Funding schemes can spur the growth of renewable energy generation

Well marketed and tailored ‘green pricing’ schemes - whereby domestic customers pay a premium for renewable energy – are acting as a spur to the growth of the renewable generation industry, says a new study by a US governmental organisation.

According to Utility Green Pricing Programmes: What Defines Success?, published by the National Renewable Energy Laboratory (NREL), green pricing programmes are offered by more than 85 utilities in 29 states. The quality of the products is generally very high, with many utility programmes focusing on developing new renewable energy sources, which offer customers a meaningful opportunity to contribute to environmental improvement, reports NREL. To date, 282MW of renewable energy has either been installed, or is planned – enough to power 110,000 homes.

“Green pricing has given utilities and their customers a powerful new tool to foster environmentally friendly energy production,” said NREL Energy Analyst Blair Swezey, co-author of the study.

However, for most of the schemes, participation rates are very low, with more than half of the utility programmes having less than 1% customer participation, and the majority of the 110MW of new renewable capacity installed to date being provided by only four of the programmes, says the report. Furthermore, three quarters of the 172MW of renewable energy that are planned for imminent installation will serve customers from only three of the programmes.

In order to solve this problem, the NREL study has produced a list of ‘best practices’ that utility schemes could use, based on a number of common attributes shared by the successful programmes. These include:

  • seeking out the best renewable resources for the locality, including those that customers are most interested in, and which can provide local economic benefits;
  • offering power from new renewable energy projects, so that customers can see that they are investing in tangible environmental improvements;
  • keeping programmes simple;
  • the creation of value to the customer, such as through tax deduction, development of community-based projects, and protection from rate increases resulting from fossil fuel price increases or environmental compliance requirements;
  • making programme information readily available, such as on the internet;
  • including businesses and other non-residential customers, who are becoming increasingly interested in green power and could represent a significant market segment; and
  • tracking customers as they change residences.

According to the report, the top US green pricing programme, ranked by the amount of new energy produced, is organised by the Los Angeles Department of Water and Power (LADWP), followed by Austin Energy in Texas, and the Public Service Company of Colorado. When companies are ranked by customer participation rates, the top four are Moorhead Public Service in Minnesota, LADWP, Holy Cross Energy in Colorado, and Madison Gas and Electric, based in Wisconsin.

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