As utilities continue their march toward clean and renewable energy, it may be time to rethink the value of green power purchasing programs. These programs, such as Xcel’s WindSource program, can be hard to understand. At a basic level, a utility customer can choose to pay a premium on one’s own energy consumption to support renewable energy. If the amount of energy purchased through a green power program exceeds the amount of renewable energy the utility generates in a year, the utility will purchase more renewable energy on the market or by installing more renewables.
The purchase of green power generally allows a home or business to claim to they are using renewable energy because that purchase includes Renewable Energy Credits (RECs). The utility would forfeit those credits to the paying customer. Therefore it is also conceivable that if enough green power is purchased, a utility may need to purchase additional renewable energy in order to meet statutory or internal targets for certifiable renewable energy generation.
One key consideration with green power purchasing is how much renewable energy a utility already has on its system. For utilities like Xcel that already have a lot of renewable energy, it is likely that green power premiums would be used exclusively to pay down loans on older, existing renewable energy farms (essentially as a subsidy). For utilities with little renewable energy, a significant influx of green power premiums is more likely to result in the purchase of new renewable energy on the market or by installing more wind or solar farms. So the cost of your additional premium should be weighed against the energy goals you want to achieve for yourself as well as the question of how else you might spend that money. It very well may be the case that spending those dollars on home energy efficiency or solar PV could result in a better return-on-investment than you can achieve through green power purchasing alone.