Cooperatives to Push Green Tags in California

Although the destiny of green power has moved from consumer choice through direct access to state requirements that utilities procure nearly one-fifth of their sales from renewable sources, there appear to be signs of life for the self-generation and even direct-access routes through ?green tags.? A new vehicle to market ?green tags??transactions that represent the non-energy environmental attributes of green power?is expected by the end of the year from the Clean Power Cooperative (CPC). What?s unique about the CPC effort is the aggregation of ?green tags? from renewable distributed-generation capacity. The potential stumbling block of exit fees was recently removed by the California Energy Commission (CEC) for projects of 1 MW or less. However, neither the CEC nor the California Public Utilities Commission has yet made a determination about exit fee exemptions for larger green tag projects. Green tags are a sort of currency used in energy trades to represent the environmental and social benefits of renewable electricity generation, not the electricity itself. The value of green tags varies considerably. Any premium above the cost of generic electricity is typically used as a proxy for the value of the green tag. For residences, the cost of a 100 percent renewable energy package generally works out to a premium from one-fifth to one-third of an existing bill. Wholesale prices for green tags to large commercial or industrial customers can be considerably cheaper. The reason companies are willing to pony up for a green tag is typically public relations. They can claim that their power supply is greener than their competitors?. Bob Marshall, manager of the Plumas-Sierra Rural Electric Cooperative, and Aaron Jones, executive director of the Golden State Power Cooperative, set up the CPC back in 1998. Members include three rural electric cooperatives with a load of 150 MW and five aggregation co-ops, with roughly 400 MW of load and 200 MW of their own electricity generation. With direct access under initial deregulation, the CPC was envisioned as a way to market green energy through a major environmental group such as the Sierra Club. Today, the CPC has set a goal of becoming the largest owner of green tags in California by working with other co-ops to help develop new solar and wind projects and add value to existing renewable distributed-generation facilities. For example, a current California co-op success story that could serve the initial green tag transactions for CPC is Cooperative Community Energy (CCEnergy) of San Rafael. Under the envisioned scenario, the CPC could aggregate the green tags from small renewable installations and market them to entities that cannot install their own renewable projects but want to purchase the environmental attributes of such generation. Ultimately, the CPC hopes to help facilitate renewable distributed-generation projects throughout California by increasing their value through the marketing of green tags. However, there is that pesky ?exit fee? problem?adding even more cost for anyone who might consider paying a premium for green power. ?The exit fee is very shortsighted in that it creates a barrier that stops people from doing what is best for California ratepayers and the environment in general,? argued Aaron Jones, executive director of Golden State Power Cooperative. The CPC also hopes to market green tags from larger, utility-scale renewable energy projects. According to Marshall, a private LLC will soon be created to take advantage of federal production tax credits for wind. Though the tax credit of $0.018 cents/kWh is scheduled to expire at the end of this calendar year, it is included in the latest version of the federal energy bill trying to work its way through Congress. Though the fate of this controversial legislation is uncertain, the wind power industry is confident that the federal production tax credit for utility-scale wind will be enacted regardless of what happens to the federal energy bill. Today, only one company is actively marketing green tags in California: 3 Phases Energy Services of Los Angeles. Created in 1994, this energy service provider is currently working to market green tags from facilities such as the recently commissioned Solano High Winds Center operated by FPL Energy and PPM Energy to municipal utilities such as the city of Palo Alto?s. While California dropped most green tags when retail access dissolved, ?green tags are far from dead nationally,? said Dan Kalafatas, manager of green certificates for 3 Phases. ?Most of the action is in the Mid-Atlantic states and in the Pacific Northwest.? Among the largest recent green tag transactions in California was the purchase by Lockheed Martin of Palo Alto of 1,800 MWh of green tags. Most of the green tag business that 3 Phases has generated has been among commercial clients, including Kinko?s and New Leaf Paper. Nonprofits such as Greenpeace and the Blue Waters Network of San Francisco have also purchased green tags. Kalafatas would not divulge details of green tag transactions in California. However, he estimated that 3 Phases will have lined up approximately 100 MW of green tag transactions across the country, most of which are in the West. He noted that wind power was the basis for roughly 60 percent of the green tag transactions conducted to date.

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Cooperatives to Push Green Tags in California

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