The electricity we use to power our homes, businesses, and institutions is the nation’s largest single source of industrial air pollution and global warming gases. The good news is that wind, solar, biomass, and other clean energy technologies are available to provide us with cleaner, healthier sources of electricity that can slow global warming and reduce our dependence on fossil fuels. Currently, a mere 2% of the energy supply in the United States comes from non-large-hydro renewable energy sources. Imagine if you could increase this percentage simply by choosing a "green power" option on your electricity bill. This fall nearly 1.7 million customers in Massachusetts and Rhode Island will for the first time ever have that option. The opportunity is unprecedented and represents a fundamental change in the transition towards a competitive marketplace that offers consumers real choice.
Transition Toward A Competitive Market
When the electricity industry was restructured in many states in the late-1990s, consumers theoretically gained the ability to choose their electricity supplier based on factors such as price and generation source. And indeed, in a few places like Pennsylvania, an active competitive electricity market developed. However, in other states like Massachusetts and Rhode Island, very few new suppliers entered the market, leaving consumers with limited choices.
The lack of competition and product choice has been due in part to rate caps and discounts that favor the established utility and make it difficult for a competitive supplier to compete with your utility for your business. This is especially true for green power suppliers who offer products or electricity sourced from renewable energy sources such as wind, solar, biomass, and small and low-impact hydro at a slight premium compared to conventional electricity rates. The lack of competition has resulted in default utility providers like Massachusetts Electric maintaining a firm hold on the customer base.
Even though the competitive marketplace has not materialized as initially envisioned, the mix of electricity sources has begun to change. Various state governments have established mandates, generally called renewable portfolio standards, requiring utilities and electricity suppliers to include a minimum percentage of renewable energy in their generation mix. In Massachusetts, for example, electricity providers must get one percent of their electricity from new renewable resources in 2003, with the percentage increasing one-half percent every year between 2004 and 2009. This type of renewable portfolio standard can be highly effective in jumpstarting the market and spurring the development of new renewables.
However, government mandates do not tap in to the huge potential of retail markets and consumer demand. The availability of green power products in the market gives consumers and businesses voluntary options to support renewable energy development beyond those levels established by state policies.
Until recently, outside the very few places with active competitive markets, it has been difficult for consumers to easily purchase green power. One exception is Tradable Renewable Certificates (TRCs), aka Green Tags, which represent the environmental benefits of renewable energy sold separately from the energy itself. TRCs are available to every consumer in the US. While offering all the benefits of a green power purchase, TRCs face the barrier of lack of consumer awareness and the need for the customer to purchase TRCs in a separate transaction outside of their utility. This lack of access is about to change as new green power product options become widely available to the average residential and business consumer in Massachusetts, Rhode Island, and other Northeastern states down the line.
National Grid Launches GreenUP Program
In September 2003 National Grid is announcing that it will offer 1.7 million customers in Massachusetts and Rhode Island a green power option with electricity sourced from renewable energy sources such as wind, solar, small and low-impact hydro, and biomass. Beginning in October, residential and small business customers served by Massachusetts Electric and Nantucket Electric will be able to choose green power for a slight premium without having to switch away from their utility. The program, which is called GreenUP, breaks new ground by providing independent green power marketers direct access to National Grid customers, allowing them to offer brand-name renewable energy products directly through customers’ utility bills.
For the first time, the average electric utility customer will have the option to direct their monthly electricity dollars towards electricity generated from renewable energy sources instead of fossil fuels and nuclear! It is the equivalent of being able to shop at the same grocery store as always to buy organic foods that are healthier for your family and better for the environment. It will be that simple. Consumers can simply check-off a box on their utility bills to opt for electricity produced from clean, renewable energy resources that benefit the environment and public health.
The GreenUP program builds on the success of a similar initiative launched in 2002 by National Grid in its Niagara Mohawk territory in upstate New York. The program is designed to facilitate the transition to an active competitive market for smaller customers because "it introduces electricity customers to the concept and benefits of choice in the marketplace, and helps eliminate the barriers to entry faced by competitive suppliers," say National Grid executives. In the first six months of the Niagara Mohawk program, over 6,000 customers opted to pay for a green power product supplied by one of three name-brand green power suppliers. The success of the program has caught many states’ attention with Connecticut, Vermont, and New Jersey all considering implementing utility green power "check-off" programs similar to the Niagara Mohawk model.
