| Buying Green in North America |
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By Frank Gazzola & Laura Gibson Green power was once considered a small and exotic niche-market with a price-tag to match but this status is rapidly being shed. Not only is improved technology pushing prices down, but people are realising that the initial higher cost of purchasing green power is offset by long-term environmental benefits that are not reflected in today’s energy bills. 'Buying green' is therefore becoming an increasingly popular option for all North Americans. For power to be considered 'green', it must be generated from a renewable resource and have minimal impact on the environment. In this context, in spite of the minimal greenhouse gases produced by generating it, nuclear power is not considered green since it relies on non-renewable uranium as a resource, and we have no safe way to permanently dispose of nuclear waste. Wind power, solar power, small scale hydro power, biomass, bio-gas power and geothermal power are all classified as green power as they are from natural or low impact sources. Choosing to buy green generally means choosing to generate power from one of these types of resources. Companies and consumers have significant spending power that will drive the development of green power across North America. This buying power will be exercised in a number of ways to encourage green power production. Buying shares in green power companies, such as in Canadian Hydro and Green Power Co-operatives is one option, although it is more difficult for a small scale investor to invest in large scale renewable energy generation or distribution. Another option is to develop small-scale renewable energy technologies, such as small wind turbines that are ideal for remote locations, and begin generating your own green power. Acquiring power in this fashion can increase electric reliability, and provide more certain electricity costs. This latter possibility is becoming even more attractive as net-metering (a financial agreement where utilities will buy excess energy from you) becomes more widespread and technology becomes more accessible and affordable. However, few North American utilities currently offer their customers the option of selling renewable energy to the grid. While this is likely to change as pressure to seek alternative power sources mounts, the most straight-forward way for businesses to invest in Green Power at present is to buy it from the existing grid... Of course, consumers who opt to buy green from their utility company cannot guarantee that only electricity generated by the renewable resources enters their building since electricity follows the path of least resistance to the nearest load, or consumer of electricity. Instead of getting green power at our meter, we simply expect the amount of energy we have purchased to be delivered to the local or regional electric grid. We still get the electricity we use, and we also get the benefits of more wind or other clean energy source on the wires. Another way to say this is, we buy the electricity "bundled" together with the green attributes that add value to the electricity.
North American Companies Buying Green
At the moment, bundled green power is only available from local retailers at the provincial level, and there are no national programs. In some regions that do offer bundled green power, it is only available to larger industrial or commercial customers. However, Green Power, or "green pricing" as it is sometimes called in regulated utility markets, does give customers an option to buy green in what is still a monopoly electric service environment. And in restructured markets, including Alberta and Ontario, energy service providers do offer green power products, which differentiate them from the standard energy resource mix. Green Power certificates, Tradable Renewable Certificates or "Green Tags" present another opportunity for consumers to invest in Green Power. These Green Tags represent the environmental (and renewable) attributes created by the generation of a unit of electricity, such as a megawatt-hour. These attributes, embodied in a certificate, may be bought and sold either bundled or unbundled with commodity electricity. Green energy is added to the grid on behalf of the customer. The price Green Tags trade for represents the premium value that markets place on green power. We can buy generic electricity at the lowest possible cost, and buy an appropriate amount of Green Tags to "green" that electricity for whatever value the market places on them. The fact that these can be traded separately from electricity makes it possible for you to, in effect, buy green power anywhere, regardless of whether or not your utility or supplier offers green power. Some may feel that it is misleading to sell a re-bundled product made from combining coal or nuclear power with Green Tags from wind or hydro, and calling it wind or hydro power. But this is really the same as green power - what you get at your meter is not necessarily the wind or hydro that you are paying for. And your retail supplier will have paid the premium for the environmental benefits to the renewable energy-generator. It is important to understand that Green Tags are limited in quantity. A Green Tag is created only when a given quantity of electricity is generated from a renewable energy source. Generators and other companies that deal in these credits must maintain accounting systems to make sure that there is no "double counting" and that the same Green Tag is not sold to more than one customer. This is complicated since Green Tags are intangible and unscrupulous vendors will take advantage of this. By purchasing Green Tags, you can be assured that the renewable energy is generated - somewhere. It may matter to you where the renewable energy is generated. After all, some of the environmental benefits are local, such as sulphur dioxide and nitrogen oxide emission reductions. These pollutants are responsible for smog and acid rain. Carbon dioxide emissions, on the other hand, are a greenhouse gas, and contribute to global warming. This is a worldwide, not a local, environmental problem. Developing Green Power will be a joint venture between consumers, who push for the option to buy green, and suppliers, who must meet the demands of their consumers. Canada and the USA have the technology and resources to promote Green Power, reduce greenhouse gas emissions and lessen the impact of climate change with other green world leaders. Listed below are examples of North American organizations selling some form of green tags, and their selling price:
A number of utilities also sell green tags. For example, Los Angeles Dept of Water and Power offers Green Power Certificates. In this case, the organization is simply asking consumers to contribute funds to support the development of new renewable energy generating capacity sometime in the future. The certificates are not tied directly to electricity generation. LADWP has not sold any certificates since the inception of the program in December 2000. In a different version of green tags, Waverly Power and Light -- a municipal utility in Iowa – sells green tags at $50 for 2.5 MWh based on output of three wind turbines.1 1 http://www.cleanenergystates.org/CaseStudies/GreenTagsandProj.pdf - 30 - Editorial Contacts:
Dan Morel |
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