Here’s how to buy renewable energy from your electric utility

Finance

Wind turbines in Dawson, Texas, on Feb. 28, 2023. 
Mark Felix | Afp | Getty Images

As carbon emissions from fossil fuels keep warming the planet, eco-conscious consumers may wonder if there’s a way to buy electricity from renewable sources without installing technology like solar panels or windmills on their property.

In short, the answer is yes.

However, the option isn’t necessarily available to all homeowners and renters. It also often comes with a slight price premium, experts said.

Few people are aware they can buy green energy

Renewable energy sources — including wind, solar, hydropower, geothermal and biomass — accounted for about 21% of U.S. electricity generation in 2023, according to the U.S. Energy Information Administration.

Most, 60%, came from fossil fuels like coal, natural gas and oil. These energy sources release carbon dioxide, a greenhouse gas that traps heat in the atmosphere and contributes to global warming.

The White House aims for electricity generation to be free of greenhouse gas emissions by 2035.

A growing number of individuals and organizations are opting to shift away from fossil fuels: About 9.6 million customers bought 273 Terawatt hours of renewable energy through voluntary green power markets in 2022, according to the National Renewable Energy Laboratory. That’s up fivefold from 54 TWh in 2012.

In the voluntary market, customers buy renewable energy in amounts that exceed states’ minimum requirements from utility companies. Over half of U.S. states have policies to raise the share of electricity sourced from renewables, though most targets are years away.

Voluntary purchases accounted for 28% of the renewable energy market (excluding hydropower) as of 2016, according to the Environmental Protection Agency. They help increase overall demand for renewable electricity, thereby driving change in the energy mix, the EPA said.

Photovoltaic solar panels at the Roadrunner solar plant near McCamey, Texas, on Nov. 10, 2023. 
Jordan Vonderhaar/Bloomberg via Getty Images

The bulk of the increase is from corporations, according to NREL estimates. Residential sales have grown, too, but more slowly.

Just one in six U.S. adults know that they may have the option to buy renewable power, either from their electric company or another provider, according to most recent NREL survey data on the topic, published in 2011.

“The market does continue to grow every year in terms of sales and customers,” said Jenny Sumner, group manager of modeling and analysis at NREL, a national laboratory of the U.S. Department of Energy.

“But very few people are aware” they can opt in to green programs, she said. “It’s just not something that’s top of mind for most people.”

How consumers can buy green power

Joe Raedle | Getty Images News | Getty Images

Buying green power can take many forms for residential consumers. What’s available largely depends on their state and local electricity markets.

“Access is not … universally available to the same degree in every state and every area,” said Omar Siddiqui, senior program manager of customer insights at the Electric Power Research Institute. “But the overall trend is certainly moving in that direction.”

More from Personal Finance:
Miami is ‘ground zero’ for climate risk. People are moving to the area and building there anyway
8 easy — and cheap — ways to cut your carbon emissions
Climate change could cost Americans born in 2024 nearly $500,000 in their lifetime

Residential customers should visit their utility’s website to see the options available to them, Sumner recommended.

Some states have websites where consumers can compare information on energy services, including renewable options, she added. (Texas has one called Power To Choose, run by its Public Utility Commission, for example.)

Green pricing programs

Wind turbines in Solano County, California, on Aug. 28, 2023.
Loren Elliott/Bloomberg via Getty Images

Power companies may offer “green pricing programs,” for instance.

Customers in these programs — also known as utility green power programs — pay their utility a “small premium” to get electricity from renewable sources, according to the U.S. Energy Department.

The cost generally exceeds that of a utility’s standard electricity service by about 1 to 2 cents per kilowatt hour, Sumner said.

That may roughly translate to about $5 to $15 more per month, Sumner said. It will ultimately depend on factors like program price and household energy use, she added.

Nearly half of Americans, 47%, said they were willing to pay more to get their electricity from 100% renewable sources, according to a 2019 poll by Yale University’s Program on Climate Change Communication. On average, they said they would be willing to pay $33.72 more per month.

Green power marketing programs

Consumers in some states can also opt into “green power marketing programs.”

Such states have “competitive” energy markets, meaning consumers can choose from among many different companies to generate their power. (Unlike with “green pricing programs,” the company generating the renewable power may not be the customer’s utility, which distributes the power.)

Residential green power options are available in these states with competitive (also known as “deregulated”) markets: California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas and Virginia, according to the U.S. Energy Department and EPA.

These also tend to come with a premium, though in some regions they “may be price competitive with default electricity options,” the agencies wrote.

Community choice aggregation

With “community choice aggregation” programs, local governments buy power from an alternative green power supplier on behalf of their residents.

The municipality essentially operates as the supplier for the community’s electricity, Sumner said. These programs are especially prevalent in California, she said.

Unlike the other program types, residents generally don’t have to opt in to community choice programs; it’s typically automatic and consumers can opt out if they wish, Sumner said.

How renewable energy certificates (RECs) work

A solar farm in Imperial, California, on December 6, 2023. 
Valerie Macon | Afp | Getty Images

Just because a consumer opts for renewable power doesn’t mean the electricity being pumped into their home is coming from those renewable sources.

This may sound strange. But it’s due to the physical nature of electricity and its movement through the shared electric grid.

“Once the electrons have been injected into the grid, there’s no way of tagging that these are ‘green’ electrons and these are not green,” said Joydeep Mitra, head of the power system program at Michigan State University. “Nobody knows which electrons are going where.”

Green energy programs instead rely on “renewable energy certificates,” or RECs.

The certificates are essentially an accounting mechanism for the generation and purchase of renewable energy, Mitra said.

You may not be getting the green power — but someone, somewhere is. And RECs keep track of it all.

Any consumer — even one who doesn’t have access to a green power program through their utility — can also purchase a REC as a separate, stand-alone product. It’s a way to provide extra funding to a renewable energy project, typically sold by a broker or marketer rather than a utility, Sumner said.

Buying these certificates separately doesn’t impact a consumer’s existing utility service relationship.

How to verify your electricity is green

Experts recommend choosing a green power option or REC that has been verified by an independent third party.

That’s because the voluntary sales and purchases of renewable energy aren’t subject to government oversight, according to the EPA and U.S. Energy Department.

One such independent body is the Center for Resource Solutions, a nonprofit that oversees the Green-e certification standard, the agencies said.

For example, Green-e polices the disclosures energy suppliers make to consumers about renewable energy, and verifies the purchase of that energy isn’t being counted toward state energy mandates, among other things.

In this new series, CNBC will examine what climate change means for your money, from retirement savings to insurance costs to career outlook.

Has climate change left you with bigger or new bills? Tell us about your experience by emailing me at gregory.iacurci@nbcuni.com.

Articles You May Like

Google’s Android apps are coming in 3D via Xreal as competition with Apple’s Vision Pro heats up
Top Wall Street analysts recommend these stocks for the long haul
IRS to reject billions of dollars in ‘improper’ pandemic-era small business tax credit claims
Super Micro, Dell shares jump as Elon Musk calls them suppliers to xAI supercomputer project
Reining in America’s $3.3 Trillion Tax-Exempt Economy