The Green Power Partnership is a voluntary program of the US Environmental protection Agency that encourages organizations to use Green power as a way to reduce the environmental impacts associated with conventional electricity use. The Partnership currently has more than 1,300 partner organizations of all types that voluntarily using billions of kilowatt-hours of green power annually.
The organization's web site has a lot of useful information about Green or sustainable energy generally and how to acquire it.
Of particular interest to the GreenSupplyChain.com are several lists of top performers. For example, the GPP ranks the top organizations in the US in terms of total Green power generation. The latest such list, released on October 27, is topped by Intel, estimated to have generated some 3.1 billion kilowatt hours of energy from renewable sources, followed in the top 10 by Kohl's, Microsoft, Google, Walmart, Staples, Apple, the city of Houston, the US Department of Energy, and Starbucks.
A related list identifies organizations said to produce 100% of their required electrical power in the US from sustainable sources. GPP says the combined green power use of these organizations amounts to nearly 12 billion kilowatt-hours of green power annually, which is equivalent to avoiding the carbon dioxide emissions from the electricity use of more than 1.1 million average American households each year.
The 100% list includes a broad array or companies and organizations, including several of the firms listed above as well as SAP, Steelcase, Unilever, DHL, Mohawk Fine Papers and many more.
We were surprised by the number of such companies. Are all these firms really producing all of their US energy needs from sustainable sources?
The answer appears to be No - but with some complexity to that answer.
The Role of Renewable Energy Certificates
The GPP web site says that there are basically four ways to acquire Green power:
(1) Produce it on site for a company's own needs: an easy example of that would be the growing number of factories and distribution centers installing solar power capabilities on roofs or property (e.g., Toys R Us)
(2) Acquire power from actual electric utilities that are producing power from renewable sources or sourcing such power from another firm
(3) Pay a premium to the current electricity company towards Green energy investment (called "Green pricing products")
(4) Acquire "renewable energy certificates" (RECs)
What are RECs? They are a mechanism to in a sense acquire offsets to a company's use of electricity from the standard, fossil fuel powered grid by paying for credits for Green energy produced somewhere else.
RECs are also known as green tags, green certificates, and renewable energy credits. They are tradable instruments that can be used to meet voluntary renewable energy targets as well as to meet compliance requirements for renewable energy policies. They are therefore very similar conceptually to the carbon permits traded under "cap and trade programs" such as are functioning in California and Europe.
A REC is a certificate that represents the generation of one megawatt-hour (MWh) of electricity from an eligible source of renewable energy. Each REC denotes the underlying generation energy source, location of the generation, and year of generation (a.k.a. "vintage"), environmental emissions, and other characteristics associated with the generator.
So by acquiring an REC, a company receives a claim to the environmental attributes associated with renewable energy generation - and by doing that in enough quantity, a company may claim, under the GPP's rules, to increasing their level of Green power generation, all the way to 100% status.
Most RECs are created by a regional tracking system such as the New England Generation Information System (NE/GIS), the Pennsylvania, New Jersey and Maryland Generation Attribute Tracking System (PJM/GATS), the Energy Reliability Council of Texas (ERCOT), the Midwest Regional Tracking System (M-RETS) or the Western Renewable Energy Generation Information System (WREGIS). These are all quasi-governmental entities created to issue and track certificates of generation located within their jurisdiction.
Acer Uses RECs to Get 100% Green Status
Electronics manufacturer Acer provides a good example. It recently announced that it had "purchased enough Green power to offset 100% of its carbon emissions from electricity at all U.S. facilities."
It further said that "The purchase of more than 27 million kilowatt-hours of green power in the form of renewable energy credits (RECs) will reduce emissions from Acer's US facilities through the end of 2015. Along with the renewable energy purchase, Acer is now included in the Green Power Leadership Club and also listed on the 100% Green Power Users."
Acer, you might say, bought its way in to the 100% club.
GPP says RECs may be sold "bundled"- that is, paired by the electric service provider with grid electricity delivered to the buyer - or "unbundled" from electricity as a stand-alone product and paired by the buyer with its grid electricity purchase.
"RECs combined with plain grid electricity are functionally equivalent to Green power purchases from a local utility, no matter where the REC may be sourced," a GPP overview document says. "Purchasers of RECs may make claims about their purchase of green power similar to purchasers of renewable electricity products."
Because RECs are not tied to the physical delivery of electrons, they allow organizations to purchase Green power from suppliers other than their local electricity provider.
REC Acquisition Flow
Source: Green Power Partnership
Therefore, "RECs help overcome a major barrier to renewable facility development - the fact that the best renewable resources may not be located close to population centers. The sale of RECs allows these more remote facilities to benefit from support for Green power."
Since they are in a sense "virtual" claims to power, unlike regular electricity, RECs do not need to be scheduled on a transmission system, and they can be used at a different time than the moment of generation. Certificate tracking systems have been established in different states or regions to issue and record the exchange of RECs, making REC markets even more accessible, the GPP says.
In addition, companies do not need to switch from their current electricity supplier to purchase RECs, and they can buy RECs based on a fixed amount of electricity rather than on their daily or monthly load profile. Because RECs are independent of the customer's electricity use, load profile, and the delivery of electricity, they provide greater flexibility than purchasing bundled RECs and electricity from a utility.
However, while RECs offer increased contracting convenience, they do not provide the same protection against price volatility as long-term contracts.
The price for voluntary RECs can be lower than the premiums for renewable electricity products for several reasons: (1) RECs have no geographic constraints and therefore can provide access to the least expensive renewable resources; (2) the supplier does not have to deliver the power to the REC purchaser with the associated transmission and distribution costs; (3) the supplier is not responsible for meeting the purchaser's electricity needs on a real-time basis.; and (4) REC prices reflect greater competition because RECs are fungible in a voluntary market.
The GPP notes that to the extent that electricity providers are also sourcing their Green power products from purchased RECs, however, the premium that they would charge might not differ greatly from the cost of the unbundled RECs that organizations can buy.
So, the GPP programs and recognition seem to be good things, but companies claiming 100% Green energy status could still be using lots of power off of the standard grid.
Do you have experience with the GPP? What do you think? What about the role of RECs? Let us know your thoughts at the Feedback button below.
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