GROUPS URGE FEDERAL GOVERNMENT
TO BUY GREEN POWER
GROUPS URGE FEDERAL GOVERNMENT
TO BUY GREEN POWER
In a letter sent to the Clinton Administration, environmental groups urged the White House to direct federal procurement officials to buy green power. The letter — signed by the Natural Resources Defense Council, the Union of Concerned Scientists, the Sierra Club, the Environmental Defense Fund, and the Center for Resource Solutions — stated that federal green power purchases could create an important downpayment on reducing U.S. greenhouse gas emissions. Such action by the federal government could also demonstrate a positive link between electric utility restructuring and efforts to clean the air and reduce the threat of global warming.
The groups emphasized that the new market for renewable energy technologies created by federal green power purchases "would demonstrate leadership that other electricity customers will follow. The resulting new demand will transform new energy markets, help ensure U.S. leadership in a growing high technology industry and promote a host of clean air and greenhouse gas reduction goals."
More than half of the electricity produced in the United States comes from coal, oil and other fossil fuels. Fossil fuels used to produce electricity account for 70% of U.S. sulfur dioxide, 34% of carbon dioxide, 33% of nitrogen oxides, 28% of particulate, and 23% of toxic heavy metal pollution. The Natural Resources Defense Council estimates that as many as 64,000 premature deaths each year result from particulate air pollution.
Electricity produced using green, renewable energy resources such as wind, solar, geothermal, biomass, and hydropower dramatically reduce these environmental and public health impacts. Renewable energy technologies are making significant new contributions in serving global electricity needs, based on recent technological advances and public policy support.
This section gives the user background information on the
concept of green power and the context in which green power fits into the
electric power industry marketplace.
Background on Green Power Marketing
The passage of the Public Utility Regulatory Policies Act (PURPA) of 1978
expanded the market for larger, bulk-power-oriented renewable electric projects.
This legislation partially addressed the restrictive market power of utilities
by requiring utilities to interconnect with and purchase power from certain
qualifying facilities (QFs) at a utility's avoided cost, or the cost that
the utility would have incurred by generating or otherwise supplying the
power itself.
In the early days of PURPA implementation, electricity costs were rising
and electricity demand growth was higher than it is today, which led to favorably
priced, long-term avoided cost contracts for renewables developers. More
recently, low natural gas prices and the increased competition in the wholesale
electricity markets initiated by PURPA have lowered generation prices and
caused utilities and regulators alike to adopt a very short-term perspective
of the electricity market. In this environment, renewables, with their higher
front-end investment requirements and longer-term contractual needs, are
at a disadvantage. Indeed, annual renewables electric capacity additions
have fallen to between 200 MW and 300 MW during the 1990s from a level of
more than 1,000 MW during the late 1980s.
Currently, electric utilities are facing increasing competition because of
a nationwide movement to deregulate the power supply industry. The promotion
of greater competition in electricity markets is premised on the belief that
a more competitive market will result in lower market prices than the traditional
regulated monopoly industry structure. This will be achieved by giving a
greater number of suppliers access to the market. Renewables, with higher
front-end costs, will be disadvantaged in this strictly price-based segment
of the market.
However, full competition should also provide electricity customers with
a greater choice of how their electricity is produced, and this opens a new
market for renewables. In the face of this competition, utilities have a
growing impetus to strengthen their image with their customers and build
customer loyalty. Two important factors in customer loyalty are:
1) Most utility customers want their utilities to pursue environmentally
benign options for generating power.
2) Some utility customers are willing to pay extra to receive (or even just
to fund) power generated from renewable sources.
Some utilities are now offering customers the option of paying more to receive
such environmentally preferable power—a concept known as "green pricing."
Green pricing is an evolving utility service that responds to utility customers'
preferences for electricity derived from renewable energy sources such as
solar, wind, or biomass. Under green pricing, utilities offer customers a
voluntary program or service to support electricity generated from renewable
energy systems. Customers are asked to pay a rate premium, which is meant
to cover the costs that the utility incurs above those paid for electricity
from conventional fuels. Utilities are considering green pricing as a way
to build customer loyalty, deploy popular renewable technologies, expand
business lines and expertise, and improve understanding of customer response
to unbundled pricing and services.
The more general concept of marketing green power is usually referred to
as "green power marketing." Green power marketing capitalizes on an expressed
public preference for cleaner energy options, such as renewables, by giving
consumers a market option to purchase renewables-based electricity services.
Green marketing has the potential to expand domestic markets for renewable
energy technologies by fostering greater availability of renewable electric
service options in retail markets and is compatible with ongoing attempts
to introduce greater competition into the generation and delivery of electricity.
Center for Resource Solutions Contact: Kirk Brown, (415) 561-2100
RELATED LINKS:
The Center for Resource Solutions is a San Francisco-based non-profit organization dedicated to promoting the use of energy efficiency and renewable resources to sustain healthy environments and enhance overall quality of life.
Written by: Green Power Network
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