Green Power Supply Options
The table at the bottom of this page details various green power supply options available to buyers in today's market. The range of available supply options allows buyers to customize a green power procurement approach to meet a wide range of unique financial, operational, and on-site project feasibility situations. In many cases, organizations use a combination of green power supply options to meet their objectives. When considering which options best suit your organization, you will want to consider the following:
Desired impact on new supply
Supply options that involve buying green power from already existing 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 financeability. Due to various financial, operational, or technical project site feasibility situations, some organizations may not be able to pursue direct project engagement options.
What you are buying
All green power supply options involve a renewable energy certificate (REC). 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, as well as ownership of the generating asset itself. Supply options that involve different combinations of REC ownership, commodity electricity, and generator ownership offer the buyer a different set of benefits, costs, and marketing claims.
Your relationship to the generator
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. EPA can assist you in determining whether ownership of the generating asset is a more desirable arrangement relative to entering into an offtake contract with a third-party who owns and operates the project.
Your financial impact
As the costs associated with renewable energy technologies continue to drop, buyers of green power have more options available to them in developing their own projects. Through project development, buyers are generally afforded financial benefits above and beyond basic renewable electricity use claims.
Types of claims you can make
Many consumers buy green power in order to say something regarding what they are doing differently (e.g., using renewable electricity). In order to make a green power claim, an organization must be able to substantiate it through the ownership of RECs. Please visit the Making Environmental Claims Web page in order to learn more about the role of RECs.
| Green Power Supply Options | Your Impact on New Supply | What You Are Buying | Your Relationship to Generator | Your Financial Impact | Your Claim Limits | ||||
|---|---|---|---|---|---|---|---|---|---|
| Direct or Indirect | Renewable Energy Certificates | Commodity Electricity | Generating Asset | Ownership | On-site | Off-site | Cost or Savings | Renewable Electricity Use or Build New Projects | |
| Self-Generation | Direct2 | Yes | Yes | Yes | Direct/Buyer | • | • | Savings over life of project | I use renewable electricity6 and I built a new project7 |
| Physical Power Purchase Agreement (PPA) | Direct2/Indirect | Yes | Yes | – | Third-party | • | • | Savings over term of PPA | I use renewable electricity6 and I built a new project7 |
| Financial/Synthetic Power Purchase Agreement (PPA)3 | Direct2/Indirect | Yes | – | – | Third-party | – | • | Savings over term of PPA | I use renewable electricity6 and I built a new project7 |
| Bundled4 Green Pricing Product (from a Regulated Utility) |
Indirect | Yes | Yes | – | Third-party | – | • | Cost premium | I use renewable electricity6 |
| Bundled4 Green Marketing Product (from a Competitive Supplier) |
Indirect | Yes | Yes | – | Third-party | – | • | Cost premium | I use renewable electricity6 |
| Unbundled5 Renewable Energy Certificates (from a REC marketer) | Indirect | Yes | – | – | Third-party | – | • | Cost premium | I use renewable electricity6 |
1 All green power supply options include the procurement of a REC, which substantiates the buyer’s claim to be using renewable electricity from a zero-emissions resource. In the absence of owning a REC, the associated commodity electricity is not considered renewable and is assigned the environmental profile of the local grid mix.
2 To have a direct impact, an organizational buyer must engage with the project before it is built by signing a financeable long-term Physical or Financial PPA or by taking an investment position in the project itself.
3 A financial, synthetic, or virtual PPA is a form of financial hedge. The renewable energy project sells electricity on a merchant basis, but enters into a contract with a third party (counterparty) that provides a floor under the electricity price. Project counterparties pay each other depending on whether the realized electricity price is higher or lower than the established PPA benchmark price. These types of PPAs are generally limited to locations where hedging counterparties can be found—therefore, areas that are deregulated and that have liquid spot markets for energy sales that permit the sale of the electricity output into day-ahead or real-time market (Chadbourn & Park, April 2014).
4 Bundled products involve paying a single bill to a single supplier for the combined (e.g., bundled) RECs with the underlying commodity electricity service.
5 Unbundled refers to buying your electricity and the environmental attributes separately from two different suppliers and paying two separate bills.
6 To claim renewable electricity (green power) use from a zero-emissions resource, the buyer must own and retain the associated RECs.
7 To claim to have built a new project or directly contributed to new supply, the buyer must directly engage with the project before it is built an in a manner that is determined to be financeable. Signing Physical or Financial PPAs with underlying RECs does not constitute direct project engagement and does not offer the claim of having built a new project (see Endnote No. 2 above).