Recently, I used Power2Switch to sign up for a new electricity provider. I still get the same bill from ComEd and pay delivery charges from my local utility, but the electricity is "sourced" from a different company. The ability to shop for your own electricity provider is thanks to electricity deregulation, and allows consumers to negotiate their own (often cheaper) rates.
Power2Switch works like an online broker and shows you the different companies that offer you electricity, as well as provides their different rates and terms side by side. Average total rates in Chicago are currently about 12 cents per kWh and half of that will keep going to ComEd, even if you switch to a different provider. In fact, Chicago's ComEd will be charging residents 6.123 cents per kWh as a delivery charge this summer, and that increases to 7.511 cents in September.
When shopping for the new company, I was offered a few options for the supply of electricity, to replace the price of 6.93 cents per kWh that I currently pay. One option was the standard electricity rate of 5.5 cents per kWh with a fairly short contract. Electricity prices will likely go up in the future, so there were also some longer term contracts for two years with slightly higher rates. I opted for 100% renewable power at 6.98 cents per kWh, a fraction of a penny more than what used to pay. Currently, 6% of the power in Illinois is mandated to be green, or from renewable sources like wind or solar, and this goes up incrementally until 25% in 2025.
The average home in the US uses about 10,000 kWh annually, so if you pay 6.98 cents per kWh, you would pay about $698 annually for your electricity supply (about $148 more than the cheapest rate offered by Power2Switch). Did my choice to buy 100% green power impact the environment? The short answer is no - it was mostly a symbolic gesture, but I know that companies pay attention to decisions like this. The willingness to pay a bit more for green power will only impact the environment if it leads to extra wind mills and solar panels being built. Sure, it makes me feel better to have electricity from wind power, but I didn't cause it to be built and the law requires someone else to use it if I didn't.
The company that I bought my 100% renewable power from likely paid a wind farm for their Renewable Energy Certificate, or REC, and then charged me a bit more for this power. The problem is that my money didn't actually lead to more wind mills being built, and the value of that REC is very cheap these days, mostly because the economy slowed down and less electricity was being demanded.
According to a recent study by Harvard and Yale (not exactly chumps), the average consumer is willing to pay $162 more per year for green power. While my previous example showed that 100% renewable power would cost $148 more annually for the average household - there is a slight problem. As I said before, the green power is already built and I am paying a little bit more for access to it. There is only so much green power available right now, and if everyone demanded it we wouldn't have the supply available to meet it. Currently in Illinois, 6% of power is green and the rest is split fairly evenly between coal and nuclear. The 6% green power is fairly competitive because a lot of smart people have studied wind patterns in our state anturbines windmills where they will generate the most power. I participated in a study during graduate school at thr University of Chicago and we found that there likely would not be enough wind in our state to meet the 25% mandate in 2025, which means we will need to get creative (think deep tunnel hydro or solar technology breakthroughs).
Here comes possibly the first ever Field of Dreams/energy efficiency analogy. Think about Kevin Costner when he heard, "if you build it, they will come". He spent his life savings building a baseball stadium in a corn field and eventually people paid a few bucks to sit in the seats. If Kevin Costner was building a wind farm, he would have to assume that RECs would add a bit of extra value to the energy that they produce or he wouldn't make any money.
However, we all have our threshold of what we can afford and at some point, the fans would not be willing to pay for the seats in the stadium to watch baseball games. RECs are a good thing, as are the state mandates for some percentage of green energy, as they guarantee that some fans will show up to buy seats at a baseball stadium in a cornfield in Iowa, but they don't guarantee that enough fans will pay enough money to keep the bank from taking your house.
Coal and nuclear electricity is cheaper than wind and solar and that is a current fact. If we all wanted to purchase wind and solar, it would cost a lot more than the $162 annually that we are willing to pay, at least with current technology. The moral of the story is that green energy is close, but we need to do a lot more to be energy efficient today in reducing our energy usage with tools like this green iPad app, while clean technology catches up and becomes more affordable compared to coal and nuclear power.
