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New green power product draws fire -- FPL's claims questioned

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The launch of EarthEra as the first renewable energy credit (REC) business to dedicate 100% of its revenues to new wind and solar projects has sparked debate within the industry over the claimed revolutionary nature of the product. NextEra Energy Resources, previously known at FPL Energy and the firm behind EarthEra, describes the new REC as "a game-changing initiative." But others operating in the same field see the fund as little more than a marketing exercise.

NextEra is owned by the FPL Group, which owns 17 GW of wind power capacity in North America, more than any other power producer. It is putting all money from sales of EarthEra RECs directly into the EarthEra Renewable Energy Trust. "We take it upon ourselves to actually say, you know what, we're going to take these dollars that we could use to fund our current operating business -- we're going to set them aside and we're going to build additional generation," says EarthEra's Nate Hanson.

Suspect motives

Not quite so simple, says Rob Harmon of the Bonneville Environmental Foundation (BEF), an Oregon-based non-profit group involved with REC sales since the dawning of the concept nearly a decade ago. "I'm not suggesting in any way that the purchase of RECs doesn't lead to more renewable energy development," Harmon says. "I just don't understand how this subset of that marketplace, the EarthEra fund, adds anything to that. I'm not sure it's a way to create any more renewable energy development than the normal standard purchase of RECs would do. It seems to me to be a way to attract customers."

A REC represents the generation of a specific volume of accredited green power, usually 1 MWh, and is a way for companies, governments and other organisations to voluntarily clean up their electricity consumption without having to acquire the physical electricity from a renewables generator. BEF invests all its net revenues from REC trade in renewables and watershed restoration.

While Harmon is a staunch believer in RECs, he says the fungible nature of money makes it difficult to verify NextEra's claims that REC income will only go to renewable energy projects. When customers give Next Era money earmarked for a wind energy fund, it frees the company to spend the same amount of its own money looking for profits from other resources, whether they be coal, oil, nuclear, gas or shareholder dividends. "So I don't know that this particular fund increases the amount of money that they would use from the company's coffers to support wind energy development," he says.

EarthEra tallied more than $5 million in voluntary REC sales in the first few weeks of its product rollout. Sony Electronics, stationery supplies firm Office Depot and outdoor equipment retailer REI are listed among roughly 15 early corporate customers. It will eventually sell to the consumer market. The EarthEra Renewable Energy Trust is administered by US Bank and audited by Deloitte & Touche. Any renewable energy projects built by proceeds from the trust will be owned and managed by NextEra or its subsidiaries. As North America's largest wind plant operator, NextEra operates about 17 GW of wind energy in 26 states and Canada.

Downturn proof

Despite the economic downturn the market for voluntary purchase of RECs has remained functional and drives decision making, says Harmon. "It's now large enough where developers can know when they come to market that there'll be a price for their RECs. They can make assumptions about where the prices are going to be and go out and get financing based on those assumptions."

Although functioning, the markets are volatile with prices swinging from a few dollars to over $40 a REC. Prices can be very high in regions lacking renewable energy projects and then suddenly plummet when a large amount of new wind comes online, says Harmon, in much the same way that apples are cheaper in Washington in the summer than in the winter, says Harmon.

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