Any effort to go green is a good one, right? A recent survey from Lab 42 on the state of the energy market indicates that nearly one-in-four Texan consumers wish they had more green energy options. Doing good things for the environment, like signing up for an environmentally friendly energy provider, seems like a great thing on paper. The truth, however, is much more complicated.
For starters, if you signed up for a 100 percent green energy plan, you are not actually using 100 percent green energy. So when you run your dishwasher or turn on the lights, it’s not all powered by solar and wind, but a combination of gas, oil and coal too.
How the Green Energy Hoax Began
In most deregulated markets, the state mandates that a certain portion of electricity being consumed must be offset through the purchase of renewable energy credits (RECs). RECs represent 1 MWh of electricity produced from renewable energy resources and allow companies to meet renewable energy goals and support the generation of more renewable power projects. For perspective, 1 MWh provides enough energy to power 330 homes for one hour. For Texas, the state mandate is 12.1 percent.
There are strict rules around buying and selling these compliance RECs that require RECs to be of a certain age (no older than three years), of a certain technology (wind or solar), of a certain geography (in state or state adjacent) and, in most cases, must be trackable.
Lines get blurred, however, when it comes to voluntary RECs. Voluntary RECs don’t have the same restrictions as compliance RECs. It’s the company’s choice to buy these RECs so they can choose to buy some that are less ideal — ones that are more than 10 years old, generated in California while selling in them to Texans, or created from other sources like methane from landfills and poultry litter. Yep, that’s right: poultry litter.
Despite good intentions, these have become a cheap way for retailers to mislead consumers into thinking they are getting a product totally sourced from renewable energy — while also selling them at overpriced premiums. With no rules to govern these voluntary RECs, the energy sector has become flooded with companies that are branding themselves as green energy providers, and marking up their costs by 20 percent or more with cheap RECs that account for less than 1 percent of their total costs.
For example, cheap wind RECs can be bought for $0.14-$0.20. This means that the average residential customer can purchase a “100 percent” wind product that only costs the REP an extra $1.40-$2.00 per year to provide — though the customer will be paying a significantly higher markup.
The problem with this confusing marketing is that consumers believe they are powering their homes with renewable energy sourced in Texas, by their energy provider, when, in fact, it may be a very different story. This is not to say that REPs shouldn’t buy RECs, but that they should be transparent about their business practices.
Another way to go about providing green energy to consumers is to provide them with information about when more renewable energy is powering the grid. When consumers sign up with a REP marketing green energy sources, they should also receive alerts as to when the grid is ‘high’ on electricity generated through green means, such as on a windy day, when lots of wind power is generated.
For example, my company uses an app to help consumers make decisions about when to use power. The app will turn green and alert users to when the cost goes down, which corresponds to when more renewable energy comes online. This will allow users the opportunity to choose to use lower cost, greener energy.
Encouraging consumers to shift their energy use to times when renewable power supply is high does more than just put money towards green energy — it helps increase demand for it, and therefore, encourages more to come online. This tactic not only shows a commitment to transparency and consumer education, but also empowers savvy consumers to take control of their energy use.
A good analogy for this is the weather: People wake up every morning and check the weather so they can plan their day around it. We envision a world where people can just as easily check the amount of renewable energy on the grid and plan their energy-intensive tasks accordingly. The more information consumers have, the better decisions they can make.
With this new model, energy consumers can choose what kinds of energy they use for power-heavy tasks, like doing laundry or running the dishwasher. An electron by any name is going to do the same job, but the point is to give consumers more control over their energy cost and sources.