Jump to Content

Energy credits are a diversion

Article Published At:
Rutland Herald
Date of Publication:
January 20th, 2016

There have been several articles in the last few weeks, discussing the sale of renewable energy credits associated with solar arrays in Vermont to out-of-state utilities. They are written from a legalistic perspective that has little relevance to the global issue of transforming our fossil fuel energy system to renewable energy as fast as possible.

A solar farm generates electricity from a renewable source, the sun. RECs were created as a financial instrument to represent the environmental benefits resulting from not generating the same electricity from burning fossil fuels. A Vermont developer can sell the electricity generated to Green Mountain Power, while selling these RECs to a utility outside Vermont, so that another utility is effectively subsidizing solar power in Vermont. Very interesting you might say, and helpful to Vermont; but why would a utility in Massachusetts subsidize renewable power in Vermont, when it is getting no electricity?

Some New England states passed renewable energy portfolio standards telling utilities that some percentage of their electricity must come from renewable sources. But utilities do not have to actually build renewable generation facilities themselves — they can buy the credits from elsewhere. The idea in our market economy is that solar arrays will get built where it is cheapest — such as Vermont where land may be cheaper and farmers may need cash. So a utility can claim it owns renewable power, and that it has met its mandated renewable energy standards, even if it has actually built none. Readers will recognize this is one of the ways we avoid facing critical issues in our society, by creating instead face-saving legal and financial instruments. Another example would be purchasing carbon offsets on airline travel.

Does it matter to the Earth whether a solar array is in Vermont or Massachusetts? Of course not, what matters is how fast we can move away from fossil fuels, and we are not moving anywhere near fast enough. The buying and selling of RECs does not help the Earth at all. It is a delaying tactic, providing a fig leaf so that states can pretend they are making the transition, when they are not shutting down fossil fuel plants fast enough, and building renewable alternatives. No amount of honest or fictitious bean-counting can hide this critical and disturbing fact.

Consider a concrete example. I invested in 5 kilowatts of solar power in a community solar array in West Haven. The developers funded construction of this array in several ways. They sold shares to individuals like me; they collected a 30 percent tax credit (funded by taxpayers like you and me), and sold the RECs out of state. Green Mountain Power gets the electricity, and I get an electricity generation credit and group solar incentive credit, which over the year pays most of my electric bill.

Many sources have contributed to building this community solar array, with individuals like me being the major investors. The sale of the RECs has also made a smaller but significant contribution. Some other utility can pretend it has renewable power in its portfolio, simply because it has bought the legal right to say this. But in reality the solar power is here in Vermont being integrated into our smart grid. If the New York or the New England grid goes down, Vermont has this local renewable power intact.

In decades to come Vermonters will be grateful that we started this renewable transition early. Yes, we can thank our neighbors for contributing a little towards it. But the Earth asks that states everywhere face reality and start building tangible renewable infrastructure on a massive scale — as well as investing heavily in energy-efficiency measures. In the meantime expect the coastal storms to get worse, and sea-level to rise a few feet this century and next.

Related Topics

Download Article

Figures and Images