Roy Phillips is owner of REP Energy of San Rafael, which is building a 1.5-megawatt solar project at the abandoned Cooley Quarry near Novato. The project is among several local energy projects benefiting from long-term energy purchase agreements with Marin Clean Energy. Frankie Frost — Marin Independent Journal
Workers for Synapse Electric of Mill Valley install solar panels at the San Rafael Airport in 2012 for Marin Clean Energy, which has contracted to purchase electricity produced by the 1-megawatt project for 20 years. Robert tong — Marin Independent Journal
Marin Clean Energy was created five years ago with the objective of making it possible for every person in the county who pays an electric bill to also help in the monumental battle against global climate change.
It was the first successful attempt in California to launch a public model for providing electricity to residents.
The joint power authority’s birth was made possible by a “community choice aggregation” law passed in 2002, which allows local governments to aggregate (or cluster) electricity demand within their jurisdictions to buy and sell renewable energy while maintaining the existing electricity provider for transmission and distribution services.
When Marin Clean Energy flipped the switch in May 2010, it had 6,000 customers. Today, it has some 170,000 customers and its membership spans all of Marin County, unincorporated Napa County and the cities of Benicia, El Cerrito, Richmond and San Pablo.
Marin Clean Energy’s standard Light Green energy was 56 percent renewable in 2014 compared with Pacific Gas and Electric’s electricity, which was 27 percent renewable.
Marin Clean Energy customers paid slightly less than PG&E’s. The average monthly bill for a typical residential customer using about 473 kilowatt-hours was $99.45 for Light Green customers and $100.92 for PG&E customers. The Marin agency’s Deep Green residential customers, who get 100 percent renewable electricity, paid an average of $104.18 per month in 2014.
Half of the premium that Deep Green customers pay goes into Marin Clean Energy’s fund for developing local energy projects.
The agency’s operating budget for the 2015-16 fiscal year is $145.9 million and it has 30 employees.
— Richard Halstead
A union representing Pacific Gas and Electric Co. workers and a San Francisco consumer group are taking aim at the common use of energy credits by groups including Marin Clean Energy.
They’re pushing an initiative in San Francisco and new state legislation designed to curb such practices.
Their contention: Marin Clean Energy and other purchasers of those credits, such as the city of Palo Alto, Cisco Systems Inc. and the Sacramento Municipal Utility District, are using paper certificates to “greenwash” their energy.
A renewable energy certificate (REC) is a tradable environmental commodity used in North America to represent proof that 1 megawatt-hour of electricity was generated by an eligible renewable energy resource such as solar, wind, geothermal, biomass, hydroelectric and tidal power.
During the 1990s, states began requiring that utilities acquire a specific percentage of their electricity from renewable sources. To facilitate the sale of renewable electricity nationally, a system was developed that separates renewable electricity generation into two parts: the electrical energy produced by the renewable generator and the renewable “attributes” of that generation.
The electricity associated with a REC may be sold separately and used by another party or it may remain bundled with the REC. If the energy is sold separately it is no longer considered renewable and cannot be used by utilities to meet their state-mandated goals for renewable energy use. The unbundled REC now carries all of the renewable attributes and can be sold separately.
For example, electricity generated at the Mountain Air Projects in Idaho, 60 wind turbines with a capacity of 138 megawatts, is sold to Idaho Power, the investor-owned state utility. Idaho does not require Idaho Power to buy any minimum amount of renewable energy, so the utility has no incentive to pay the extra cost associated with renewable energy. Idaho Power pays about the same price for the electricity as it would for power generated using natural gas. The owners of the project sell the unbundled RECs to Marin Clean Energy and other entities, who then take possession of the “renewable attributes” associated with the power.
— Richard Halstead
At issue is something known as an “unbundled, renewable energy certificate” — a credit that, when purchased, allows the buyer to legally claim ownership of 1 megawatt hour of renewable electricity. It has been “unbundled” from the actual renewable electricity that was generated.
The International Brotherhood of Electrical Workers, Local 1245, which represents PG&E’s electrical workers, is collecting signatures for a ballot measure that would bar San Francisco from promoting its electricity as clean or green if it uses unbundled RECs.
“RECs have been dismissed by many experts as an accounting gimmick that do nothing to reduce greenhouse gas emissions or create more clean power,” said Hunter Stern, a spokesman for Local 1245. “We introduced this measure to require that San Francisco disclose the sources of the power they sell, so they cannot sell brown power as green.”
