Why 100% green energy isn't 100% truthful
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 25% of 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% green energy plan, you are not actually using 100% 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 Texas, the state mandates that a certain portion of electricity used must be offset through the purchase of Renewable Energy Credits (RECs) as a way for companies to meet renewable energy goals and support the generation of more renewable power projects. For the Lone Star State, the average for renewable content is 19%.
Now, there are two different kinds of RECs you can buy and sell: Compliance RECs and Voluntary RECs. Compliance RECs are the really strict ones. They can't be older than 3 years, need to come from wind or solar, need to be produced in that state and, in most cases, 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 if they want to come off as more "green." Often time, however, they can choose to buy some that are less ideal – ones that are more than 10 years old, generated in California while selling them to Texans, or created from other sources like methane from landfills and poultry litter. Yup, that’s right: poultry litter can be considered renewable energy.
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. There are no ways to enforce these Voluntary RECs so the energy sector has become flooded with companies that are branding themselves as green energy providers. Plus, they are marking up their costs 20% or more with cheap RECs that account for less than a 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%” wind product that only costs an energy company 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.
The Better Way to Go Green
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. For example, on a windy day, when lots of wind power is generated.
At Griddy, we have an intuitive app that helps consumers make decisions about when to use power. The app will turn green and alert users when the price goes down, which correlates to more renewable energy on the grid. This will allow users the opportunity to choose to use lower cost, greener energy. The more information consumers have, the better decisions they can make.
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.