At least four suppliers plan to offer green power products through GreenUP in Massachusetts: Community Energy, MassEnergy, Sterling Planet, and SunPower Electric. Other suppliers, such as Green Mountain Energy Company, are considering participating in the future. Product options will vary according to the type and percentage of the renewable resources and will be priced to fit every budget. The average consumer, who uses 600 kilowatt-hours per month, can expect to pay about 2 to 2.5 cents per kilowatt-hour, or $12 to $15 a month more than the standard offer. This is about the cost of a pizza with toppings if you choose to go all out and opt for a 100% renewable product.
Nicole Wobus of the Massachusetts Energy Consumers Alliance (MassEnergy) "is optimistic that a green power market will develop and provide meaningful choices to Massachusetts consumers." Developers have already started to invest in new projects in anticipation of consumer demand for green power products. In June 2003, Community Energy, the largest wind power marketer east of the Mississippi, announced a 20-year agreement with Princeton Municipal Light Department to build and operate two 1.5 megawatt wind turbines at an existing wind energy site in Worcester County, Massachusetts. "Now Massachusetts Electric customers will be able to purchase wind-generated electricity from newly-built wind projects in the region without losing the reliability and security of their local utility supply," notes Brent Alderfer, Community Energy’s President.
Narragansett Electric in Rhode Island is still in the planning stages of its GreenUP program but expects to launch in November 2003. Many of the suppliers participating in the Massachusetts program are expected to participate in the Rhode Island program, as may new suppliers like People’s Power & Light, a non-profit organization and NESEA chapter, currently marketing a 100% New England wind TRC product in Rhode Island.
There are challenges in working with incumbent utilities who are not always anxious to disclose their own resource mix. Disclosure of a utility or supplier’s fuel mix is an important consumer education tool. Research conducted by the Center For Resource Solutions found that many consumers believe their electricity mix is cleaner then it actually is and are more motivated to choose a green power product when they can compare the green power product to the default mix they currently receive. For example, about 70% of Massachusetts Electric’s standard electricity offering comes from fossil fuels, with the largest share coming from coal, and more than 10% comes from nuclear.
Options for Commercial Customers
The GreenUP Program will be available to residential and small commercial and industrial customers. Larger commercial customers can also benefit by the expected expansion of green power suppliers. A number of green power suppliers are able to serve large commercial customers in New England and can customize products to meet their needs. In addition, new competitive suppliers like Constellation NewEnergy, one of the largest competitive electricity suppliers in the country with over 4,000 megawatts of electric load, are planning to offer green power options to commercial customers. For more information on certified TRCs and competitive commercial suppliers, visit www.green-e.org.
How Can You Be Sure Your Purchase Is Making a Difference?
Because customers cannot individually monitor the electrons flowing into the grid to be sure their money is really going toward renewable energy sources, the Green-e Renewable Energy Certification Program provides independent, third-party certification and verification of green power products. Green-e certifies electricity products that meet strict environmental and consumer protection standards. Many of the products offered through the GreenUP program are Green-e certified. Green-e certification verifies the claims made by marketers that the green power delivered to the grid is from eligible renewable energy sources and in the proper amount. For a green power product to be eligible for certification, a minimum of 50% of the energy supply must come from the following renewable resources: wind, solar, biomass, small and low-impact hydro, and geothermal. The product must also contain a percentage of recently developed (new) renewable resources. Currently Green-e certified products in New England include 15% or more new renewable-generated electricity, and are set to increase to 25% or more as the market develops. Any non-renewable portion of the product must be as clean or cleaner than the overall system mix and must also not contain any specific purchases of nuclear energy. Certified suppliers must tell consumers their power sources and agree to an annual third-party audit to verify marketing claims. Green-e is administered by the Center for Resource Solutions, a non-profit organization based in San Francisco.
Moving Forward
Although state and federal policies like the renewable portfolio standard are likely to remain the most important driver for increasing the amount of renewable energy in the near term, a voluntary decision to purchase green power allows you to change the way your electricity is made. Not only do you provide funding for additional renewable energy projects, but you send a clear message to the electricity industry and to government policymakers that there are consumers who are so concerned about the environmental and public health impacts of conventional electricity that they have consciously chosen to purchase green power.
Anne Marie McShea is the Mid-Atlantic Regional Manager for Green-e. The latest green power product information for New England is available at 888-63-GREEN and www.green-e.org.
NESEA Network