What's Green Power?
As Defined in California
Deregulation of the electricity industry has provided choice for consumers
in almost all investor-owned utility service areas -- choice on who will supply
their electricity and choice on how that electricity will be generated. While
price alone could be the deciding factor for some people, choosing renewable
energy will help move
One of the choices is renewable power. Renewable power is generated using fuel resources that don't run out, or are quickly renewed through natural processes. These resources are defined as solar, wind, geothermal, biomass (such as waste wood) and small hydroelectric.
All methods of generating electricity affect the environment. Renewable electricity technologies however, are among the more environmentally friendly sources you can choose. That's why renewable power is sometimes referred to as "green" power.
Why choose renewable?
Renewable power technologies have been part of
Renewable power makes use of indigenous and replenishable natural resources. In many applications, renewable energy can help clean our air by reducing the production of air pollutants like nitrogen oxides and reducing emissions carbon dioxide (a leading contributor to global climate change).
Although any cost premium for renewable power is likely to be small compared to the total size of your electric bill, renewables can cost more. The costs of renewable technologies are becoming more competitive with conventional power sources as more consumers purchase electricity generated from "green resources," and your decision to buy "green power" can help continue this trend.
Why Should you care?
No peacetime human activity causes more harm to the environment than the
production and use of electricity. Until now, the average
Most electricity in the
Fossil-fueled (coal, oil and natural gas) power plants in the
- 66% of all sulfur dioxide (acid rain),
- 29% of all nitrogen oxide (smog),
- 21% of all mercury (air and water contamination), and
- 36% of all carbon dioxide (global warming) emissions.
Nuclear power plants produce 50% of this country's nuclear waste-a disposal and management problem lasting tens of thousands of years-and pose a continued threat of accidents resulting in releases of radioactive materials.
For the first time ever, each Californian has the right to choose how the
energy they use is produced. Before deregulation, only about 11% of
As Defined by Massachusetts Electric Company
The Masssachusetts Electric Company (MECo) pilot did not define green power per se, but instead allowed service providers flexibility in the design of green power options. One result of this open-definition approach is that, although many think of green power as having significant renewable energy content, suppliers offered a number of non-renewables-based alternatives in their green service options, such as energy efficiency programs, retirement of emission credits, and donations to environmental groups. For energy efficiency programs, a kWh conserved provides the same emissions reduction benefit as a kWh generated by renewables. Energy efficiency services and programs not only reduce the need for electricity produced by fossil fuels but also save end users money on their electric bills. Retirement of emission credits will also reduce the total amount of emissions from power plants. And donations to environmental groups can advance many different environmental causes.
Nevertheless, questions arose concerning the open-definition approach to green power. Some questioned the substance of some of the green-marketing approaches and themes. Others stressed the fact that no new renewable generation resulted from the green-power offerings. Where green power is broadly defined to include options other than renewable energy, the potential benefits of green marketing for renewables will not be as great as would be expected with a renewables-only definition. However, the diversity of green options offered by a broader definition may attract and serve to educate a larger market segment inclusive of not only stereotypical green customers, but also customers who might be interested in other environmentally friendly actions such as energy efficiency measures. Consequently, the broader definition of green may better serve to heighten environmental awareness and increase the diversity of customers interested in the green options with significant renewable content and energy conservation programs.
The MECo pilot demonstrates that the concept of green power appeals to a diversity of customer interests. Each green choice made in the pilot program contributes in some fashion to promoting environmental stewardship in either power generation or consumption.
Background on Green Power Marketing
The passage of the Public Utility Regulatory Policies Act (PURPA) of 1978 expanded the market for larger, bulk-power-oriented renewable electric projects. This legislation partially addressed the restrictive market power of utilities by requiring utilities to interconnect with and purchase power from certain qualifying facilities (QFs) at a utility's avoided cost, or the cost that the utility would have incurred by generating or otherwise supplying the power itself.
In the early days of PURPA implementation, electricity costs were rising and electricity demand growth was higher than it is today, which led to favorably priced, long-term avoided cost contracts for renewables developers. More recently, low natural gas prices and the increased competition in the wholesale electricity markets initiated by PURPA have lowered generation prices and caused utilities and regulators alike to adopt a very short-term perspective of the electricity market. In this environment, renewables, with their higher front-end investment requirements and longer-term contractual needs, are at a disadvantage. Indeed, annual renewables electric capacity additions have fallen to between 200 MW and 300 MW during the 1990s from a level of more than 1,000 MW during the late 1980s.
Currently, electric utilities are facing increasing competition because of a nationwide movement to deregulate the power supply industry. The promotion of greater competition in electricity markets is premised on the belief that a more competitive market will result in lower market prices than the traditional regulated monopoly industry structure. This will be achieved by giving a greater number of suppliers access to the market. Renewables, with higher front-end costs, will be disadvantaged in this strictly price-based segment of the market.
However, full competition should also provide electricity customers with a greater choice of how their electricity is produced, and this opens a new market for renewables. In the face of this competition, utilities have a growing impetus to strengthen their image with their customers and build customer loyalty. Two important factors in customer loyalty are:
1) Most utility customers want their utilities to pursue environmentally benign options for generating power.
2) Some utility customers are willing to pay extra to receive (or even just to fund) power generated from renewable sources.
Some utilities are now offering customers the option of paying more to receive such environmentally preferable power-a concept known as "green pricing." Green pricing is an evolving utility service that responds to utility customers' preferences for electricity derived from renewable energy sources such as solar, wind, or biomass. Under green pricing, utilities offer customers a voluntary program or service to support electricity generated from renewable energy systems. Customers are asked to pay a rate premium, which is meant to cover the costs that the utility incurs above those paid for electricity from conventional fuels. Utilities are considering green pricing as a way to build customer loyalty, deploy popular renewable technologies, expand business lines and expertise, and improve understanding of customer response to unbundled pricing and services.
The more general concept of marketing green power is usually referred to as "green power marketing." Green power marketing capitalizes on an expressed public preference for cleaner energy options, such as renewables, by giving consumers a market option to purchase renewables-based electricity services. Green marketing has the potential to expand domestic markets for renewable energy technologies by fostering greater availability of renewable electric service options in retail markets and is compatible with ongoing attempts to introduce greater competition into the generation and delivery of electricity.
TPCO is marketing the attributes of green power separate and appart from
electricity through green tags or renewable certificates
in both the wholesale and retail markets. Interested parties should contact
TPCO by e-mail (tpco@earthlink.net), or
by phone (423-624-0852) or fax (423-624-4906).
The latest criteria for certified green power may be found at Green-e.
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