RT @SPGlobal: Essential Intelligence from S&P Global helps you dive below the surface. Because a better, more prosperous world is yours for…
Green-e renewable energy standard undergoes update after record sales in 2020
Companies and consumers are embracing clean energy in record volumes across North America, as Green-e® Energy certified retail sales jumped by 31% in 2020, compared with 2019, according to the Center for Resource Solutions (CRS), which created and runs the program.
More than 90 million MWh of retail energy sales were Green-e certified in 2020, representing about 2.5% of total US electricity demand, the group said in its annual report released in December. Another 15.7 million MWh was sold at the wholesale level.
Commercial customers, such as retailers and banks, comprised more than two-thirds of energy purchases in 2020, at 83.2 million MWh, an increase of more than 33% in megawatt-hours purchased. On the residential side, 2020 ended with over 1.4 million households buying Green-e certified power, or about 7 million MWh.
With hours covered by the program rising steadily—the last four years averaged an annual increase of 17%—CRS is updating the Green-e Renewable Energy Standard, and has a comment period open through 28 February.
Now in its 25th year, the Green-e certification program was created to provide consumers and businesses with confidence that the clean energy they were purchasing was, in fact, what it was purported to be.
"If you are the consumer, you have no idea you are getting renewable energy—it's indistinguishable when you use it. We are always there to make sure you get what you pay for," Jeff Swenerton, communications director for the CRS, told Net-Zero Business Daily.
Utilities and other electricity sellers participating in the program—and there are more than 100 of them currently—must show sales and supply data to prove the power is being produced and/or sourced properly, and that customers receive that renewable electricity.
Renewable power generators that have registered with CRS can earn Renewable Energy Credits (RECs) that can then be traded or sold in a Green-e Energy certified program.
Under the Green-e Renewable Energy Standard, a renewable energy project must be less than 15 years old, and it cannot have been built to satisfy a state mandate for renewables. CRS tracks that REC, and the certificate gets "retired" after its end use, ensuring that it cannot be used more than once.
"It's the only certification in North America of its kind. We set the standard, with a lot of granularity," Swenerton said.
For consumers, the tracking system behind the certificates assures them that they are truly supporting expansion of clean energy. "The whole point … is to build confidence in the market so that we can increase demand for renewable energy," Swenerton said. "I signed up for a green pricing program from a utility, and Green-e backs it up with 'truth in advertising.'"
For utilities and independent power companies, being able to sell RECs is an incentive to increase their renewable power capacity. In most states, this "voluntary" market is in addition to the "compliance" market that is created by a state's Renewable Portfolio Standard (RPS). Currently, 38 states and the District of Columbia have an RPS that sets a minimum share for renewable power generation.
Drilling down on Xcel Energy's service in Colorado illustrates the delineation. Colorado's RPS mandated that 30% of each utility's energy as of 2020 had to come from renewable energy or batteries. Xcel's Windsource program offers 100% wind energy to customers for an extra $1.50 per 100 kWh of power. As a voluntary program certified by Green-e Energy, none of the renewable energy sold through Windsource can count toward Xcel's RPS obligation, Swenerton explained. "Megawatt hours supplied to Windsource customers belong to them alone, and cannot also be counted by the utility or the state," he said.
Xcel must use other renewable energy sources to meet Colorado's 30% RPS, its compliance obligation. Somewhat confusingly, the same renewable power facility can generate power for both the compliance market and the voluntary market, as long as it's not the same MWh of power, Swenerton said.
Power purchase agreements
Green certificates, whether from CRS or another certification group, also are a component of corporate purchase power agreements (PPAs) for renewable power, through which big users of electricity sign contracts to buy renewably sourced supplies. With those contracts in hand, energy producers can make the investments in growing their renewable capacity, and often choose to build extra capacity that is available to additional users.
"Corporate PPAs have evolved from being something of a sideshow in the power market structure in North America to become a core part of resource planning in recent years," said Peter Gardett, IHS Markit research and analysis executive director.
IHS Markit data for the first half of 2021 show about 5.5 GW of new corporate PPAs in North America. If that pace was maintained for the second half of the year, the 11 GW would set a record, beating the approximately 9.2 GW of 2019.
"These green certificates allow more corporate buyers to enter this space and more traditional energy companies to serve them via PPAs, potentially adding to general power market stability even as regulation shifts lag," Gardett said.
While the knock against green power five or 10 years ago was the higher cost, Gardett said it's reached a point at which corporate buyers with good credit and the capacity to sign a long-term PPA can actually find financial benefits as well as move towards green goals. Not only is renewable power price-competitive, but the PPAs are not tied to the cost of a fossil fuel such as natural gas. "They enable corporate buyers to hedge against price fluctuations," Gardett said.
Companies such as Bank of America, Equinox, Apple, Starbucks, Cisco, Samsung, Wells Fargo, P&G, Intel, Facebook, Microsoft, and Google have each contracted for renewable electricity, covering 100% or more of their power needs, according to IHS Markit. While financial and tech firms have dominated purchases to date, Gardett said that manufacturing and industrial firms are expected to take a larger portion of the corporate renewables market during the ongoing decade as they chase carbon neutrality at least for their own operations.
Updating the standard
The Green-e standard is periodically updated to reflect changes in industry conditions, government regulation, and customer demand.
On the table for the current review is a proposed extension of the time beyond 15 years that a generator can be operational and still remain eligible for a REC; this could encourage more investment as well as upgrades to existing renewable operations, Swenerton said. Also under consideration is requiring smaller power generators, down to 2 MW from the previous requirement of 10 MW, to use tracking systems for better chain-of-custody accounting of renewable energy. "This would include a lot more solar," Swenerton said.
In the biofuels category, which is part of a separate certification program managed by CRS, discussion is underway about whether large cattle feedlots and dairies should be allowed under the biomass or biodiesel categories. This would accommodate the dozens of dairy digester systems have been set up across North America in the last few years.
While environmental awareness and federal and state regulations have driven the growth in Green-e, Swenerton said CRS has noticed that the cost reductions for new renewable power have changed the equation over the last 10 years. "When energy providers need new generation, now, by default, renewable energy is at the top of the list because it costs the least," he said.
And if this reduces the need for Green-e, then CRS is okay with that, he said. "Some day, we will happily be out of business because every state will require 100% renewable energy, and the cost advantages will be too large to ignore," he said.
- EU states’ energy security fears drive 150-GW offshore wind island pact
- US offshore wind auction maintains momentum for Biden administration, TotalEnergies
- Norway sets 30-GW offshore wind by 2040 goal, eyes hydrogen exports
- Renewables become cheaper than coal for utilities—but near-term decarbonization prospects remain dim
- US Gulf of Mexico eyed for overlapping offshore wind, carbon storage like North Sea
- Oil majors’ shadow looms over latest US offshore wind lease auction
- Poland’s Russian gas exit speeds progress on renewable power
- TotalEnergies, Shell expand renewables footprint with acquisitions
Each year, we commemorate Asian American & Pacific Islander Heritage Month to celebrate the rich, diverse culture a… https://t.co/oOU06vryXV