Renewable Energy Grows as Resource, Renewable Energy Certificate Prices Low

           US - Energy News

During June, the Energy Information Administration (EIA) projected that nonhydro renewable electricity production will increase by 6.9% during 2015. It has been well documented but worth mentioning that of new electricity generation that has been added to the grid this year, 80% or more of that generation has been of a renewable nature and the rest has been natural gas. There are a few nuclear generating facilities being proposed but it will be some time before they are operational. This has been a trend that has been evolving the last few years and concurrent with this trend, has been a collapse of national voluntary renewable energy credits (RECS) prices.

We have addressed RECS here (August 2014) before. Since that time the wholesale price of national renewable energy credits has continued to fall, losing 40% of their value. It now costs a larger facility less than $1.00 per Mwh to buy credits that will allow that facility to have a 100% green energy usage profile. This is as cheap as it has ever been.

It is really a matter of supply and demand. For the last several years the wind and solar electric generating business has been aided by fairly generous production tax credits that have promoted the building of these facilities. This created a boom in both wind (in the Midwest and Texas especially) and solar electric generating production and with that, the creation of additional renewable energy credits. While there are many buyers for these credits, some of the larger “greener” companies have started producing their own green energy, reducing the number of buyers for the credits.

This allows all sized electricity consumers with a need (there could be many reasons outside of compliance or conscious) to “green” their supply for a small additional cost. While there is currently a glut of green energy certificates, this supply/demand imbalance can change quickly. An elimination of the wind and solar production tax credits (supply) or some sort of mandatory requirement for green energy on part of large consumers (demand) could be two such things. It is important to note that most consumers can buy these certificates directly, it does not have to be done through a retail electric supplier.

Sources – Energy Information Administration (EIA), Center for Climate and Energy Solutions and Dallas Herald

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