But Dawn Weisz, Marin Clean Energy’s executive officer, said Local 1245’s ballot initiative is attempting to rewrite the definition of renewable energy so that no out-of-state supply would qualify as renewable. Most unbundled RECs come from projects outside California.
“The IBEW wishes to promote California sources of renewable energy because it wishes to promote jobs for its members,” Weisz said. “While this is valuable, it should be presented in a clear way, not by relying on confusing information about RECs, and should be considered together with the other goals of a power portfolio.”
A second offensive is being mounted against the use of unbundled RECs in the state Legislature.
Assemblyman Phil Ting, D-San Francisco, has introduced AB 1110, which would prohibit an adjustment in the calculation of emissions of greenhouse gases through the application of unbundled RECs. The legislation was sponsored by The Utility Reform Network, a consumer advocacy organization based in San Francisco.
“What we’re looking for here is an apples-to-apples comparison and full disclosure by all about exactly what the product is they’re selling to customers,” said Mindy Spatt, a TURN spokeswoman. “Customers want to know whether it is actual clean energy or RECs.”
RECS ARE ‘VALUABLE’
But James Critchfield, director of the U.S. Environmental Protection Agency’s Green Power Partnership, said unbundled RECs are an important part of the national system that developed after many states began requiring utilities to get a certain percentage of their electrical power from renewable sources: solar, wind, geothermal, biogas, biomass and low-impact small hydroelectric resources.
“The EPA, the Federal Trade Commission, and the National Association of Attorneys General have all recognized the REC as the instrument through which renewable energy usage claims are substantiated,” Critchfield said. “It’s a market-based approach that is valuable to growing the market.”
Local 1245 began raising the issue of Marin Clean Energy’s use of unbundled, renewable energy certificates about a year ago. It was the Oakland-based Local Clean Energy Alliance, however, that first questioned their efficacy with a report it issued in October 2013.
‘WHAT THE HECK IS A REC’
Al Weinrub, co-author of the report, “What the Heck is a REC,” and coordinator of the alliance, said the concern at the time was a PG&E proposal for using RECs.
“PG&E said they were going to offer a 100 percent green option. It turned out the way they were going to do that was to buy the cheapest unbundled RECs they could find on the market,” Weinrub said.
He said PG&E dropped the plan after meeting opposition.
In the paper, Weinrub and co-author Dan Pinkel wrote that the short-term purchase of unbundled RECs “while generally making renewable generation more profitable, makes only a questionable contribution to increasing renewable energy generating capacity.”
The paper went on to say that “unless the purchase transaction actually enables the development of new renewable generation that would not otherwise have occurred, there is scant legitimacy to the claim of displacing fossil fuels or reducing greenhouse gas emissions.”
Weinrub said the two major problems with unbundled RECs is that they are underpriced and typically not purchased under long-term contracts.
Weisz said Marin Clean Energy pays $1 to $2 for its unbundled RECs, about a tenth of what it pays for RECs that come bundled with their original electricity.
According to a 2011 report by the National Renewable Energy Laboratory, long-term contracts for RECs need to be encouraged because they “can offer the security and certainty that many projects need to obtain financing.” Most of Marin Clean Energy’s unbundled REC contracts are for a single year, although some are for two or three years.
RELYING ON RECS
Beginning in 2012, unbundled RECs have accounted for nearly a third of Marin Clean Energy’s total electricity purchases. In calendar year 2012 unbundled RECs made up more than 35 percent of the agency’s power purchases; in 2013 the number dropped to 31 percent, and in 2014 it inched down to 30 percent. Weisz said that this year the number will be cut in half to 15 percent as more California generation projects come online.
Local 1245 asserts that Marin Clean Energy uses unbundled RECs to make it seem that its electricity is cleaner than it really is.
Marin Clean Energy computes the greenhouse gas emission rate of the electricity it sells per megawatt hour by dividing its estimated emissions by the total amount of electricity it buys and sells. Using this method, Marin Clean Energy calculated its 2013 emissions rate as 364 pounds per megawatt hour, 17 percent lower than PG&E’s reported 2013 emission factor of 427 pounds per megawatt hour.
Local 1245 says that procedure is unfair because 345,000 megawatt hours of Marin Clean Energy’s 1.1 million megawatt total in 2013 came through the purchase of unbundled RECs.
