The nation's largest developer of renewable energy today plans to unveil a green power purchase program that could shake up the market by channeling all of the money into new wind and solar projects.
Today, customers who buy green power have no assurances their payments will finance future clean energy projects.
NextEra Energy Resources, a unit of Florida-based electricity giant FPL Group, says it will put all proceeds from the sale of its EarthEra renewable energy certificates, or RECs, into a trust. The company's auditor, Deloitte & Touche, will ensure the entire trust is funneled to new clean generation, NextEra executives say.
"We found people wanted transparency," says Mark Maisto, who heads commodities and retail markets for NextEra. "They wanted to know where the money was going, and they wanted the money to make a difference."
Customers who pay extra for green power often don't buy renewable energy itself, since it's almost impossible to zap electricity from, say, a wind farm to a specific home or business. Rather, they buy renewable certificates — commodities that represent premiums above standard electric prices and subsidize a generator for each megawatt hour of electricity it produces. A megawatt hour can power an average house for a month.
The certificates are intended to prod developers to build clean-energy generators, which are more expensive than traditional power plants.
Many of them are purchased by utilities. They often must meet state standards that require them to include a certain portion of clean energy in their power purchases. Thirty-three states have quotas.
A growing number of certificates in recent years also have been bought by consumers and corporations that want to support green power to combat global warming. Sales in this voluntary market jumped at least 30% last year to about 24 million megawatts, says Lori Bird, an analyst at the National Renewable Energy Laboratory. Many of the certificates are sold through brokers.
But during the economic downturn, demand for them has fallen as corporations have less discretionary income. Prices have dropped from $4 to $5 in early 2008 to about $1 to $1.50, says Andrew Kolchins, director of renewable energy markets for broker Evolution Markets. In addition, REC purchase contracts are for shorter terms, Bird says.
Partly as a result, "Critics have raised the question of whether (RECs) have been driving new renewable energy development," Bird says.
NextEra says its certificates will be sold in the voluntary market by company sales representatives, rather than brokers. In recent months, the company has quietly sold 1 million of the new RECs for $5 million to companies such as Office Depot, Sony Electronics, Bank of New York Mellon and REI, Maisto says.
"We think we can excite these companies to move forward" and "accelerate renewable energy in this country," he says.
Arthur O'Donnell, executive director of the Center for Resource Solutions, which certifies RECs, says, "This is a big deal for (large) customers."
With traditional certificates, "You don't know if any more renewable energy is created," says Mark Small, Sony's head of environmental issues.
REI, the outdoor gear and clothing giant, bought 2,500 megawatt hours of electricity and RECs from NextEra. They more effectively fulfill "the mission of our co-op to connect people with nature and getting people to the outdoors," says Kevin Hagen, REI head of corporate social responsibility.