We’ve recently had a number good discussions about what makes Local Sun different from traditional renewable energy plans in the market and thought we’d share a few comments.
The Basics with Most Renewable Energy Plans
What you think you’re buying:
What you are most likely buying:
In Texas, retail electricity providers can sell plans marketed as 100% renewable by purchasing renewable energy certificates (RECs) to “offset” the volume of non-renewable electricity they supply.
RECs are earned by power generating companies when a clean power plant generates a MWh of electricity. Think of RECs like trophies awarded for generating clean power, which can be sold separately from the energy produced by the power plant. RECs aren’t energy.
While the intent of RECs is to provide additional revenues to support renewable energy projects, the reality is they don’t meaningfully support new generation in Texas, and in the process skew customer understanding of renewable content within green energy plans.
Here’s an example of how it works:
- A wind farm generates power and earns RECs.
- The wind farm sells the power to a big bank that trades energy.
- The wind farm sells the RECs to a retail electricity provider.
- The retail provider adds the RECs to brown power and calls it 100% renewable.
- A customer buys the plan assuming it’s wind power, though the energy procured for that customer could actually be 0% renewable.
In other words, buying a trophy is not the same as winning the game.
The primary issue is RECs aren’t energy and can be sold separately from the actual green energy produced. And, they can be held for three years (think pile of cheap, plastic trophies), as opposed to energy which must be used in real-time as it’s generated.
The effect of this in Texas, mostly because of wind power and the voluntary nature of the Texas REC market, is an oversupply and depressed value of RECs.
To put this into consumer terms, a retailer usually pays less than a dollar per month per customer to sell their plan as 100% renewable. But, because customers think they are getting renewable energy, they pay a much higher premium, benefiting the retailer – not in support of more clean energy on the grid.
Traditional renewable energy plans and RECs aren’t bad … as long customers know what they really getting (we use RECs in addition to the solar power we generate).
However, RECs alone aren’t energy and don’t put new clean power on the grid. They can be misleading for consumers looking to make an impact with their purchasing choices.
Local Sun’s Difference
What Local Sun customers are buying:
The big difference in Local Sun’s electricity plan is it’s powered by our own solar power plant in Sealy, 50 miles away from Houston. The power you buy from us is generated on your behalf and put directly on the local distribution grid.
This means every kWh generated for you by Local Sun is one less kWh required in the area by polluting sources. Traditional renewable electricity plans can’t say the same.
The term of art used to describe this difference is additionality.
Simply put, when customers choose Local Sun, they add clean power on the grid. Each customer directly supports between 40-50 solar panels at our solar farms. That’s 40-50 solar panels that would not otherwise be there without customer participation.
Beyond long term price certainty for consumers, additionality of renewables drives the cost down for future projects, benefits the environment with non polluting power, and supports communities through job creation and dollars for the local economy.
For these reasons, we think it’s important to consider additionality when choosing a renewable energy plan and to ensure that you get what you pay for.