Three Common Myths about Buying Green Power from a Utility
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by John Powers on 02/22/2012
In our new blog we explore some of the more widespread myths about purchasing renewable energy.
When consumers decide they would rather purchase renewable energy than continue to support fossil fuels, they have limited options. They can install an onsite generator like a solar panel, buy green power through their utility, or buy renewable energy credits (RECs) separately from an independent retailer.
In this blog, we’ll explore some of the common misconceptions about purchasing green power from a utility versus an independent retailer and why it might make sense to challenge your current beliefs.
If I go through my utility, I’m buying clean energy. If I buy RECs, I am just buying an “offset” that is inherently less valuable than buying green power.
When you buy green power from a utility, all you are buying is delivered power and a REC together on one bill: your electricity and an “offset.” RECs are simply the way green power is tracked and traded in North America – whether in a utility program or direct purchase. Unfortunately, there is no way for the utility to guarantee that the actual electrons produced at a wind farm find their way across the miles of power lines to your specific home or business. Clean electrons just get mixed in with all the other power from carbon-based sources (e.g. coal) and delivered to whatever energy user is closest or most convenient.
Whether you buy green power from a utility or from an independent retailer, you are ensuring that the amount of electricity you use has been injected onto the national power grid from a renewable source and that you are the only one who can claim that clean energy. RECs are RECs whether they are bundled with your electric bill or purchased separately from your delivered power.
If I buy green power from my utility I’m supporting local sources of renewable energy, whereas buying RECs directly means they all come from some distant location.
While some utility green power programs make an effort to source RECs from local renewable facilities, many simply couple RECs purchased from distant wind farms with your local delivered (i.e. “dirty”) power. There is nothing wrong with this practice--you are still helping renewables get built somewhere in the country—but there is a misconception that since it’s being sold by your local utility it must be locally sourced.
Most utility green power customers receive RECs from a mixture of projects and cannot choose to support one facility or one location over another. If you buy RECs directly from a retailer rather than through a utility program you can choose which location and which facilities you support. If you want to, you can ensure that you only buy RECs from your home state or regional power grid, often at prices 30-40% lower than the blended mix from the utility. You can, of course, still choose to buy RECs directly from distant states as well, which can have additional benefits such as further cost savings or more carbon dioxide offset per kilowatt hour.
Buying green power through my utility does more to encourage the growth of renewables than buying RECs directly.
Wind developers need to sell their RECs to encourage the growth of new facilities. Whether the RECs are sold to a utility or a REC retailer before they are sold to you makes no difference.
Most utilities are still primarily profit-driven, fossil fuel-based companies. While some are truly committed to sustainability, many are not actively pursuing new renewable sources of energy unless mandated by law.
Buying RECs, be it through a utility or directly from a retailer, helps encourage green power developers to build new wind farms, solar plants, and other facilities. As to whether buying from the utility provides more encouragement than buying directly, it’s safe to say that most utilities make decisions to support renewables vs. fossil fuels based solely on legislation and profit rather than the number of RECs actually sold through their green power programs.
We hope that we’ve helped dispel the most common myths surrounding REC purchasing from utilities versus independent retailers. As with any business decision you make, we recommend that you should go with the supplier that gives you the most choice at the lowest cost. At Renewable Choice, we’ve spent the last decade working with our customers to ensure that they receive the RECs they want at a price that makes sense.
Want more information? Contact us.
John Powers is Vice President for Business Development for Renewable Choice.