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It's easy to buy "green power." Making a difference is a little harder.

(Shutterstock)

Many people would like to support renewable energy, not just through activism or lobbying politicians but with their pocketbooks. So can you, the average American consumer, buy electricity generated from clean sources?

Yes. But it's complicated. Like anything worth doing in life, your impact will vary with the amount of time, effort, and money you're willing to invest.

There are cheap and easy ways to get "green power," or at least the legal right to say you've gotten it. But if you actually want to play a part in getting new renewable energy generators built, you'll have to do some organizing and studying (or have the luck to live near, or work for, someone who has).

If you want to buy green power, it's all about RECs

As I discussed at length in a previous post, all green power purchases in the US are done through Renewable Energy Certificates, or RECs.

The short version is this: When a renewable generator generates a megawatt-hour of clean electricity, it is issued one REC. The REC represents the environmental benefit of that power and can be sold separately (or "unbundled") from the electricity itself. For the purpose of making "green claims," it doesn't matter where your electricity physically comes from. As long as you purchase an equal amount of RECs, you're allowed to claim to be "powered by clean electricity."

green power
What people want, basically.
(Shutterstock)

Most RECs are traded in the "compliance market," bought by utilities to comply with state renewable energy mandates. But the rest are available to ordinary consumers on the "voluntary market."

Almost all RECs on the voluntary market are certified by an organization called Green-e, which ensures they meet minimum standards. These RECs can differ based on their geographic origin, the technology involved, and the age of the generator.

In certain specialized markets, RECs can be expensive and have substantial direct impact on the decisions of renewable energy investors. But most RECs sold in the voluntary market are nonspecific — they represent any clean electricity, generated by any technology, anywhere in the country.

This tier of RECs is dirt cheap right now, about $1 to $2 per certificate, but by the same token, buying these RECs is unlikely to have any impact on clean energy investment decisions. They are unlikely to produce measurable "additionality," in the jargon.

Does that mean they're not worth buying?

Some argue that no, they're not worth buying at all — the whole voluntary REC market is a shell game that produces no new renewable energy. (See here and here and follow the many links therein.)

green examination
Looks a little funny.
(Shutterstock)

People in the industry tell a somewhat more nuanced story. Obviously, renewable energy generators welcome extra revenue, whether or not any investment decisions can be traced directly to it. (Investment decisions in renewable energy are extremely complicated and a lot of factors come into play.) An industry with more revenue is, ceteris paribus, better off than an industry with less.

Nonetheless, claims that voluntary RECs reduce carbon emissions are highly suspect. Their direct effect is not to reduce net emissions, but to shift responsibility for emissions between parties. They only reduce net emissions, if at all, indirectly, by demonstrating demand for clean energy and by providing a modest boost in revenue to the clean electricity industry.

It's weak tea. Buy voluntary RECs if you like, they're cheap as hell, but have no illusions that by doing so you are offsetting your emissions. It's like tossing your supermarket change into a Unicef jar. Whatever, it's better than not doing so, but you're not "curing poverty."

Better and worse RECs

That said, not all RECs are created equal. Depending on the state you live in, you can buy RECs pegged to a particular region or technology, restrictions that will raise both their quality and their price. For instance, in the Northeast there's a robust market in solar RECs, or SRECs. These tend to be more expensive, ranging from $20 (in Pennsylvania) to $490 (in DC), but precisely because they are expensive, they have market-moving power.

Also, it's possible to buy RECs "bundled" with the power that created them. This is done though a "power purchase agreement" (PPA), a promise to buy a set amount of power (and RECS) from a particular renewable generator for a particular amount of time, usually around 20 years.

Bundling RECS into PPAs is a much more effective way of supporting renewable energy generators than buying RECs alone; the electricity is worth much more than the RECs. Having a guaranteed buyer for both power and RECs can often make the difference between a renewable facility getting built or not. Green PPAs, in other words, pretty much guarantee additionality. (Green-e has a certification program for green PPAs too.)

PPAs involve a lot of money, so they're generally out of reach for individuals; they are typically purchased by entities like universities, corporations, or municipalities.

