Voluntary purchases of renewable energy are growing

All eyes were on the real-time price graph projected before the large conference table in the David L. Lawrence Convention Center. A group of local officials were crowded around. 

As the online bids trickled in — the best offers from retail suppliers of electricity — the officials saw the graph begin to form what auctioneers call a “hockey stick” because of its sharp drop at the beginning and slow decline thereafter. It was an auction of epically tiny proportions: An opening bid of 20 cents per kilowatt-hour became 10, then 5.5, 5.533, 5.28. 

When the bidding ended, the officials were pleasantly surprised. 

The auction, started and finished in about two hours, had purchased two years of electricity for hundreds of individual electric accounts run by 29 municipal organizations in Allegheny County, including the City of Pittsburgh. That’s 220 million kilowatt-hours of electricity annually, enough to power more than 20,000 U.S. homes.

What’s more, the group of utilities managers had sought out 30 percent of that electricity from renewable energy sources with minimal increase in costs from the previous contract.

“Right now, green power is something everybody is interested in purchasing and everybody touts their green component within their municipality or authority,” said Jim Sloss, Pittsburgh’s utilities manager.

Mr. Sloss formed the group, known as the Western Pennsylvania Energy Consortium, in 2007 and organized its first auction the following year. The group has since grown from five to 29 members, doubled its annual purchases of electricity and earned national recognition from the U.S. Environmental Agency as a voluntary partner in buying green power.

Its commitment has been paralleled by residents, businesses and other government organizations across the country that have increasingly chosen to buy power from clean sources. The ease of buying electricity from retail energy suppliers has contributed to luring more customers to buy renewable. 

Competitive markets allow green power choice

In the early 1990s, a small number of U.S. utilities offered green power options to their customers. Today, more than half of all U.S. electricity customers have the option to purchase green power directly from a retail electricity provider, according to a report in January from the U.S. Department of Energy.

True growth in voluntary sales of green power began when Pennsylvania and several other states deregulated ownership of electric generation.

Retail energy supply companies — taking the place of traditional regulated utilities — emerged as the broker of electricity between power producer and power consumer. Consumers suddenly could choose from a variety of specific plans, prices and, more recently, extensive rewards programs

This opened the door to those interested in buying and selling renewable energy, said Tom Matzzie, CEO of Ethical Electric, an Washington, D.C.-based retail supplier that markets electricity from 100 percent renewable sources in Pennsylvania and seven other states.

Mr. Matzzie, who spent 15 years in politics before started Ethical Electric in 2011, realized the challenge of choosing renewable energy when he installed solar panels on his home in Washington, D.C.

“I said, this is great, I love it, but it’s probably not going to be for everybody,” he said. “The vision was to make renewable energy easy to purchase as a service — not as a home construction project. ... I stumbled across the energy supplier model, which has the benefit of being a service, and so a customer doesn’t have to make a commitment.”

The model is relatively simple: the utility — in the Pittsburgh area, it’s either Duquesne Light Co. or West Penn Power Co. — determines how much electricity its customers have used. Ethical Electric then buys the proportionate number of renewable energy credits — certificates designed to encourage renewable energy projects — from the generator.

In Western Pennsylvania, most clean electricity comes from wind farms in Somerset County, said Mr. Matzzie.

At 75 percent, wind energy is the largest source of total U.S. green power sales, followed by landfill gas and biomass at 7 percent; hydropower at 4 percent; and solar at 1 percent, according to the Department of Energy.

In 2013, the most recent data available, customers bought nearly 62 million megawatt-hours of renewable energy — about 1.7 percent of total electricity sales that year.

Sales from competitive retail suppliers in deregulated states represented nearly a quarter of the overall market, the DOE found. Since 2008, green power growth in competitive markets has far outpaced that from utility’s green offerings in regulated states.

Choose Energy, an San Francisco online service that connects customers with retail suppliers, reported that about one-third of Pennsylvania households in 2014 selected a plan that included some percentage from renewable sources — though just 2 percent chose a plan that included all renewables. 

Big savings allow for green power

The Western Pennsylvania Energy Consortium’s inception, as Mr. Sloss recalled, was pretty unremarkable. One day in 2007, a buddy at the Pittsburgh Water and Sewer Authority called him and asked if he wanted to combine the city’s energy accounts into one purchasing authority.

They gathered a few more large accounts and put them up for a so-called reverse auction, meaning the sellers of electricity are the bidders and the buyers are choosing the winner. It was a strategy that meant big savings and, therefore, incentive to increase green power purchases. 

In its first auction, the group agreed to purchase 10 percent of its power from clean energy sources for a 12-month period. 

The auction opened with the lowest sealed bid from the night before: 7.94 cents per kilowatt-hour. The winning bid came in at 6.87 cents per kilowatt-hour.

“It doesn’t seem like a lot, but between here and here” — he pointed at the blade of the hockey-stick-shaped price graph — “there was $1.4 million in savings.”

Phone calls from municipalities followed.   

The group became an EPA Green Power Partnership and currently ranks 12th in the country among local governments in voluntary green purchases. “From that point — and especially after that first auction — people took notice of what we did,” Mr. Sloss said.

The group’s previous auction in 2013 saw the cheapest power prices in decades; prices have since inched back up. 

That has kept Mr. Sloss realistic about the difficulty in reaching compromise among all group members as their green commitment increases. If electricity prices continue to edge upward, he said, it could be a few auctions down the road that they ask for a price comparison for a non-green plan. 

“I’m worried about that day we hit 50 percent renewable,” he said. “What’s the group gonna say?”

Daniel Moore: dmoore@post-gazette.com, 412-263-2743 and Twitter @PGdanielmoore.

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