Renewable Energy Technology Assessments - Kauai Island Utility ...

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Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 6.0 Renewable Energy Financial Incentives Table 6-3. Top Utility Green Pricing Programs by Customer Participation. Rank Utility Program Name(s) Participants 1 Xcel Energy Windsource, Renewable Energy Trust 43,039 2 Los Angeles Department of Water and Power Green Power for a Green L.A. 29,677 3 Portland General Electric Company * 4 Sacramento Municipal Utility District 5 PacifiCorp * Clean Wind, Renewable Usage, Healthy Habitat 26,893 Greenergy, PV Pioneers I 24,542 Blue Sky, Renewable Usage, Habitat Option 23,351 6 We Energies Energy for Tomorrow 10,760 7 Alliant Energy Second Nature 9,519 8 Austin Energy GreenChoice 7,462 9 Tennessee Valley Authority Green Power Switch 7,364 10 Wisconsin Public Service SolarWise for Schools, NatureWise 6,157 Source: Energy Efficiency and Renewable Energy Network, February 2005 Note: * Marketed in partnership with Green Mountain Energy Company. Implication for KIUC: A green pricing program may be a good method for KIUC to test local desire for renewable energy projects. By implementing such a program, those customers who support renewable energy may do so directly through their monthly electric bill. This reduces rate impacts to other customers, while satisfying the wishes of those who want more renewable energy in the KIUC energy mix. 6.2.2 Green Marketing Green power marketing is the sale of renewable energy in competitive markets. When a state deregulates its electric market, the consumer can choose an energy provider, and they consequently have the option to choose a green energy provider. Green power is somewhat analogous to other premium products, such as bottled water, and is one of the few ways that power producers can claim to have a differentiated, brand name product. Green marketers are under constant pressure to minimize the premiums they charge while still covering the costs associated with consumer education and the actual marketing of their product. Average premiums charged for green energy vary from around 1¢/kWh to 2¢/kWh. Currently, at least ten states have green energy marketed as a 21 March 2005 6-15 Black & Veatch
Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 6.0 Renewable Energy Financial Incentives competitive energy choice, including Texas and Pennsylvania. Perhaps the most recognizable green marketer is Green Mountain. Implication for KIUC: Because the electric power sector is not deregulated in Hawaii, green marketing programs are not applicable to KIUC. 6.2.3 Renewable Energy Credits As more states (such as Hawaii) and perhaps even the federal government set mandates for renewable generation, markets have arisen to allow local and national trading of renewable power. This power is typically a premium product, traded at higher prices than conventionally generated electricity. Renewable Energy Credits (RECs) can capture the value of this credit and increase revenue opportunities for renewable energy generators. When a mandate is set for a portion of a utility’s generation to come from renewable sources, the utility has two general options: to build a renewable energy plant or to buy power from another company. The purchase of RECs allows a different way to buy the renewable characteristics of a generation source without necessarily purchasing the associated energy. This is accomplished by “unbundling” the environmental benefit from the electricity. The unbundled environmental benefit is known as a REC. RECs are conceptually similar to air pollution credits (e.g. NOx credits). When a renewable generating source is serving as a stand-alone generator, they will sell their power at some market or contracted price. If their current agreement(s) does not specifically include the green aspect of their generation, then the owner may wish to also sell the green attributes of their energy as a REC. The unbundling of the electricity from the green characteristics allows another entity to purchase the green component of the energy (REC) without having to buy the associated electricity. It is common for questions to arise about the verification of the renewable generation to be purchased. Buyers want to be assured that they are only purchasing power generated from genuine “green” sources. They also want to know that the sale includes only RECs equivalent to actual kWh produced. Some states, such as Texas, have already created their own certification programs to ensure the “quality” of the generation and to avoid generators from selling their RECs more than once (known as double counting). Other organizations, such as Green-e, have also started that offer thirdparty certification services for renewable power. Trading of RECs is still relatively immature, although increasing rapidly. Currently, RECs are either used to satisfy voluntary green pricing / marketing programs or used for compliance with state renewable mandates. The voluntary REC market is thinly traded around the country. REC values vary depending on the type of resource; 21 March 2005 6-16 Black & Veatch
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Renewable Energy Technology Assessments - Kauai Island Utility ...

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