Okay, enough about the quality of RECs and REC purchases. Let's briefly look at the ways individuals can get involved.

1) If you live in a regulated utility market: utility green power programs

Matters relating to electricity in the US are complicated by the fact that there are two very different kinds of electricity markets operating in different states. In regulated electricity markets (roughly 30 states), utilities have a monopoly on the whole value chain: generators, power lines, and local distribution systems. In such states, you can only buy electricity from your utility.

In states with deregulated electricity markets, retail consumers have a choice of electricity suppliers.

Here's a map showing which is which:

electricity restructuring by state (Energy Information Administration)

Unless you live in one of the green states, you're stuck with your utility.

Most utilities offer opt-in green power programs, whereby customers can pay a bit extra for clean electricity. (Here's a big list of utilities that offer such programs.) What this means, in effect, is that you're paying the utility a little extra to retire some RECs.

Some utilities offer different tiers of green power, depending on the number and characteristics of the RECs. And the RECs offered in these programs are usually constrained to the utility's own region, so they will vary in price depending on the area of the country, usually coming in a little above rock-bottom prices. But for the most part, these will be voluntary, nonspecific, unbundled RECs, so all the caveats above apply.

This involves checking a box on your bill, so it's pretty easy! But the effects will be minimal. It's a step above "doing nothing," but a very small step.

2) If you live in a deregulated electricity market: competitive electricity suppliers

If you live in one of the green states on the map above, you can choose to buy your electricity not from your utility but from a third-party supplier. Many of those suppliers try to attract customers by offering green power, i.e., electricity bundled with RECs.

There's a wider variety of green power products available in these markets, and they don't always disclose their REC prices, so this option requires a bit more due diligence, but it's possible to find higher-quality, more expensive RECs from some suppliers.

3) Anywhere you live: unbundled REC suppliers

You can buy unbundled RECs directly from suppliers (or third-party brokers) anywhere in the country. This is theoretically available to anyone, but in practice it's mostly done by businesses with big, power-hungry facilities like data centers or warehouses — all those businesses you see "powered by 100 percent green power."

This is by far the biggest category of voluntary RECs by sales:

voluntary recs (NREL)

Some businesses go the extra mile, buying high-quality RECs or bundled RECs, but without a little digging it's difficult to tell those businesses from the ones that just buy the cheapest RECs available on the national market.

It's super cheap now for businesses to buy the right to say they are "powered by clean energy," but in the absence of further evidence of green commitment, those claims should be treated as worth what they cost.

4) Community solar

One of the hottest options in clean energy these days is community solar, wherein a group of customers go in together on a small solar PV installation. It's a great way for people who can't put solar on their own roof (or who rent) to get into the solar game.

There are different models: Sometimes community solar programs are offered through utilities, sometimes they are independent; sometimes customers pay upfront, sometimes there are ongoing payments; sometimes customers "subscribe" to a portion of the power output, sometimes they purchase a portion of the energy capacity. Either way, they own a chunk of it and get a small credit on their utility bill each month for their portion of the electricity sold.

There are now 90 community solar projects in the US, across 25 states. (Colorado is the leader by a wide margin, with 37 of those projects.) The average size is less than a MW, which means the vast bulk of these projects are truly community-level.

The community solar space is set to boom in coming years, led by growth in California, Massachusetts, and Minnesota. By some estimates, it will make up almost half the distributed solar market by 2020.

community solar growth (NREL)

Here's the wrinkle: Community solar projects produce electricity and RECs. In most cases, the utility retires the RECs to comply with renewable energy mandates. In some cases they are sold, and the revenue is split among participants. But either way, the participants in the community solar project don't get the RECs.

In other words, if you participate in a community solar project, you get a piece of a renewable energy generator, but you don't get RECs, meaning you're not actually buying any green power.

Obviously, directly helping to fund a solar project pretty much guarantees additionality! So the fact that it doesn't involve purchasing RECs is neither here nor there for most participants. Community solar is perhaps the most tangible and small-d democratic way to directly support clean energy.

