Green Power Procurement Considerations
Green power is available from a variety of suppliers, including utilities, competitive electricity suppliers, renewable energy certificate (REC) marketers, project developers, and nonprofit organizations. Green power products also come in a range of supply options which each have their own set of unique characteristics. The diversity in supply options allows consumers to customize a green power procurement approach to best meet their financial, environmental, and operational objectives. In many cases, consumers use a combination of green power supply options to meet their objectives.
When considering which green power supply option(s) best suit your organization, you should consider the following:
- Green Power Supply Option Availability: The availability of supply options can vary depending on many variables, such as where your organization is located, whether your organization is a for-profit or a non-profit, your organization's electricity load, and whether you lease or own your operations. To learn more about what options might be available to your organizations, use EPA's Green Power Supply Options Screening Tool (XLSM)(1 pg, 125 K)
- Procurement Scope: Determine the desired breadth of your green power procurement. Will it be for a single facility, for a logical aggregation of facilities, or for your entire U.S. footprint? Do you have budget or geographical constraints?
- Eligible Green Power Resources: Green power is a subset of renewable electricity and represents those renewable energy resources and technologies that provide the highest environmental benefit. EPA encourages buyers to ensure their purchases are sourced from eligible resources and "new" renewables.
- Length of Commitment: Consider the desired length of your purchase contract or commitment to use green power. Supply options that allow for shorter commitment requirements, such as unbundled REC products or utility green power products, often have a cost premium. Supply options requiring longer-term commitments, such as power purchase agreements, can result in lower procurement costs for your organization over the term of the contract. Longer-term contracts executed with yet-to-be-built renewable energy projects can also play a substantive role in the realization of a project.
- Purchase Components: All green power supply options involve renewable energy certificates (RECs). In the absence of owning or retaining RECs, your organization cannot claim to be using renewable electricity from a zero-emissions resource. Some supply options also involve the procurement of the commodity electricity and others involve ownership of the generating asset itself.
- Resource Mix: Depending on your organization's location and goals (financial, environmental, or other) you may seek a specific resource or resource mix (i.e. 50% wind and 50% landfill gas). For example, your organization might desire to support local renewable energy generation which narrows your resource options to resources available locally.
- Environmental Attribute Ownership: Ensure that your green power purchase conveys all the environmental benefits of the generation source. This is particularly pertinent for buyers that engage directly with on-site or off-site projects. Buyers should have contractual ownership of the RECs generated by the system in order to be able to claim to be using the project's green power. Alternatively, REC arbitrage may be an option to lower the cost of the procurement while still allowing the buyer to make a green power use claim. Learn more about Renewable Energy Certificate (REC) Arbitrage.
- Environmental Claims: Many consumers buy green power in order to say something regarding what they are doing differently (e.g., using renewable electricity). However, to make a green power claim, an organization must be able to substantiate the claim through the ownership of RECs. Please visit the Making Environmental Claims webpage in order to learn more about the role of RECs. Also, please read the Solar Power Use Claims webpage for examples of claims that can be made pertaining to the "use" of solar power and any associated carbon footprint reductions.
- Financial Incentives: Many states and utilities offer financial incentives for installing renewable generation projects. These incentives may make your renewable energy project feasible or improve its financial return on investment. To learn more about federal, state, and utility incentive programs, visit the Database of State Incentives for Renewables and Efficiency Exit.
- Price: The price a consumer pays for green power can vary significantly. Price can be influenced by the supply option type, resource, geography, state and utility incentives, among other things.
- Price Structure: Consider a fixed-price contract when the product is bundled with the commodity electricity. Fixed-price contracts can hedge against future electricity price volatility. Some contracts may include a price escalator over the contract term.
- Impact on New Supply: Supply options that involve buying green power from already existing renewable energy projects allow buyers to claim that they are using renewable electricity from a zero-emissions resource and that they have made an indirect impact on the growth of the renewable energy market by helping to increase the demand for green power. Some organizations, however, desire to claim that their green power purchase has had a direct impact on the deployment of a new renewable energy project. This claim requires that a buyer engages with a project prior to its construction and ensures that the buyer's type of engagement substantively contributes to the project's finance-ability. Due to various financial, operational, or technical project site feasibility situations, some organizations may not be able to pursue project-specific supply options that have a direct impact on new supply.
- Certification and Verification: EPA strongly encourages buyers to purchase green power that is certified and verified by an independent third party. Buying certified and verified products helps ensure the quality of your purchase and protects the integrity of the green power industry.
Shop Around: It pays to look at a number of green power suppliers and product options. Some supply options involve sourcing green power from on-site (e.g., solar) or off-site systems, which may or may not be owned by the green power user. You should shop around when making a green power purchase to find the best option to meet your goals. EPA can assist Partner organizations in determining whether ownership of the generating asset is the right arrangement for you, identifying products, and navigating the purchase process. Become an EPA Green Power Partner today!