Lately, I've been bombarded with advertisements from a company named Arcadia Power that claims I can power my home with 100% clean energy, reduce my environmental impact and change the way America consumes its energy. Those are some pretty big claims! Can stock photos of children running through a field of golden grain showing (either real or photoshopped) wind turbines really save the planet? Is this really a "community wind" program? I was intrigued, so I peeled back the wrapper to see what was inside.
After all, the ad encourages me to "learn more," doesn't it? The first place I started "learning more" was by clicking the ad to end up at Arcadia Power's Facebook page. I asked them where they sourced their renewable energy certificates (or RECs) and how much they paid. After all, I'd like to know what renewable energy projects I'm supporting, and what the mark-up is on the product Arcadia buys and re-sells to consumers. In answer to my question, Arcadia told me I could find the answers to my questions on my "dashboard." But, I don't have a dashboard. In order to get one, I'd have to sign up as a customer of Arcadia. That sort of defeats the idea of caveat emptor, right? So, I asked more questions. And what did I get for my trouble? Arcadia not only refused to respond to my questions, they also removed or hid them from view and banned me from any further postings on its Facebook page. I guess they have decided they don't want me as a customer. Go ahead, check Arcadia's Facebook page out. Be sure to click to see all the comments on its postings -- you can't see them! The vast majority are hidden from public view. I'm guessing I'm not the only one who asked questions Arcadia would rather remain unasked. And, right there, I lost all faith in this company and its promises. But, never fear, I'm quite capable of educating myself to get the answers Arcadia refused to give me. And Arcadia's rudeness and evasiveness gave me the warm fuzzies that further fueled my curiosity!
So, what does Arcadia propose to sell me?
Arcadia Power will buy renewable energy to match your usage, ensuring that an equal amount of clean energy is getting on the power grid.
Arcadia Power buys renewable energy? Or do they merely buy renewable energy certificates?
...we buy Renewable Energy Certificates (RECs) on behalf of residential and business customers, and sometimes we source our own RECs from projects we directly invest in.
Oh, so Arcadia doesn't really buy renewable energy. It's not an electric company. It buys RECs and resells them to consumers as a way to feel good about offsetting my carbon footprint.
But, does it work?
First, I needed to understand what RECs are. A REC represents the social and environmental benefits of a megawatt hour (MWh) of clean electricity generated. It does not represent the actual energy generated. A clean energy generator has two income streams derived from production of clean energy. One income stream comes from the actual energy produced, which is sold to users on the grid. A second income stream is derived from the sale of RECs. RECs can be sold either bundled with the actual electricity produced, or unbundled from the electricity and sold separately. So, if a company like Arcadia tells me that I'm using the clean energy represented by the unbundled REC, am I really? Didn't someone else purchase and use the actual clean energy produced, without spending additional money to buy the associated REC? I learned that RECs aren't really energy at all.
Why is there any market for created products like RECs? Because utilities are required by law in many states to make sure a certain percentage of the power they purchase for their customers comes from alternative sources. These individual state laws are called Renewable Portfolio Standards, and every state has its own unique version. A utility can meet its state RPS requirement by purchasing RECs. Ahh.... so now I've found the purpose of RECs! So a utility doesn't really have to purchase alternative energy to meet state RPS requirements, it can simply purchase the "social and environmental benefits" of alternative energy? Well, sort of. Many states put some sort of qualifiers on what RECs count towards RPS compliance. Certain types of generators, certain locations for generation. Many states contain a requirement that some or all RECs purchased for compliance must come from sources in the state, in the region, or physically able to be used by the utility taking the credit. Apparently this is what causes unbundling of RECs from the actual energy produced. A utility is only going to buy those RECs it needs for compliance. Therefore, the RECs necessary for compliance in any given state or region are the most valuable. After that, the value of the REC can decrease sharply, because nobody needs to purchase it.
