Want To Go Green? First, Look At Your Options
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Margaret Campbell is CEO of Easy Energy, a competitive electricity supplier based in Bolton.
Renewable energy's popularity is on the rise. Many businesses are "going green" in order to gain customer favor, cut down on energy costs and help protect the environment. Some businesses are turning to solar panel installation as a solution, partly due to state and federal tax incentives and rebates.
Massachusetts offers incentives to those who install solar panels. In addition, the environmental attributes of renewable generation have been monetized by the creation of a market for renewable energy credits (RECs). A REC is minted each time a renewable resource generates one megawatt of electricity. Utility companies and suppliers are required to purchase RECs, so they have market value (currently, solar RECs are worth about $285 each).
Judging by state data, these incentives are working: In the past five years, solar generation has increased from 3.7 megawatts to 143 – enough to power more than 20,000 homes. And costs to install the systems have fallen by nearly a third to $4.50 per watt. While this price reduction does have something to do with inexpensive Chinese panels, other components made in the United States, inverters, for example, have also gotten cheaper.
Even with all these benefits, installation of solar panels doesn't make financial sense for every business. Indeed, business owners or managers should consider other methods of going green to determine which option best fits their needs.
First, find a good competitive electricity supplier to act as a consultant and assist you in sourcing your energy. Not only can you choose who purchases electricity on your behalf, you can choose what kind of electricity you get. Many competitive suppliers now offer options that allow you to offset your energy usage with RECs.
The main advantage of purchasing renewable energy from a competitive supplier is flexibility and control. Contract terms can be longer or shorter than your utility's standard three-month term to better match your budgeting cycle and enable you to lock in your rate when the price is right.
Purchasing RECs allows you to make claims about how "green" your business is. For instance, you could say, "We match 50% of our electricity with renewable energy from Massachusetts wind farms." However, the right to these claims comes at a cost because RECs can be expensive.. Going green through a competitive supplier's renewable option could increase your electric bill by 10 to 40 percent.
Another option is to enter a power purchase agreement (PPA) with a renewable generator. This can provide you with both PR value and potential savings on your electricity costs over time.
If you own your building or parcel of land, but don't want to pay for solar panel installation, you can enter a PPA with a solar provider. They lease your land, install the panels, operate and maintain the system and you pay them for the electricity produced. Depending on the agreement, you may take ownership of any RECs generated, as well.
Finally, if you want savings and you want to support renewable energy development, but don't care to make any claims about your business' "green" status, you might want to consider entering an agreement to purchase net metering credits from a local solar farm. Under these agreements, a portion of the electricity produced by the solar farm is assigned to you every month. Your utility will apply a credit to your bill, which will reduce the amount you owe. The solar developer will bill you for the amount of net metering credits they assigned to you, usually at a discount.
These agreements generally offer the most immediate savings with no up-front costs for you. However, because state regulation stipulates that RECs are the only environmental attribute of renewable energy, and because you are not purchasing the RECs when you enter into a net metering agreement, your business won't be able to make any claims about purchasing "green" energy. n
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