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Renewable Energy

Customers should understand what purchasing green power is, and what they are getting for the premium they pay.

First and foremost, power is power, be in brown, blue, green, gold, whatever. There is no difference in the quality of the product. There are obvious differences on where that power gets sourced from. Purchasing clean energy is recognized as a good socially responsible thing to do, as it should be. Unless you are self-generating your own electricity off the grid, there is currently no way to distinguish where the electrons you use are coming from. Solar, wind, biomass, hydro, natural gas, coal, nuclear, whatever, all feed into the same grid your electrons are delivered to you. The fact of the matter is each state has their own set of renewable energy, or compliance requirements, so you are more than likely already purchasing as part of the price you pay your supplier. That premium is already going to a clean fuel generator that is putting electrons into the grid. Different states have set standards for that premium to go to different types of clean fuelled generation, be it solar, wind, biomass, or other type of renewable technology. A useful tool to find out what type of renewable fuel your premium goes to is a site called DSIRE. From this site, click on your state, and look for the details behind “Renewable Portfolio Standard” or “RPS”. This is what the industry refers to as your compliance renewable requirement (“Compliance REC”).

You have the option of making an additional investment into renewable energy by asking your supplier to purchase renewable energy credits (“RECs”) on your behalf. This additional investment into renewable energy is what the industry refers to as your voluntary renewable requirement (“Voluntary REC”).

Now, a REC is created when 1 mwh of electricity gets generated from a renewable source. That REC has a value to it that is determined by supply and demand market forces, as well as other regulatory rules that govern how much or how many Compliance RECs need to be purchased. When there is a shortage of the specific REC generated, relative to the amount of Compliance RECs that need to be purchased, the value of that REC is higher. Each renewable generator that holds title to that REC is given the market value of that REC, and that is how you, as a customer purchasing a Compliance REC or a Voluntary REC are investing in the renewable energy future.

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