By Caitlin Marquis
In response to requests from their largest customers, a growing number of utilities across the country have introduced voluntary renewable energy offerings. These programs, often called renewable energy tariffs or green tariffs, reflect a fundamental shift in the relationship customers want with their electricity providers. Instead of simply expecting utilities to provide reliable service at the lowest possible cost, companies now want to partner with their utilities to ensure that the source of this low-cost, reliable power also aligns with their organizational needs. For the growing number of companies that have set renewable energy or sustainability goals, this means increased access to renewables and other forms of advanced energy.
While the number of renewable energy tariffs has accelerated in recent years, with 23 programs now approved or pending approval in 17 states, they have had mixed success in meeting customer needs. Some programs — such as Puget Sound Energy’s Green Direct and Georgia Power’s Commercial & Industrial Renewable Energy Development Initiative — have enjoyed broad support and attracted participation from a diverse cross-section of customers. Other programs have gone untouched or have been used by only one or two customers, despite interest in renewable energy among other customers in the same territory.
Successful renewable energy tariffs grow out of a collaborative relationship between utilities and their customers. For utilities that want to work with and meet the needs of the “new” C&I customer, there are lessons to be learned from the most successful existing programs, as well as from the less successful programs, and even from those that could be considered complete failures.
A recent guide from the Advanced Energy Buyers Group shows how to harness the lessons of existing and past programs into successful new programs. The report, Renewable Energy Offerings that Work for Companies: A Practical Guide to Meeting Corporate Renewable Energy Demand in Vertically Integrated Markets, outlines six steps utilities can take to develop workable renewable energy options:
- Seek advice and input from customers, industry, and other states. The good news for a utility just starting out is that there is plenty of experience and knowledge to draw from. Involving customers early in the process is essential, and the insights of regulators and utilities in other states, as well as industry experts, should also not be discounted.
- Determine which approaches align best with state and utility circumstances. For better or worse, each state’s electricity market is different. Working with, and not against, a utility’s rate structures, resource mix, regulatory structure, etc., will result in an end product that works better for everyone.
- Account for the varying needs of customers, including nonparticipants. Seeking initial advice from a few leading customers with experience across other states (through step one) is not enough; utilities must solicit input from across their customer base throughout the program design process to ensure the needs of different customers are being met. A program that works for a large data center may not serve the needs of a small business or a university, and vice versa. In addition, considering the needs of nonparticipants is crucial to success of any voluntary opt-in program. No corporate customer wants to be seen as getting a special deal at the expense of others.
- Adopt replicable best practices. When it comes to renewable energy tariffs, there is no cut-and-paste solution that will work seamlessly for every utility. However, there are best practices that apply no matter the state. The Advanced Energy Buyers Group’s Practical Guide outlines best practices in addressing key details for utilities in retail choice and direct access markets (such as customer protection, control, and eligibility) as well as vertically integrated utilities (such as rate structure, program caps and expansion, term options, program fees, and termination provisions).
- Guide customers through the decision and enrollment process. The decision to enroll in a renewable energy program (especially one that involves a years-long commitment) requires significant analysis and consideration, and sometimes customers lack important information and tools to make an informed decision. Utilities can bridge this gap, ensuring that a good program does not go underused due to lack of information or understanding on the part of customers.
- Review, iterate, and improve. Success of a renewable energy tariff should not be measured by its approval or even its full enrollment, but by whether it continues to meet the needs and expectations of participating customers, nonparticipating customers, and the utility over time. Regular assessment and, if needed, adjustments are key to the true success of any utility offering.
These six steps require time and effort on the part of the utility, its customers, and its regulators — but the reward is clear: Utilities that have implemented successful renewable energy offerings have diversified their overall generating portfolio, earned praise from satisfied customers, and attracted attention from other companies. And with dozens of successful programs — as well as cautionary tales — from around the country to learn from, no utility that wants to be on the right side of the growing renewable energy demand from its C&I customers needs to start from scratch.
Caitlin Marquis is a director at national business group Advanced Energy Economy, where she manages the policy engagement of the Advanced Energy Buyers Group, a coalition of leading companies that are working to expand their use of advanced energy. She leads the Buyers Group’s efforts on both regulatory and legislative engagement at the state, federal, and regional level.