Not all RECs are created equal. In a state with substantial renewable/alternative energy supply, there will be many more RECs created than needed for RPS compliance. There's no real market for these RECs after utilities purchase what they need for compliance. Therefore, they end up in the "voluntary" REC market, where entities purchase them for the right to say they "use 100% clean energy." The intent is that one KWh of dirty electricity used is offset by one KWh of clean electricity generated somewhere else in the world. Some experts contend that this is just wishful thinking and that voluntary REC purchases are nothing but "green washing."
But, does it work?
First, I needed to understand what RECs are. A REC represents the social and environmental benefits of a megawatt hour (MWh) of clean electricity generated. It does not represent the actual energy generated. A clean energy generator has two income streams derived from production of clean energy. One income stream comes from the actual energy produced, which is sold to users on the grid. A second income stream is derived from the sale of RECs. RECs can be sold either bundled with the actual electricity produced, or unbundled from the electricity and sold separately. So, if a company like Arcadia tells me that I'm using the clean energy represented by the unbundled REC, am I really? Didn't someone else purchase and use the actual clean energy produced, without spending additional money to buy the associated REC? I learned that RECs aren't really energy at all.
Why is there any market for created products like RECs? Because utilities are required by law in many states to make sure a certain percentage of the power they purchase for their customers comes from alternative sources. These individual state laws are called Renewable Portfolio Standards, and every state has its own unique version. A utility can meet its state RPS requirement by purchasing RECs. Ahh.... so now I've found the purpose of RECs! So a utility doesn't really have to purchase alternative energy to meet state RPS requirements, it can simply purchase the "social and environmental benefits" of alternative energy? Well, sort of. Many states put some sort of qualifiers on what RECs count towards RPS compliance. Certain types of generators, certain locations for generation. Many states contain a requirement that some or all RECs purchased for compliance must come from sources in the state, in the region, or physically able to be used by the utility taking the credit. Apparently this is what causes unbundling of RECs from the actual energy produced. A utility is only going to buy those RECs it needs for compliance. Therefore, the RECs necessary for compliance in any given state or region are the most valuable. After that, the value of the REC can decrease sharply, because nobody needs to purchase it.
Not all RECs are created equal. In a state with substantial renewable/alternative energy supply, there will be many more RECs created than needed for RPS compliance. There's no real market for these RECs after utilities purchase what they need for compliance. Therefore, they end up in the "voluntary" REC market, where entities purchase them for the right to say they "use 100% clean energy." The intent is that one KWh of dirty electricity used is offset by one KWh of clean electricity generated somewhere else in the world. Some experts contend that this is just wishful thinking and that voluntary REC purchases are nothing but "green washing."
RECs are not offsets and the voluntary green power market does not reduce emissions from electricity generation.
The problem is that green power markets, as currently structured, cannot achieve this goal. They were created on a fundamentally flawed foundation—that buying a virtual attribute can substitute for physically consuming a specific good or service. Further, the incentives of the participants in green power markets—power companies selling RECs, intermediaries marketing them, organizations certifying them, and companies buying them—are aligned, leaving no one with a strong interest in questioning the claims being made.
With these concerns in mind, we are challenging everyone to question their own assumptions about voluntary green power markets.
That also seems to be the conclusion reached by this expert:
Nonetheless, claims that voluntary RECs reduce carbon emissions are highly suspect. Their direct effect is not to reduce net emissions, but to shift responsibility for emissions between parties. They only reduce net emissions, if at all, indirectly, by demonstrating demand for clean energy and by providing a modest boost in revenue to the clean electricity industry.
It's weak tea. Buy voluntary RECs if you like, they're cheap as hell, but have no illusions that by doing so you are offsetting your emissions. It's like tossing your supermarket change into a Unicef jar. Whatever, it's better than not doing so, but you're not "curing poverty."
This article talks about "additionality," which is roughly described as the income stream flowing to the generator from the sale of RECs. If the RECs are good quality RECs needed by utilities for compliance, or bundled with the electricity as part of a PPA, then the RECs provide some real value that could help that particular generator be financed and built. However, if the RECs produced by a generator are unbundled voluntary junk RECs that are now selling as low as a buck or two, then the sale of RECs doesn't add the "additionality" that provides a significant income stream to the generator. If you're buying cheap RECs in the voluntary market, you're buying junk that doesn't do a thing to offset your carbon footprint or increase the use of renewables.
