The cost of doing green business in Silicon Valley could soon be increasing. The demand for renewable energy credits (RECs) is outpacing the amount of land needed to provide clean energy, and so prices for RECs may be on the rise.

The purchase of a renewable energy credit generally represents one megawatt hour of renewable energy. Although the clean electricity can’t be routed from the wind turbine directly to the business, the investment allows for more renewable energy to built and displace the energy needed from dirty fossil fuels. Many companies and individuals buy RECs in order to make up for, or “offset,” their unavoidable pollution (driving, manufacturing, etc).

In Silicon Valley, the big buyers of RECs include Cisco Systems, Applied Materials, and Yahoo!. The latter just signed up for 1.6 million kilowatt hours of green power costing $24,000 and meeting about 6.5 percent of Yahoo’s Santa Clara energy requirement. The RECs are purchased from Silicon Valley Power, the city-owned utility of Santa Clara.

The increase in REC purchases across the country – the most recent data from the Department of Energy shows sales doubling in 2005 – may affect places like Silicon Valley in the near future. Renewable energy producers will need to get more creative in their search for land for the solar power and wind power systems. Dan Kalafatas, president and Chief Operating Officer of 3 Degrees, the San Francisco-based energy marketing company from which Silicon Valley Power buys its renewable energy credits, noted, “The best sites have been tapped. The long-term fundamental demand will raise prices."

California law says that utilities have to increase their renewable energy use by 2010, so this problem isn’t going away. Efficiency will be key here: while it’s exciting that the demand for green power is increasing, running efficient businesses and households must be the first step, and will help cut the need for energy across the board.

Green Options’ Green Life Guide
San Jose Business Journal

Today the U.S. House is likely to vote on the Udall-Platts Amendment to the energy bill. This legislation would require 15 percent of our nation’s electricity to come from renewable sources by the year 2020. It’s high time the federal government catch up to so many states that already have implemented 21st century policies like this one.

But in addition to broad state and federal programs, consumers can also do some renewable energy good for themselves, even if they don’t own a wind turbine or live in a sunny area. They can buy green power.

“Green power” is a term for clean, renewable energy. More than 600 utilities in 36 states give their customers the option to buy their power from renewable energy sources (depending on the state, they normally include solar power, wind, biomass, hydropower, or geothermal) rather than traditional ones (likely to be coal). Although the transmission system can’t guarantee that particular energy from a wind farm makes it to your refrigerator, the total amount of green electricity that travels over the entire system is increased because (ideally) the utility is taking all of the extra revenue and investing in more renewable energy sources.

My fellow blogger Philip Proefrock just covered a green power program he is considering in his homestate of Michigan. Green power programs do vary, whether it’s the location from which the renewable energy is coming (in state or out of state) or the source (I know of one municipal provider that promotes destructive Canadian hydropower as an eco-friendly option, so make sure you know where the energy is coming from).

Here in Minnesota, I purchase wind power through Xcel Energy’s Windsource program. The initial cost is a little more than $3.50 per 100 kWh block, but I also get a credit on my bill for the avoided fuel costs of conventional (i.e. coal) power. The credit varies each month, but my cost last month was less than $11. Windsource was also audited by the Green-e program to ensure that ratepayers’ money is going to build new renewable energy sources, and it passed with flying colors: Windsource funds the costs associated with Xcel purchasing wind power from private owners of wind turbines and new wind generation facilities across the state, so I feel good about my investment.

Find out whether you can buy green power in your state at the U.S. Department of Energy. If you can’t buy green power locally, consider investing in renewable energy credits (RECs) to offset your emissions.

Sierra Club, North Star Chapter
Union of Concerned Scientists
Xcel Energy

Ogden, Utah has joined the growing number of American cities buying clean, renewable energy to power their community. Mayor Matthew Godfrey announced that Ogden will buy enough renewable energy through Rocky Mountain Power’s Blue Sky program to cover about 19 percent of city buildings’ electricity use.

The Mayor also urged residents and businesses to participate in the Blue Sky program, which gets its electricity from six wind power facilities and is one of the most popular green power programs in the nation. Mayor Godfrey’s Blue Sky Community Challenge aims to get 5 percent of businesses and households signed up for renewable energy by the end of October.

Increasing investment in renewable energy is an important economic move for Ogden, a city of about 78,000 people. It has been attracting several outdoor recreation companies, and Mayor Godfrey explained that having clean air is “critical” to attracting these businesses.

The Sustainable Ogden Committee developed the challenge, and has other initiatives in the works. A Fresh Air Friday program will encourage the use of public transportation, converting city vehicle fleets to renewable fuels, and a downtown bicycle program.

Ogden’s purchase of wind power will cut carbon dioxide (CO2) emissions – a main contributor to global warming – by 900 tons each year. That’s equivalent to planting about 354 acres of trees, according to a statement from the Mayor. If Ogden residents meet the Blue Sky Community Challenge, it would cut CO2 emissions by about 5,900 tons each year. A typical household could get 100 percent of its energy from renewable power for an extra $11.70 per month.

Rocky Mountain Power
Salt Lake Tribune, via Headwaters News

The National Renewable Energy Laboratory has released its annual ranking of the top 10 green power utility programs.

Categories include: Total number of participants, participation rate, total green power sales to program participants and the lowest price premium charged for using renewable resources.

These green power options for utility customers may be stimulating growth in the renewable energy sector. In 2005, utilities’ green power sales increased 30 percent from the previous year. Nationwide, about 500,000 people are taking advantage of these programs. That’s a 10 percent increase from 2005. Blair Swezey, an analyst at NREL, told Renewable Energy Access: "Higher prices for conventional energy sources, as well as increasing environmental concerns, are focusing greater attention on renewable energy options."

Austin Energy has the highest sales of its green power program, which includes wind power and landfill gas. Austin Energy also charges the lowest premium for new, customer-driven green power. Xcel Energy has the largest number of customers participating, and the City of Palo Alto Utilities has the highest participation rate.

See all the rankings and results here.

Renewable Energy Access
U.S. Department of Energy: Energy Efficiency and Renewable Energy