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Paying extra for renewable power?

Jon_R | Posted in General Questions on

Many power companies offer a renewable power option.  You pay more and some or all of your electricity will be “from” renewable sources.   The price is low.   Supposedly renewable energy certificates (RECs) are similar.    One can pay ~$55/year and supposedly achieve the equivalent of 100% renewable power.    https://www.terrapass.com/product/productres-recs

Sounds wonderful – a way for anyone to easily erase their carbon footprint due to electricity use.    But is it legit? – some say that the utility is playing an accounting game and charging extra for power while not actually changing anything.   They already installed some amount of renewable power for other reasons.   

It’s not at all clear to me.   My guess – that at the low cost involved,  everyone should do it even if the effect is small.  But don’t say “I’ve done my part” and stop there.

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Replies

  1. jameshowison | | #1

    I puzzled on this one myself (there's a thread somewhere on GBA about it, but finding one's own posts isn't as easy as it should be). In the end I concluded that I should think of the additional money as reducing their borrowing amount and thus interest costs. So it's a pretty small reduction in their costs for renewable generation development. But it's also a demand demonstrator, and that's important too.

    In terms of knowing what they do with that additional money I recently saw this announcement: https://austinenergy.com/ae/about/news/press-releases/2019/austin-energy-selected-as-green-power-leadership-award-winner-2019

    So https://resource-solutions.org/programs/gpla/ at least appears to do some assessment of the honesty of these green power programs? I don't know how substantive these are, though!

    1. Jon_R | | #2

      Maybe this, but it doesn't really answer the question. Will the modest up-charge actually result in an increase in renewable output equal to my usage?

  2. Expert Member
    Dana Dorsett | | #3

    Buying recs funds the renewables industry and (unless they're double-dipping) removes those recs from the state targets and utility mandates etc..

    In states with decoupled electricity markets one doesn't necessarily have to pay more than the standard-mix rate for 100% power, but that power isn't necessarily being generated within the grid region.

    In Massachusetts there are mandated renewables minimums for the utilities, and while it's possible to pay extra and go with 100% renewables through the utility, it's also possible to buy electricity from brokers who trade in PPAs from renewables generators. I'm currently about a year into a 2 year supplier contract for 100% wind energy (generated in Texas) at rate slightly below the local utility's standard rate. Massachusetts maintains a state marketplace website for buying electricity under contract from suppliers & brokers deemed "mostly not a scam" by the state AG's office.

    http://www.energyswitchma.gov/#/

    http://www.energyswitchma.gov/#/compare/2/1/01803/

    When assessing the contract terms watch out for termination fees and automatic renewal at the end of term (at prices not specified in the contract). Some brokers using those and other tactics have recently been successfully sued for gouging by the state AG in recent years and forced to rebate customers for their excesses owed.

    This is subtly different from simply buying recs- electricity brokers are buying power from the generators, not just the recs. I don't have a lot of insight as to how many layers there are to the accounting- multiple PPAs & brokers for multiple generators are involved.

    So in my case the impacts are global, not local to me, but there is also a local impact in Texas, where the generator is operating, offsetting power going on the ERCOT grid that might otherwise have been from fossil burners.

  3. Expert Member
    BILL WICHERS | | #4

    I like Dana’s response. Depending on how your state allows these “buy some renewable power” programs, you ARE helping to pay for alternative power sources, they just might not be in your own local region. If you look at the big picture though, does this really matter? Somewhere one more kw was from wind/solar/whatever and not coal or gas. You still accomplished your goal, just maybe not in your own local market.

    The utilities have the concept of a “generation mix”. This is usually shown as a pie chart with each slice representing the percentage of total generation from each source. In the northeast, the big chunks are nuclear, natural gas, and “dual fuel”, which is usually actually coal. There is some hydro in there too, and a little bit of solar/wind/biomass/etc. the power you use at your house can be thought of as being generated from that same mix of sources regardless of what you’re paying for since the grid has no way to partition off a special mix of power to different customers. If you pay extra for renewables, you are still being supplied by the same generation mix.

    In my state, the utility uses the funds from their green program to pay for more solar and wind in their territory. They like to site the solar farms near roads where people can see them and they put big signs nearby.

    Your extra money most likely IS going towards more renewable sources, just think of it in the big picture as helping to push the needle on the national generation mix a little more towards renewables.

    Bill

  4. pscamperle | | #5

    Jon_R:

    I've been reading your postings on GBA. I was wondering if you offer a consulting and/or engineering services in Michigan. If so, please send me your contact information to [email protected]. Thank you.

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