5) Community choice aggregation

Community choice aggregation (CCA) is almost as hot as community solar. The idea is simple: A town or municipality aggregates its electricity demand, defects from its utility, and buys its power directly from an alternative supplier.

Seven states have passed legislation enabling CCA; three other states have proposed legislation.

community choice aggregation (NREL)

CCA is fairly recent, but already there are some 2.5 million customers involved. The reason for that big number is that unlike utility green power programs, CCA programs are opt-out rather than opt-in. In other words, when a big city like Chicago decides to go CCA, all its residents are automatically signed up to the program. They can opt out of it and go back to the utility if they want, but as any behavioral scientist will tell you, most people are lazy and will accept whatever default option they're given. Thus participation is "typically above 75% and exceeds 90% in several programs."

Now, a city that goes CCA can theoretically choose to buy power from anywhere. There's no requirement that the power be green. The primary motivation for most CCA bids is cost; cities believe they can get cheaper power elsewhere. But the desire to get cleaner electricity than the utility offers is also a big piece of the CCA push. In Illinois, California, Ohio, and Massachusetts in particular, most CCAs are 100 percent green power.

If CCAs elect to go green the low-road way — by just buying a bunch of cheap, unbundled RECs alongside their power — they will have limited impact, although a million people buying such RECs obviously has a bigger impact than one person doing it. But they could choose instead to buy bundled RECs, which will have much bigger effect, especially with a city the size of Chicago behind it.

CCAs probably warrant their own post, but for now individual consumers should just know that they are a possibility. If you live in one of the states where they are allowed, you could lobby your neighbors and municipal elected officials to go CCA. If you don't, you could lobby state lawmakers to pass CCA-enabling legislation. There's going to be a lot of action in this space in coming years.

6) Voluntary PPAs

There are lots of businesses these days that want to support clean energy in a meaningful way. And they know that buying a bunch of unbundled RECs is one step above useless. So many of them are pushing for better options.

As of today, 43 corporations representing more than 30 million MWH of renewable energy demand have signed on to the Renewable Energy Buyers' Principles, including tech giants such as Amazon and Microsoft along with big industrials like GM, Unilever, and 3M. Those principles call for more choices, more access to long-term power contracts and bundled RECs, and more ways to collaborate with utilities.

One of the instruments supported by those principles has already started to take off a bit: voluntary PPAs. As described up top, a voluntary PPA is a bilateral contract directly between an entity (business, city, etc.) and a renewable power producer whereby the former will buy the latter's power at a set price for a set number of years. "In the summer of 2015 alone," NREL writes, "HP, Washington DC, Amazon Web Services, Facebook, and Google announced voluntary PPAs."

Google has a very smart white paper on why it has settled on green PPAs. Here's how it represents the flows:

google green ppas (Google)

A PPA is a big enough financial promise that renewable energy developers can use it to get investment — it can make the difference on a project getting funded and built.

Sometimes the RECs from those PPAs are absorbed by utilities for compliance purposes. But sometimes the entity buys those, too, allowing it to claim clean electricity. Either way, a PPA is a far more substantial way to support renewable energy than RECs.

How to assess all these options

This is quite a lot of information to take in. Here's how I'd sum it all up.

If you're an individual, you can easily participate in utility green power programs or buy green power from a competitive supplier. It's super easy to do, doesn't cost much money ... and doesn't make much difference. It's a small production subsidy to a renewable generator, that's all.

More substantial work, more likely to produce additionality, can be done by bigger entities — a community solar project, community choice aggregation for your town or city, or green power purchases by businesses. An individual has limited control over those, but at the same time everyone has some influence. You can organize your neighbors, start a city petition, or just talk to your CEO.

That's a lot of work, but most worthwhile things are.

Further reading:

  • In describing these options, I'm drawing heavily from this great report from the National Renewable Energy Laboratory.
  • Here are the Corporate Renewable Energy Buyers’ Principles.
  • Here is a case that voluntary RECs are worthless as carbon offsets.

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