A new report from the World Resources Institute has highlighted the increasing rise of “green tariffs” in the United States — large-scale renewable energy purchase programs available to residential and industrial customers alike.
Simply put, “green tariffs” allow residential and industrial consumers the opportunity to interact directly with renewable energy sources, ensuring that they are receiving 100% renewable electricity. Traditionally, electricity customers have not been able to engage directly with renewable energy resources, instead having to rely on their local utility to source the electricity for them, and in turn paying the utility company, rather than accessing fixed-price renewable energy. Any renewable energy options available were usually Renewable Energy Certificates (REC), but as the authors of the WRI report explain, these REC programs have only ever been available at an additional cost. Further, REC programs usually only offer “unbundled” Certificates, “which match the energy they buy separately from their utility” but mean “the RECs usually do not provide a fixed cost of energy as protection against volatile fossil fuel prices.”
However, in an effort to address rising demand for more direct access to renewable energy, several utilities across the United States have begun introducing what is widely called a “green tariff.”
These tariffs can take several forms; a subscriber program, according to the World Resources Institute (WRI), “allows customers to subscribe to very small amounts of energy from a larger renewable energy project(s) and replace the standard charge for fossil-fueld power on their bill.” Conversely, there is the traditional tariff itself, which replaces “the standard electricity rate customers are charged on their bills with the cost of the renewable energy,” while riders “are usually the total of the cost of the renewable energy and a credit for the fossil-fueled power the customer replaced.”
The WRI report, Emerging Green Tariffs in US Regulated Electricity Markets, further showed that traditional utilities across the United States have responded to this demand by creating 10 green tariff options, twice the number that existed at the end of 2015.
Overall, the 10 green tariff options currently available or proposed are available in eight states, and are offered by some of the country’s leading utilities, such as Xcel Energy and Duke Energy. Specifically, these new programs “allow eligible customers to buy both the energy from a renewable energy project and the [Renewable Energy Certificate].”
One of the drivers behind the recent spate of green tariff offerings has been the loud calls from commercial and industrial customers, who have themselves committed to ambitious renewable energy targets and want a way to access reliable, affordable, on-grid renewable power. One leading example was that set by Facebook earlier this year. According to WRI, Facebook was looking for a location for a new data center, and wanted to be able to source 100% renewable energy to power the project. Facebook subsequently approached two utilities — Rocky Mountain Power in Utah and Public Service Company of New Mexico — and asked each to propose a renewable energy purchase program, to which both utilities agreed. Facebook eventually settled in locating its new data center in New Mexico, but this story shows the proactive stance some utilities in the US are taking towards customer demands for reliable and affordable renewable energy.