So, voluntary junk RECs in oversupplied markets are selling for a buck? Some Texas utilities are giving away free electricity, too, in order to deal with the glut of wind energy produced in the state that peaks at night, when electricity use is lowest.
If an unbundled REC can be purchased for a buck, how much is a company like Arcadia charging to resell it to consumers like me?
So, voluntary junk RECs in oversupplied markets are selling for a buck? Some Texas utilities are giving away free electricity, too, in order to deal with the glut of wind energy produced in the state that peaks at night, when electricity use is lowest.
If an unbundled REC can be purchased for a buck, how much is a company like Arcadia charging to resell it to consumers like me?
We offer a flat-price premium of $0.015 per kWh for 100% Wind Energy in all states except for Oregon and Washington state.
One REC equals 1 MWh of electricity. It takes 1,000 kWhs to equal 1 MWh. Therefore, Arcadia is charging a flat rate of $15 per REC. If Arcadia is buying voluntary RECs for one dollar each, then the company is adding a huge markup by reselling them to you and me. Since Arcadia couldn't or wouldn't answer questions about where it sources its RECs and how much it pays, then I have to assume they are buying the cheapest unbundled RECs they can find from places very far from my east coast home.
I can come to no other conclusion than to think that this scheme sounds like something P.T. Barnum would sell at a trashy carnival. Somebody's getting rich somewhere, and it's not the generator. I don't want to increase my electric bill by any unnecessary amount, so I won't be signing up for Arcadia Power. They can quit bombarding me with advertisements now. Decision's made.
But here's the part that really, really concerns me:
I can come to no other conclusion than to think that this scheme sounds like something P.T. Barnum would sell at a trashy carnival. Somebody's getting rich somewhere, and it's not the generator. I don't want to increase my electric bill by any unnecessary amount, so I won't be signing up for Arcadia Power. They can quit bombarding me with advertisements now. Decision's made.
But here's the part that really, really concerns me:
Arcadia Power pays your local utility directly and provides you with a consolidated statement each month that combines your local utility charges with your clean energy from them.
Arcadia Power simplifies your life by providing every customer with automatic billing – either with a credit card or direct debit from your checking account. We provide you with an easy-to-read e-statement every month and you never have to worry about missing a payment!
Arcadia will somehow take over your regulated electric bill and you will no longer receive a bill from your electric provider (don't worry though, I'm sure you'll continue to receive those exciting offers for Exterior Electrical Wiring Protection Plans from HomeServe.) So you will no longer know how much electricity you use, when your meter was read, how many days are in your billing cycle, or receive notification about rate increases and other information from your provider. Instead you'll get a "consolidated" monthly bill from an unregulated company. If you have a billing dispute with Arcadia, your public service commission can't help you. What happens when you have a dispute with the amount your electric company bills you, such as when they neglect to read your electric meter for years on end and then send you a "catch-up" bill totaling thousands of dollars? Arcadia pays your bill for you each month and then automatically deducts that amount from your credit or debit card, without your authorization. While you could dispute an outrageous bill directly with the power company and set up a payment plan, you lose that privilege once you sign up for Arcadia Power. Your electric company bills. Arcadia pays. Then you pay. Is Arcadia marking up your local electric bill, too? This loss of control of a regulated service makes me very, very nervous. We'll have to see what happens when unregulated companies insert themselves between regulated entities and the consumers they are required to serve by law. I'm sure there are plenty of unique state electricity tariff provisions related to billing that can be violated by an unregulated entity like Arcadia Power.
Do educate yourself before allowing your carbon footprint guilt to toss spare change in the climate change Unicef jar each month in order to save your soul. Make sure your clean energy dollars aren't going to buy P.T.
Barnum a yacht and his own, private island in the Caribbean.
Do educate yourself before allowing your carbon footprint guilt to toss spare change in the climate change Unicef jar each month in order to save your soul. Make sure your clean energy dollars aren't going to buy P.T.
Barnum a yacht and his own, private island in the Caribbean.
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