United States

United States

Green pricing only part of the solution

A new report on surveys and green pricing programmes throughout the United States shows that Americans all over the country strongly support renewables such as wind power and, given the opportunity, are willing to pay more for clean power. The key to making green pricing programmes work for private wind developers is the ability to aggregate the load of residential customers.

A new report shows that Americans all over the country strongly support renewables such as wind power and, if given the opportunity, are willing to pay more for clean power.

Authored by Kari Smith, a former policy analyst with the Natural Resources Defense Council, and entitled Customer Driven Markets for Renewably Generated Electricity, the report is a comprehensive look at surveys and green pricing programmes throughout the United States. It notes that as of May 1996, 22 utilities had conducted green pricing surveys. These surveys show that customers, on average, are willing to pay up to 10-25% more per month (about $10 more per month) for non-polluting renewable energy.

According to the report, only five utilities have actually implemented green pricing programmes: Detroit Edison, Niagara Mohawk, Public Service of Colorado (PSCo), Sacramento Municipal Utility District (SMUD) and Traverse City Light and Power, Michigan. These programmes, however, have only added about 2 MW of "green power" to utility resource mixes. And nearly half of that has come from SMUD's "PV Pioneer" programme, which installs photovoltaic panels on customer rooftops.

Nonetheless, one of the few green pricing programmes targeting wind power, that run by PSCo, has raised the most money of any green programme -- an average of $21,000 per month from 1% of the utility's customer base. Yet other than a few photovoltaic installations, the utility has yet to put a wind turbine in the ground. Traverse City light and Power, however, has installed a single 600 kW wind turbine with assistance from just over 3% of its customers chipping in $7.50 a month.

The key to success

Smith observes that the key to making green pricing programmes work for private wind developers looking to make direct access deals is the ability to aggregate the load of residential customers, which would "segment demand for renewably generated electricity and provide renewable generators a clearly defined target audience for their product." Smith warns, nevertheless, that green pricing is just a part of the solution to supporting wind and other clean power technologies in the transition to a competitive electricity market. "Voluntary customer contributions should not be used to substitute for other policy proposals designed to promote renewables, but as a complementary means of making costly investments in renewable generation possible."

The report was released by the California Regulatory Research Project and is available at the Center for Energy Efficiency and Renewable Technologies.

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