The Energy Wiz: Green Tag Sale
Green kWh Vs. RECsEndusers may directly purchase green power in the one-third of the states that have deregulated their utilities. When you buy power from a renewable source (such as a wind farm), there is no guarantee that the kilowatt-hours (kWh) generated by it will actually reach your busbar. They are, instead, injected into a transmission grid, from which all customers served by that grid receive power. While the positive environmental impact may vary somewhat depending on which non-renewable source of power (e.g., coal) is being displaced, that benefit occurs regardless of where the power is used. To see a list of green power products, go to www.eere.energy.gov/greenpower/markets/marketing.shtml?page=1.
Because the environmental benefit is independent of end use location, a market has developed in which the environmental attributes of renewable power are quantified and sold separately from the power. The value of the attributes for 1 megawatt-hour (1,000 kWh) of green power has been standardized into the Renewable Energy Credit (REC), also known as a "green tag." Where a typical kWh may sell for $.05/kWh, for example, a green kWh may sell for $.07. The environmental attribute of the green kWh is then valued at $.02. REC prices are quoted by that differential value.
The attribute value of generating a green kWh in Oregon may then be sold to power customers in New Jersey, even though the power will never be transmitted between those states. By buying RECs, power customers (or anyone else, for that matter) may therefore purchase the attributes of green power even in areas where none is being generated. For a list of REC suppliers and products, visit www.eere.energy.gov/greenpower/markets/-certificates.shtml?page=1.
In essence, the sale of RECs allows a renewable power generator to sell its power competitively elsewhere by covering the differential cost between its power and that of others generated by fossil fuels. Since any green power generator can sell RECs, the revenue from such sales helps develop and/or expand the renewable power industry. Standards for green power offerings and RECs are defined and enforced by the Green-e certification process (administered by the Center for Resource Solutions, a non-profit group; for details go to www.green-e.org).
Polishing The Company ImageWith energy costs already high, why voluntarily pay more for power just to help the renewable power industry grow? Many forward-looking firms include in their mission statements a goal of good environmental stewardship. Buying green power or RECs is a simple and recognized way to fulfill that goal. Firms having a checkered environmental history are buying green power or RECs as a way to improve that record (though RECs cannot be used as emissions credits, which are an entirely different matter). Developers seeking LEED™ (www.leedbuilding.org) status for their facilities may improve their scores by purchasing green power (or its attributes) to supply part or all of their building's needs. Where actual green power is not yet available, buying RECs may help a firm get some experience with the concepts so it has a better understanding when renewable energy becomes available.
REC pricing varies, so it is also possible to save some green while going green. A little shopping among REC options indicates that one may achieve the same bang for about half the bucks, depending on the location and type of REC being purchased. Being able to show the boss that you got the best price for polishing that corporate image may help make it happen.
You May Be Greener Than You ThinkA growing number of states are requiring their regulated utilities to secure a defined percentage of their power from renewable resources. To comply with such a renewable portfolio standard (RPS), your utility may be buying either green power or RECs. To find out which states have such requirements, visit www.dsireusa.org/summarytables/reg1.cfm?&CurrentPageID=7.
Under the RPS column, click on the numbered ball for a state to see details of its program.
For an excellent guide to buying green power (or its attributes), download the free Guide to Purchasing Green Power at www.thegreenpowergroup.org/publications.html. ES