With the genesis of the voluntary green pricing market more than a decade ago, companies are increasingly reaping the benefits of reducing their carbon footprints and stabilizing their energy costs without having to generateâ€"or even physically accessâ€"green sources of power.
(Media-Newswire.com) - Businesses don’t have to bolt solar panels to the roof and pray for sunny skies these days in order to be part of the renewable energy movement.
With the genesis of the voluntary green pricing market more than a decade ago, companies are increasingly reaping the benefits of reducing their carbon footprints and stabilizing their energy costs without having to generate—or even physically access—green sources of power.
The National Renewable Energy Laboratory says the growth of the voluntary green power market is due in part to increased purchases of renewable energy certificates and greater engagement from corporations and institutions such as hospitals and universities.
The voluntary market totaled 18 million megawatt-hours in 2007, an increase of 50 percent from the previous year. The NREL predicts voluntary demand will reach 40 million megawatt-hours by 2010. While that represents just 3 percent of the overall U.S. electricity market of about 526 million megawatt-hours, renewable energy experts are encouraged.
“One of the things we certainly have to credit here is the growing interest in climate change,” said Blaine Collison, director of the Environmental Protection Agency’s Green Power Partnership. The federal program supports and recognizes companies that are procuring green power.
“For businesses and institutions, electricity usage is, generally speaking, going to be the largest single source of greenhouse gas emissions and so energy efficiency is a terrific way of addressing that silo of emissions and reducing them,” Collison said.
Paying extra dollars for green power has benefits for business owners, from positive public relations to hedging volatile fossil fuel costs.
But the voluntary green markets need a large enough consumer base to pay higher costs to grow green power generation and encourage utilities to develop favorable pricing mechanisms.
Nationally, just 25 percent of utility companies offer voluntary green products, with an average of 2 percent customer participation, according to NREL . The most widely-used green pricing mechanism is the renewable energy certificate, which allows electricity customers to pay for green power for every 1,000 kilowatt-hours, or one megawatt-hour, of electricity they use.
With the certificates, the purchased electricity making the lights blink on in Illinois isn’t necessarily being churned out by a wind farm in Texas. Instead, the business is paying to “claim” renewable energy that is placed on the power grid. The premiums that customers pay help renewable generators compete with the lower costs of fossil fuel energy.
The premium that residential and business customers paid last year for renewable energy certificates ranged from around $4 per megawatt-hour to upwards of $50 per megawatt-hour, according to the Green Power Network’s data. The average commercial customer in Illinois consumes about 7.5 megawatt-hours per month, paying an average monthly power bill of about $642.00, according to U.S. Energy Information Administration data from 2007.
For Chicago-based Digital Hub LLC, the decision to go green three years ago was a transition of necessity.
The owners of the 30-year-old printing company decided to switch from hazardous printing chemicals to vegetable-based inks to cut employee sick days and boost low productivity in the health-hazardous business, said Michael Jones, Digital Hub’s sustainability and marketing director.
The next step was to offset 100 percent of its electricity usage with renewable energy certificates from Renewable Choice Energy. Jones said the company has been pleased with its REC experience, but would like to see more choices in the market.
Digital Hub is now taking steps to install a wind turbine on the roof of its building to generate some of its own electricity, in addition to the credits it buys, Jones said.
“It’s been about three years now and production is way up and so are attitudes,” he said. “I really think we’re doing something for the health and safety of our employees and our neighbors on the planet.”
One drawback is that because most utilities bundle their electricity from different sources, critics say renewable energy certificates don’t necessarily prompt growth of renewable generation.
Collison said entry requirements for the EPA’s Green Power Partnership help address some of those feasibility gaps. Partner companies are required to buy from renewable facilities built after Jan. 1, 1997 and must purchase energy certificates from the current year of operation instead of unused or “stale” credits from past years.
“They can’t go grab green power from a wind farm that was installed in the 1970s,” Collison said. “What we’re trying to generate is new environmental impact, additional capacity and to accelerate the deployment of this new, clean generation.”
Partners must also ante up by purchasing a minimum of 2 percent of their electricity load with the renewable certificates. While 2 percent might not seem like a large piece of the pie, it can be significant in terms of wattage for companies with high electricity usage, Collison said.
Large companies such as the partnership’s largest green power buyer, Intel Corp., may consume significant amounts of green power without necessarily reaching 100 percent of their load. But Collision said a notable number of the current 1,200 partners exceed the minimum requirements.
Between 300 and 400 partners are now buying 100 percent of their load, including Chicago’s Talbott Hotel.
Deciding to buy renewable energy certificates was one of the 82-year-old hotel’s first steps in going green, said General Manager Troy Strand.
It now buys renewable certificates for 100 percent of its electricity usage from Renewable Choice Energy and became one of the first five Chicago hotels to receive a Green Seal Certification.
“We found a lot of people in our customer base were really appreciative that we were doing something more than most hotels were doing,” Strand said. “It became a really big opportunity for us to open the minds of many of our guests who hadn’t thought of things that they could do on their own.”
Guests now participate in the hotel’s green power initiatives by opting in with the push of a green button on their room thermostat, which drops the room’s energy usage when the patron is out of the hotel.
Strand said around 70 percent of guests, more than originally anticipated, now push the button to stay green. The hotel rewards guests who opt in by giving them a free 30-day carbon offset credit “gift card” to take home after their stay.
Strand said the hotel is spending more for its electricity than before it began the initiatives, but that the extra expense seems to be paying off.
“It’s not just a few dollars more,” Strand said. “It’s kind of a substantial amount more than we were paying, in the course of a year, but it really is helping us find the guests that want to participate in this so we see a definite revenue increase.”
The Green Power Partnership’s Collison said he sees ongoing proof of green power’s business value, mainly in the way that companies have escalated their purchasing commitments.
“There has to be business value for these organizations at the end of the day,” Collison said.
“A lot of these organizations are hardcore, publically owned, bottom-line oriented, private sector, competitive, dog-eat-dog kinds of enterprises and they’re not doing this because it punches the warm, fuzzy button,” he added.
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