Producing on-campus carbon-free, renewable electricity is difficult and producing enough of it to make a real difference is even harder. That is why many campuses have begun purchasing green power. Institutions striving for carbon neutrality will eventually need to generate electricity on-site with carbon-free sources and shift purchased electricity to green power purchases, or buy carbon offsets to mitigate the carbon emissions embodied in continued conventional power generation and purchases.

The U.S. Environmental Protection Agency Guide to Purchasing Green Power is a useful resource. Also, the EPA's Green Power Partnership provides campus examples of green power purchasing.

5.4.1 Benefits of Buying Green Power

There are a variety of benefits associated with buying green power. Green power purchases can:

• Bolster the development of additional green power generating capacity, thus shifting the mix of generation types away from fossil fuel generation and reducing carbon and other harmful emissions
• Contribute to the construction of specific renewable energy generators (such as a new local wind farm) if green power is purchased through a long term contract with a specific developer
• Provide a financial hedge against price volatility of conventional electricity, especially if you purchase green power on a long term contract
• Demonstrate civic leadership
• Provide public relations benefit
• Increase campus morale
• Serve an educational value

5.4.2 What You Are Buying -- RECs or Green Tags

Green power purchasing typically involves buying renewable energy credits or certificates, referred to as “RECs” or “green tags.” These are purchased in increments of 1,000 kilowatt hours (1 REC = 1,000 kWh or 1 megawatt hour) and represent the “environmental attribute” associated with renewable power. RECs are certified by an independent agency (e.g. Green-e) to guarantee their actual production from a qualifying renewable energy source and to insure that they are not double-counted. Qualifying sources include solar electric, wind, geothermal, and certain types of hydro, biomass and hydrogen fuel cell-derived power.

RECs are sold on “compliance” and “voluntary” markets and typically cost 1 - 3 cents per kWh, a premium cost over and above purchased electricity. Price differences can be attributed to demand, location, provider, and green power generation source. Given the volume of institutional green power purchases, colleges and universities can expect better pricing than residential and small business owners.

Compliance markets are created by policies such as renewable portfolio standards that require electric utilities to supply increasing percentages of power from renewable sources. Colleges and universities participate in voluntary markets, i.e. pools of customers that voluntarily choose to go green.

While RECs are the most common vehicle for purchasing green power, there is some skepticism about them. Some argue that REC purchasers receive nothing of value other than bragging rights -- despite REC certification regimes by Green-e and state public utility commissions. In many cases – because there is no requirement of “additionality” -- it is not clear whether a given green power purchase is responsible for catalyzing additional generation of renewable power (thus suppressing fossil fuel generation and reducing GHG emissions). Potential customers may wish to ask for evidence that their green power purchase will produce a GHG emissions reduction “in addition” to what would have occurred anyway.

Over time the renewable energy market may move beyond RECs, but for now campuses as well as business and residential customers interested in green power usually deal with RECs. Fortunately, there are strategies that can be used to increase the odds that your green power purchase really produces an environmental benefit. Some of these strategies are described in the next section.

5.4.3 Maximizing the Benefit of Green Power Purchases

Not all green power is equal. For example, if you are buying biomass-generated electricity, due diligence requires that you examine the source of fuel to insure that its production does not involve forest destruction or other negative environmental impacts. Also, not all green power is carbon-free. A case in point is biomass-generated power since fossil fuels are typically consumed in the process of producing, transporting and processing biomass fuel. Wind, on the other hand, is GHG emissions-free except for the fossil fuel used in making and installing the wind turbines themselves, a carbon debt which wind manufacturers say is paid back within a few months of operation. While these embodied energy issues are generally not considered in campus carbon accounting, investigating them would provide an interesting learning experience for students and faculty.

Hopefully, colleges and universities are buying green power not simply for bragging rights but are doing so out of genuine concern for sustainability. If your purchase of green power does not actually lead to the development of more green power capacity (and thus contribute to a shift in the power generation mix from dirty fossil fuel to a greater percentage of clean renewable-generated power), then no reduction in GHG emissions has been achieved and no environmental benefit has occurred. Thus, it is important that schools consider, as an essential decision-making criteria, the likeliness that a given green power purchase will in fact leverage new renewable power development. It is critically important that it does.

To clarify, let’s see how this might play out in the real world. Perhaps you could buy qualifying hydro power at a cheap price but that purchase is unlikely to motivate developers to build more hydro capacity because additional hydro opportunities are not available. If your other option is to purchase wind energy, whose RECs might cost more but whose purchase will stimulate the construction of the next wind farm, then this perspective says you should buy wind. One can easily imagine some difficult decision-making on campus given the challenges and costs associated with achieving significant cuts in GHG emissions. You could claim greater progress in mitigating carbon emissions by buying a lot of cheap RECs but the progress you are claiming would be imaginary if your REC purchases are not actually helping to shift the mix of generation.

Let’s take this line of thought a few steps further. Are there ways of buying RECs that make it even more likely that that next wind farm, for example, is built? The answer is a resounding “yes!” The best way to leverage new wind capacity is to “buy” and build that new wind farm yourself. The next best approach is to buy wind-generated RECs on a long term contract. With a long-term REC contract in hand a wind developer can secure lower cost financing, vastly increasing the odds that the next wind farm is built. That’s what you want to see happen.

You can further increase the odds that your green power purchase will increase renewable energy capacity by purchasing wind-generated green power on a long term contract specifically from a planned wind farm that is not yet built. This may seen counter-intuitive but this strategy may be effective because it compels the developer to build additional renewable capacity in order to obtain your business. Your ability to leverage that next wind farm grows even further if you also commit to a long-term contract for the electricity output of the wind farm (the “commodity”) as well as the RECs. This approach may also allow you to lock in flat or more level and predictable electricity pricing – thus providing a hedge against future electricity price volatility.

Yes buying green power gets complicated but the bottom line is this. As the renewable energy market evolves, colleges and universities as well as other customers will have new options for buying green power. Smart buyers of green power will chose those options most likely to increase state, national and global renewable energy capacity.

5.4.4 Complementing Green Power Purchasing with Conservation

Installing or buying green power and doing energy conservation are GHG mitigation strategies that can complement and synergize each other. Big doses of conservation will save money and reduce your energy load, thus saving more money by decreasing the amount of green power you will need to produce or buy in order to displace fossil fuels. Plus conservation savings can be used to buy green power – thus offsetting those costs. Eliminate waste and reduce those energy needs! There is a lot of magic in energy conservation!