Description:

The 2015 iCAP, chapter 3, objective 3, is "Expand the purchase of clean energy. By FY20, obtain at least 120,000 MWh, and by FY25 at least 140,000 MWh from low-carbon energy sources. These targets represent 48% and 56% of our expected 2050 electricity demand, respectively." There are several methods for increasing campus clean energy use: on-campus renewable energy generation (such as the Solar Farm), off-campus power purchase agreements (such as the Wind PPA), the purchase of Renewable Energy Certifications (such as the FY15 RECs purchase), and clean energy provided through the grid purchased electricity (see MISO).

Background: 

Generate Renewable Energy On-Campus

Renewable energy on campus is one of the most important clean energy sources. Solar farm is the main project, geothermal is a promising method, combined with biomass, etc., the proportion of renewable energy is increasing.

Enter into Power Purchase Agreements

A power purchase agreement (PPA) is a contract with an energy generation facility. A long-term PPA with a renewable energy generation facility could enable the construction of new renewable energy generation. At the time of this writing, the most economical renewable PPAs are for wind energy from large farms of wind turbines, but we expect that other types of renewable PPAs may become affordable in the future.

Although nuclear power is not considered renewable, an existing nuclear power plant produces no carbon dioxide emissions and can help us meet our emissions goals. A PPA with a nuclear power plant would enable us to purchase energy from a zero-carbon source.

Buy Renewable Energy Certificates

Electrical output from both renewable and nonrenewable power sources are combined in a regionaltransmission grid. In order for a consumer to claim the use of renewable energy, it must own the associated Renewable Energy Certificates (RECs), each of which represents the environmental attributes of 1 MWh of renewable electricity generation.

Only the owners of RECs can claim that they are using renewable energy. For example, if a wind farm operator sells its electricity to one party but sells the associated RECs to a second party, only the second party can claim to be using green energy. To qualify as renewable, any energy the campus purchases must be bundled with RECs, and the campus must retain the RECs for any renewable energy it produces. Therefore, the forthcoming Solar Farm will count toward our renewable energy goals only so long as campus does not sell the associated RECs.

Another method to increase our use of renewable energy is to separately purchase “unbundled” RECs, without purchasing power from the same generation source. For example, we could purchase power from a coal plant, but purchase a corresponding number of RECs from a wind farm (in this case, the wind farm would sell its electricity without the environmental attributes to a customer who is not willing to pay for the environmental attributes). The purchase of unbundled RECs reduces our carbon footprint according to generally accepted carbon accounting procedures, but it is not clear if it adds renewable energy to the grid.

In 2015, there was exceptionally low demand for RECs in our local grid region because there are no effective government standards requiring the purchase of renewable electricity. At the same time, a significant number of wind farms have been built and are profitable even without selling RECs (due in large part to a federal tax credit for wind production), leading to a very large supply of RECs. Given the low demand and the oversupply, prices for RECs are very low, and therefore it is not clear that the purchase of RECs really provides an incentive for generators to produce more renewable electricity, or that it leads to an actual reduction in overall global CO2 emissions.

When unbundled RECs are purchased as part of a long-term contract, this can facilitate the construction of new renewable energy generation facilities. Long-term RECs contracts would also have the economic advantage of “locking in” the current low prices. Conversely, the voluntary purchase of short-term unbundled RECs from existing facilities does not add new renewable energy to the grid. For these reasons, the campus would have a greater environmental impact by purchasing long-term RECs contracts, either bundled with renewable energy in a PPA, or unbundled.

Low-Carbon Grid Purchased Electricity

Approximately half of the campus electrical demand is purchased through the MISO grid.  In FY15, the grid purchased electricity included over 10% from low-carbon sources.  Because the RECs are not included when campus buys the energy, it is unclear who can claim the use of that clean energy.  With the new energy bill passed in 2017, there are changes to the requirements for campus’ participation in the Renewable Portfolio Standard.  As these requirements and associated benefits of low-carbon energy in the grid become clarified, it may be determined that the grid’s clean energy can be included in the total campus clean energy usage.