Demand For Green Power Shows Resilience
December 13th, 2009 by Fereidoon Sioshansi, EEnergy InformerA survey by the Environmental Protection Agency (EPA) reported that the top 50 US purchasers bought more than 12.5 TWh of green power in 2008 with Intel Corporation holding the top spot, again.
The Green Power Partnership, a voluntary program with 1,100 participants, keeps track of voluntary purchasers of green power, defined as electricity from solar, wind, geothermal, biogas, biomass, and low-impact small hydroelectric sources – excluding large hydro resources. Organizations can meet their requirements using any combination of Renewable Energy Certificates, on-site generation or utility green power products.
Green and clean - even if a tad pricey
Separately, the National Renewable Energy Laboratory, (NREL), based in Golden, CO, keeps track of voluntary retail renewable electricity sales. NREL reported 2008 renewable sales exceeding 24 TWh, roughly 0.6% of total electricity consumption in the US with a market value of $110-190 million. Wind energy provided 71% of all renewable power sales, followed by biomass including landfill gas at 17%, hydropower 9%, geothermal 2% and solar at less than 1%.
Overall, the total number of customers purchasing renewable power increased by 15% in 2008, a slower rate than in previous years, with gains primarily in competitive markets and renewable energy certificates. Utility green pricing program participants remained essentially flat, with some programs reporting a loss of customers, which NREL attributes to the current economic downturn.
It must be noted that in states with renewable portfolio standards (RPS), the bulk of renewable generated power is “blended” with other types of generation and sold to customers, whether they ask for it or not, and regardless of their willingness to pay. The costs are typically spread across all consumers. The figures reported by EPA and NREL are voluntary purchases by consumers who are willing to pay a premium for the privilege of buying green electricity.
Starting with a handful of utilities offering green power products to their customers on a voluntary basis in the 1980s, the program has spread to some 850 utilities, roughly 25% of US utilities, today. For 2008, the price of green power for residential customers ranged from a saving of 1¢/kWh compared to standard utility service to a premium of 8.8¢/kWh, with 1.8¢/kWh as the average.
Since 2000, the renewable energy capacity serving green power markets has increased 40-fold and the annual average growth rate since 2004 has been 41%. “Green power markets provide an additional revenue stream for renewable energy projects, and raise consumer awareness of the benefits of renewable energy,” according to NREL’s Lori Bird.
Fereidoon Shioshansi
This post is extracted from EEnergy Informer, December 2009 issue.
April 12th, 2010 at 11:06 pm
It is reassuring to observe that the 2009 data from EPA further confirms the interest of US companies to go green: purchase from the top-50 companies increased by 4% to 1.3 TWh. The addition steamed entirely from the top-10 companies, 8 of which remained unchanged from the year before.
Besides, US companies’ growing readiness in green power is further supported by another survey published in January 2010 by Environment Leader and Retailer Daily*. According to the study, half of the companies that were not interested in clean energy are now considering various options, such as producing or buying renewable energy or purchasing Renewable Energy Certificats. Companies that are already on board intend to increase their energy portfolio exposure to the renewables.
While the return on invest can be limited when it comes to renewable energy, the respondents of the above survey made it clear that financial viability was the necessary condition in changing their energy mix. As such, governmental policies were essential to make onsite energy generation affordable. As most forms of renewable energy still have not reached the mature stage where costs are lowered by economy of scale, governmental incentives through spending or regulation are key to promote new technologies.
Most European governments implemented tariff mechanisms to guarantee green power output to be purchased at regulated price (i.e., feed-in tariffs). Yet setting the incentive price can be tricky: too-low and investments will be smothered, too-high and end-consumers will pay for excessive margin benefiting only developers (e.g., the Spanish case). Other countries choose to set a quota of clean energy then allow green energy credits to be traded on markets. This is namely the case in the US, where the state-level Renewable Portfolio Standard (RPS) combined with federal Production Tax Credit (PTC) is considered very effective. According to a report from the National Renewable Energy Laboratory**, states with stronger RPS tend to outperform others in expanding various forms of renewable energy.
Endowed with hundreds of billions of dollars, the green program is on top of agenda of most developed and emerging countries. Besides the selfless pursuit of “the best world possible for future generations” and the fear of being left behind in the post-oil era without strategic technologies, it boils down to an economic calculation. Governments must seize the opportunity of creating millions of “green-collar job” in a context of global recession. In addition, better conscious may sweetens somewhat the bitter restructuring of existing technologies.
* Enterprise Renewable Energy Adoption Survey: Benchmarking Onsite Renewable Energy Generation, Purchasing & REC Buying
** State of the States 2009: Renewable Energy Development and the Role of Policy