AIA / 27Architect’s Primer on Renewable Energy / Paying for renewable energy: on-site and off-site
» Flat-fee customers usually have a true-up period
every 1 to 3 years.
» Buyout options after about 7 years are common.
» $$$
Off-site options
There are many options for procuring off-site renewable
electricity. Here are some examples:
» Green pricing. Within noncompetitive electricity
markets (the utility owns generation, transmission,
and distribution), the local utility will likely have
a voluntary green pricing program. The customer
enters a short-term agreement (e.g., monthly)
to pay a premium/fee beyond the usual utility
rate to “buy” some or all of their electricity from a
renewable power source. RECs may be bundled or
unbundled. These programs are typically offered to
residential and small-commercial customers.
» Competitive electricity markets. Within
competitive electricity markets (utility owns
transmission and distribution but not all the
generation), the consumer can choose from
electricity providers. Typically, these markets have
more renewable electricity purchasing options.
RECs may be bundled or unbundled.
» Community solar. A solar PV project that
generates renewable electricity that is shared by
more than one property with subscribers usually
located in the same community or utility service
area. The project can be owned by the community
that shares the electricity, the utility, or a third
party that provides the renewable electricity to the
community. The project uses the local utility for
transmission and distribution. Subscribers purchase
a percentage of their annual electricity usage
from the project. Existing utility billing remains in
place; subscribers typically receive a credit on their
bill for the amount of electricity generated by the
community project. The Solar Energy Industries
Association (SEIA) has a “Residential Consumer
Guide to Community Solar.”
» Community choice aggregations (CCAs). Local
governments aggregate customer demand within
a specified jurisdiction and procure power while
continuing to use the local utility’s transmission
and distribution services. CCAs allow the
community greater choice in electricity generation.
» Utility green tariffs. Similar to green pricing, but
agreements are longer term (e.g., 1020 years).
The customer may have some say in the type of
renewable generation, and electricity costs may be
competitive (e.g., no fee above the utility’s usual
rate and the possibility of locking in a fixed rate
for term of the agreement). These programs are
typically offered to a class of large commercial
customers.
» Utility bilateral agreements. One-to-one contract
between a large commercial customer and a utility
to procure renewable electricity of a specific type
for an agreed-upon time period and rate.
» Power purchase agreements (PPAs). Like the
on-site PPA option, but generation is off-site.
There are two types of off-site PPAs: physical and
financial (also called virtual or synthetic PPAs).
EPA’s Green Power Partnership offers information
about physical and financial PPAs.
» REC purchases. Consumers can purchase
unbundled RECs from various organizations to
offset the electricity they use that is generated
from fossil fuel sources. It is important that these
RECs are third-party–certified and –verified. It
should be noted that whereas RECs can be used
to offset electricity consumption, there is some
discussion about using them to offset on-site gas
usage. For example, the EPA and eGreen do not
recommend it, but the ZERO Code does allow it.
» Renewable energy investment funds (REIFs).
These accounts are set up to receive funds from
building owners or developers when sufficient on-
site renewable generation is not possible. The fund
is typically managed by a local government with
a role for the local utility likely as well. The fund
is used to develop new renewable generation or
to purchase a virtual PPA. ZERO Code has more
information about REIFs.
The details of how a consumer purchases renewable
electricity can vary from state to state, utility territory
to utility territory, and by customer type. Architecture
2030 published the “ZERO Code Off-Site Procurement
of Renewable Energy,” and the EPA’s Green Power
Partnership website contains a wealth of information to
assist with navigating these differences.