In the near term and possibly even in the long term, it will not be possible to meet our emissions goals entirely with on-campus clean energy generation.  We must therefore purchase some off-campus renewable and other zero-carbon energy.

Enter into Power Purchase Agreements

A power purchase agreement (PPA) is a contract with an energy generation facility.  A long-term PPA with a renewable energy generation facility could enable the construction of new renewable energy generation.  At the time of this writing, the most economical renewable PPAs are for wind energy from large farms of wind turbines, but we expect that other types of renewable PPAs may become affordable in the future.

Although nuclear power is not considered renewable, an existing nuclear power plant produces no carbon dioxide emissions, and can help us meet our emissions goals.  A PPA with a nuclear power plant would enable us to purchase our energy from a zero-carbon source.

Campus has already begun working to investigate the potential for entering into PPAs with zero-carbon energy providers in order to help meet our emission reduction goals. 

Renewable Energy Certificates

Electrical output from both renewable and non-renewable power sources are combined together in a regional transmission grid.  In order for a consumer to claim the use of renewable energy, it must own the associated Renewable Energy Certificates (RECs), each of which represents the environmental attributes of one MWh of renewable electricity generation.

Only the owner of RECs can claim that they are using renewable energy. For example, if a wind farm operator sells its electricity to one party but sells the associated RECs to a second party, only the second party can claim to be using green energy.  To qualify as renewable, any energy the campus purchases must be bundled with RECs, and the campus must retain the RECs for any renewable energy we produce.  Therefore, the forthcoming Solar Farm will count towards our renewable energy goals only so long as we do not sell the associated RECs. 

Another method to increase our use of renewable energy is to separately purchase “unbundled” RECs, without purchasing power from the same generation source.  For example, we could purchase power from a coal plant, but purchase a corresponding number of RECs from a wind farm (in this case, the wind farm would sell their electricity without the environmental attributes to a customer who is not willing to pay for the environmental attributes).  The purchase of unbundled RECs reduces our carbon footprint according to generally accepted carbon accounting procedures, but it is not clear if it adds additional renewable energy to the grid.

At the time of this writing, there is exceptionally low demand for RECs in our local grid region, because there are no effective government standards requiring the purchase of renewable electricity.  At the same time, a significant number of wind farms have been built and are profitable even without selling RECs (due in large part to a federal tax credit for wind production), leading to a very large supply of RECs.  Given the low demand and the oversupply, prices for RECs are very low, and therefore it is not clear that the purchase of RECs really provides an incentive for generators to produce more renewable electricity, or that it leads to an actual reduction in overall CO2 emissions.

When unbundled RECs are purchased as part of a long-term contract, this can facilitate the construction of new renewable energy generation facilities.  Long-term RECs contracts would also have the economic advantage of “locking in” the current low prices.  Conversely, the voluntary purchase of short-term unbundled RECs from existing facilities does not add new renewable energy to the grid.  For these reasons the campus would have a greater environmental impact by purchasing long-term RECs contracts, either bundled with renewable energy in a PPA, or unbundled.