- it's really a win on a carbon basis, less so on a New England local air pollution basis.

  2. jameshowison | | #2

    Excellent, Dana, that really shows the complexity here. Do you consider your electric usage to be low carbon (as if you had your own solar array plus battery)? I mean I think it's a reasonable argument. Your wrinkle about the air pollution location is another I hadn't thought of.

    Certainly I think all these schemes help to signal the customer's valuation of renewable sources, and increase the profitability of renewable sources.

    1. Expert Member
      Dana Dorsett | | #3

      Even though the marginal power on my regional grid is usually supplied by combined cycle natural gas (half the annual power generated in the ISO-New England grid), "my" power usage is low-carbon, because it is directly paying for low-carb power going on to the grid somewhere, even if not the local grid. I'd be happier if the generator were more local to me, and have been looking into community solar options.

      The sales tactics of the community solar folks are as snake-oily as some of the rooftop solar people, who seem happy to promote the notion that electricity pricing is highly inflationary and will be rising at twice the base rate of inflation despite ample evidence that utility scale solar and utility scale wind is cheaper than "conventional" generation sources in many markets now, and will be even cheaper in 10 year.

      This summer one of the remaining nuclear plants in New England (the Pilgrim plant in Plymouth, MA) will be retired, but in the same area the construction large scale offshore wind before the end of 2019. While the power generated by the offshore wind initially will be more expensive than the nuke, bids on the first tranche of investment has already beaten the anticipated pricing of the third tranche, and it seems likely that the third tranche slated for the 2028(?) will come in cheaper than existing nuclear power. Initially there combined cycle gas will be covering most of the lost capacity, but also conservation/efficiency and solar (both large and small), and a planned transmission line to Canada will be tapping into their reserve hydroelectric capacity. So there will be a short term uptick in the regional carbon emissions, but in the intermediate term the trend toward low-carb sources will pick up. It's likely that long stalled on-shore wind projects in Maine will come on line in the next five years too.

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