Brittany McKannay, a spokeswoman for PG&E, said unbundled RECs accounted for 0.13 percent of PG&E’s total electricity purchases in 2013, which amounts to about 106,000 megawatt hours. In 2013, more than half of PG&E’s electricity came from sources that emit no greenhouse gases; but 32 percent of them — nuclear, 22 percent and large hydroelectric, 10 percent — don’t qualify as being renewable.
Weisz said using unbundled RECs to calculate Marin Clean Energy’s emission factor “conforms to every regulation and voluntary reporting paradigm that exists.”
“We are buying those volumes,” Weisz said, “so they are part of our mix.”
RECS ARE ‘VALID’
The Climate Registry, a nonprofit registry of greenhouse gas emissions for North America that certifies PG&E’s emission factor, sanctions the use of unbundled RECs in calculating emission factors.
Peggy Kelley, director of policy at The Climate Registry, said, “Our position is that RECs represent the environmental attributes of green power whether they are bundled or unbundled. It’s as valid a claim to the greenhouse gas totals as anything else.”
Weinrub and Pinkel concluded their paper with a caveat. They said that because nascent community choice programs — such as Marin Clean Energy — must compete for survival against investor-owned utilities, procurement of unbundled RECs may be justified if it makes it possible for the community choice program to invest in the development of new local renewable energy resources.
Marin Clean Energy has committed nearly $516 million to 195 megawatts of new California renewable energy projects. Those include a 10.5-megawatt solar project in Richmond, a 4-megawatt landfill waste-to-energy project in Novato, a 1.5-megawatt solar project in Novato’s Cooley Quarry, a 1-megawatt solar project at San Rafael Airport and a 1-megawatt project at the Buck Institute for Research on Aging in Novato.
Weisz said Marin Clean Energy had no idea how many customers would stick with its program in the early years, and the unbundled, short-term RECs gave it the flexibility it needed.
SONOMA NOT BUYING RECS
Sonoma Clean Power, a community choice aggregator like Marin Clean Energy that began serving about 6,000 residential customers in the North Bay last year, has ceased its purchase of unbundled RECs.
“Back in 2013, before we started serving customers, we did make some purchases of unbundled RECs, thinking we would use them more than we did,” said Geof Syphers, CEO of Sonoma Clean Power. “We haven’t sold any of those, but we haven’t bought any more.
“Our decision was made based on a concern that RECs might be double-counted in their value, but we have subsequently been unable to find any evidence that has occurred in California,” Syphers said.
Marin Clean Energy’s REC purchases are certified by Green-e, a program of the Center for Resource Solutions in San Francisco, which ensures that unbundled RECs aren’t double-counted.
“California has robust systems in place to prevent double-counting from happening,” said Jennifer Martin, the Center for Resource Solutions’ executive director. “For years now, California has been using RECs as the sole basis to demonstrate ownership of renewable energy attributes. It’s enforced by regulation and the California Public Utilities Commission.”
GROUP BACKS AB 1110
Kelly Foley, who has worked as legal counsel to both PG&E and Sonoma Clean Power and now serves as director of regulatory affairs at California Clean Power, said community choice programs should avoid using unbundled RECs in their marketing.
“You can’t say your paper certificates are sucking carbon out of the air, because they’re not,” Foley said.
California Clean Power, a Santa Rosa-based startup that is substituting a for-profit business model for the nonprofit, public power approach pioneered by Marin Clean Energy, is an active supporter of Assemblyman Ting’s AB 1110.
Foley said that often unbundled RECs come from renewable energy projects that were created long ago or that required no special financial incentive to get built. She said the sale of the unbundled RECs from such projects is just gravy for builders.
A report on the role of RECs in developing new renewable energy projects written in June 2011 by the National Renewable Energy Laboratory stated, “there are situations in which REC revenues are essential to project economics, as well as some where REC revenues may have little impact.”
DEPENDS ON PERSPECTIVE
The report added that the importance of RECs often depends on one’s perspective.
“Project developers and owners welcome all revenue, large or small, because they wish to maximize profit, and they may not know for sure how profitable the project will be until its useful life is at an end,” the report stated.
“Certainly from our perspective as a renewable energy project developer, we’re counting on those revenues from REC sales going forward,” said Bill Eddie, president of One Energy Inc., which also buys and sells RECs.
One Energy has assisted Marin Clean Energy with some of its REC purchases. Eddie said prices for unbundled RECs fluctuate with demand.
“I’ve seen prices for unbundled RECs in California go as high as $20, although not for long,” Eddie said.