In today’s increasingly complex and rapidly changing energy market, advanced energy consumers with ambitious net zero targets are driving the push for cleaner energy solutions to advance decarbonization. Utilities are under pressure to provide innovative pathways for businesses (and households) to access renewable energy, and one of the most common mechanisms is through green tariff programs, which are utility specific, renewable energy programs offered to customers. These are especially vital in regulated markets.
Green Tariff Programs: A Key Tool for Regulated Markets
Green tariff programs are voluntary utility offerings that allow customers to procure clean energy directly through their utility. These programs provide an alternative to complex bilateral agreements with power producers, simplifying the process of sourcing renewable energy. According to the EPA, as of October 2023, there are 62 active utility green tariff programs approved in the United States (US), or pending approval, across more than 30 utilities in 30 states.
These programs are crucial for companies aiming to meet stringent sustainability goals and for utilities seeking to facilitate this transition. By subscribing to a green tariff, businesses can ensure that their energy consumption is matched with renewable energy generation and corresponding attributes, such as Renewable Energy Certificates (RECs), reducing their carbon footprint and supporting the growth of clean energy infrastructure. There are many flavors of green tariff programs.
Green Tariffs in the News
Recent developments highlight the growing significance of green tariffs. Google announced a partnership with NV Energy to power its Nevada data centers with geothermal energy working towards its 24/7 carbon free energy (CFE) target. Duke Energy recently announced a similar deal in collaboration with tech giants Amazon, Google, and Microsoft, as well as Nucor Steel, to enhance their green tariff offerings by driving progress on carbon-free energy technologies, such as small modular reactors, and long-duration, in North Carolina and South Carolina. These partnerships underscore the critical role green tariffs play in helping major corporations achieve their decarbonization targets .
How Do Green Tariff Programs Come to Be?
The creation of a green tariff program is a complex, multi-step process. Utilities must file the program with regulatory bodies, such as the Federal Energy Regulatory Commission (FERC), undergo a review process, and often invite public comment; there can be delays stemming from any of these steps. This procedure can take years, reflecting the careful consideration and regulatory scrutiny involved. Despite the lengthy process, the establishment of green tariffs is a crucial step toward providing businesses with reliable access to renewable energy. Green tariff programs often have subscription limits and many are already at capacity. With increased customer interest, new programs often reach capacity quickly, and it can be difficult for utilities to keep up with customer demand.
Example Utility Green Tariff Programs
Various utilities across the U.S. have developed green tariff programs with distinct offerings for commercial and industrial (C&I) customers. Below are summaries of a sampling of current green tariff offerings, details on participating customers, and pricing information for a cross-section of utilities across the US of varying sizes. These green tariff program examples demonstrate how utilities are increasingly offering tailored solutions to meet the diverse needs of their commercial and industrial customers. By participating in these programs and other green tariff offerings, businesses can align their energy consumption with their sustainability goals while supporting the broader transition to renewable energy.
NV Energy
NV Energy’s GreenEnergy Rider program enables C&I customers to purchase renewable energy directly. This program supports various renewable sources, including wind, solar, and geothermal energy. There is no minimum volume required to participate, making it accessible for businesses of all sizes. Pricing is competitive and tailored to the energy consumption patterns of participating businesses. The cost typically includes a premium on top of standard energy rates to cover the additional expenses associated with renewable energy procurement.
Duke Energy
Duke Energy’s Green Source Advantage (GSA) program enables large customers in North and South Carolina to directly procure renewable energy. The program includes solar and wind options, with a minimum participation requirement of 1 megawatt (MW), catering mainly to large-scale energy consumers. Participants can negotiate pricing directly with renewable energy developers, resulting in variable costs based on the specifics of each agreement. Duke Energy facilitates these agreements and charges an administrative fee.
Austin Energy
Austin Energy’s GreenChoice program offers both residential and commercial customers the option to support 100% renewable energy through their utility bills, primarily focusing on wind energy. There is no minimum participation threshold, making it widely accessible. The program charges a premium of $0.005 to $0.0075 per kilowatt-hour (kWh) above the standard energy rate. This premium supports the development and integration of renewable energy projects.
DTE Energy
DTE Energy’s MIGreenPower program allows customers to attribute a percentage of their energy use to renewable sources, including wind and solar energy. The program is available to both residential and commercial customers, with flexible participation levels ranging from 5% to 100% of energy use. The program adds a premium of 2 cents per kWh to the standard energy rate. The premium covers the cost of generating and delivering renewable energy.
Wisconsin Energy
Wisconsin Energy’s Energy for Tomorrow program offers customers the ability to support renewable energy projects within the state. This program includes options for both residential and C&I customers. There are tiered pricing options based on the percentage of renewable energy customers choose to support (25%, 50%, or 100%). The premium varies from 1 cent to 2.5 cents per kWh above the standard energy rate, depending on the chosen participation level.
Xcel Energy
Xcel Energy’s Renewable*Connect program provides a flexible subscription model for residential and C&I customers to source their energy from solar and wind projects. TCustomers can choose monthly or annual subscriptions with no minimum volume requirement, making it adaptable for different energy needs. The program includes a premium that varies depending on the term length of the subscription. For example, the monthly subscription may add about 1.5 cents per kWh, while an annual subscription could add about 1.2 cents per kWh.
Are There any Drawbacks to Green Tariff Programs?
For customers in regulated energy markets, green tariff programs offer a pathway to choose clean energy, often at a premium and sometimes with volumetric constraints. There are no drawbacks to participating when programs are offered but customers may find that their choices are limited or non-existent depending on the utility and the market, or they may find opting into the program to be cost prohibitive. More sophisticated corporates may not find the infrastructure for granular certificates or hourly RECs, but over time the expectation is that these programs will evolve to meet the needs of customers.
Differentiating as a Utility
Utilities looking to stand out can design robust green tariff programs that not only meet but exceed customer expectations. Tracking data is crucial in ensuring program commitments are met. Cleartrace supports utilities in these efforts by providing tools to allocate attributes appropriately, track generation data, and match loads accurately.
Creating ambitious programs that partner with customers to set and achieve new decarbonization targets through innovative collaborations is another way utilities can differentiate themselves. As customers demand more comprehensive clean energy solutions, utilities must evolve to offer advanced programs that support their customers’ net-zero ambitions.
Looking Ahead
The demand for green tariff programs is growing as businesses and consumers alike strive to meet net-zero targets. While utility programs are regulated and often move slowly due to a variety of complexities in the process, corporate customers are pushing utilities for more options and more data to back up their claims.
