I got a great piece of feedback from Heather Mulligan, PSE Green Power Market Manager, about how the extra cost of the Puget Sound Energy Green Power program is applied to help the financing of new stations. She says:
The extra cost is used to purchase Renewable Energy Credits (RECs), which represent 1 MWH of actual energy production. RECs place a monetary value on the environmental attributes associated with renewable energy generation, thus making it easier for the developer to get the necessary funding to build their project. So in that sense, RECs do make it easier to get the startup capital needed, which does help to encourage the creation of more small & renewable generation stations.
– Heather Mulligan, PSE Green Power Market Manager
What is a REC?
After researching the good and bad side of the REC system, I came to the conclusion that it is just a token-based market for “green Megawatt-hours”. Trying to put it simply:
- If I put up a wind generator, and I generate 1 megawatt for 1 hour, I have two things I can sell – a megawatt-hour (MWh) of electricity, and a REC, which is worth some cash (I estimate around $10 per REC).
- PSE sells electricity to people. They want more of it. So PSE buys my megawatt.
- Some people want “green power” so they also “buy” RECs from PSE which are worth a bit of cash.
- PSE has to buy a REC from my mini-utility to meet these people’s demand, or fail audits.
- By using the RECs (and the associated auditing that comes with this ‘virtual good”), the consumers can say “I want renewable electricity” – and have to put their money where their mouth is – and PSE has to get them from somewhere.
Some folks claim this distorts the market. That is true. But the market is already VERY distorted as it is: with externalized costs (which every non-renewable generator has tons of), large R&D and supply-chain subsidies (which large nuclear, hydro, etc. projects have), and a central controlling distribution entity consumers can’t choose (which almost every utility company is). With RECs I have a way to express my demand, so for me it removes some net distortion.
I also see claims that purchasing RECs are a way to offset your carbon footprint. RECs are not carbon-reduction tokens. They are a token of demand of renewable electricity, and I believe you can’t buy RECs beyond the amount of Megawatt-hour you consume. In addition, some renewable energy sources are still carbon positive (that is, they still throw some previously captured carbon into the atmosphere, even if at lesser rates and from smarter sources than, say, coal). Therefore buying RECs won’t offset the emissions of your car.
I know this sounds like an ad – it is not- but there are few things that you can do that are as smart, cheap and easy to reduce your energy footprint as signing up for the PSE Green Power energy.
and choose 100 percent. If you don’t do it, I would love to understand why, and how you feel about it.