In our recent blog, Understanding Cape Light Compact’s Power Supply Program, Austin Brandt, Senior Power Supply Planner at Cape Light Compact, helped explain the Compact’s power supply program and how it serves its customers. That article touched briefly on the Compact’s commitment to renewable energy but didn’t get into what’s behind the renewable power supply options. In this blog post, we dig deeper into the Compact’s power supply program and learn how it supports ongoing and future renewable energy projects locally and across the country.

Before we dive in, here is a brief recap from our recent blog on the Compact’s Power Supply Program. Cape Light Compact launched its power supply program in 2002 as a locally-administered alternative to the utility’s power supply with competitively priced rates for electricity. In fact, since launching the program, the Compact has offered lower rates to its customers than the utility’s basic service about 65% of the time.

Shortly after launching its power supply program, the Compact created the CLC Green power supply option. CLC Green gave customers options to opt-in to receive either 50% or 100% of their power supply from renewable sources – such as wind, hydro, or solar – for a small premium.

In 2017, after public input and a vote of the Compact Governing Board, the Compact switched its default power supply product to 100% renewable. Committing to 100% renewables has meant that the Compact has had to face a more unique challenge than before to remain competitive with basic service rates. But, Brandt and his team at the Compact have managed to do so time and time again. To help understand how they manage the program to keep it competitive while relying on a fully renewable power supply, Brandt begins by explaining the basic building blocks for measuring renewable energy.

He notes that it’s important that we look at how we track renewable energy to understand the big picture. For electricity, it’s impossible to track where your supply is sourced from at the end use point.

“The electrons that are used in our homes and businesses could have come from anywhere – they all mix together,” clarifies Brandt.

Without any real way of telling renewable and non-renewable electrons apart at the end use point, the industry instead tracks renewable electrons at the source where they’re produced. Perhaps you have a solar photovoltaic system on your roof at home. In Massachusetts, for every 1,000-kilowatt hours your solar system produces – also known as 1 megawatt-hour – you have also produced one renewable energy certificate. Referred to in the industry as RECs, these special certificates are bought and sold separately from the electricity produced by renewable resources.

The Compact, or the Compact’s supplier, NextEra, may be on the other side of the transaction if you’re selling your RECs. To make the claim that they have used 100% renewable energy, they need to purchase the number of RECs that equals your energy usage. RECs are the standard for making renewable energy claims and are key to the success of renewable energy in the U.S. Once a REC has been retired, it cannot be used again, therefore preventing double-counting.

“The point of RECs is to provide financial support for projects,” states Brandt.

Several states, including Massachusetts, require retail electric suppliers to purchase RECs to match a minimum percentage of the power that they supply to customers. This is known as the renewable portfolio standard or the RPS. The RPS further specifies a minimum percentage of different types of RECs, which are generally referred to as “RPS-qualified RECs.” The RPS in Massachusetts increases the required percentage of Class I RECs – which are sourced from New England –  by 1% every year, and a new law passed in July 2018 increases the requirement by 2% per year for 2020-2029 (then back to 1% until 2050). In 2018, suppliers must source their electricity from 13% renewable resources. Since this percentage will increase annually, it will be necessary for more renewable energy projects to come online in the future so that these suppliers can comply with the RPS. The Compact’s current supplier, NextEra, meets these minimum standards, plus buys an additional 1% of Class I RECs to lend further support to local renewable energy sources.

“It’s creating more built-in demand and sustaining the value of RECs, which in turn sustains renewable energy projects,” concludes Brandt.

Purchasing these Class I RECs that are in high demand is not the only way the Compact helps stimulate growth for renewable energy projects. The Compact also purchases RECs sourced from projects outside of New England – known as out-of-market RECs, or voluntary RECs. These are often from states where there is a softer REC market, making them less important in their respective states in terms of financing new renewable energy projects, though their purchase and retirement still represent renewable energy use. In order to make sure that these voluntary RECs contribute to the growth of renewable energy production, the Compact’s supplier, NextEra, takes the revenue used to purchase the voluntary RECs and puts the money into a third-party administered trust called the EarthEra Renewable Energy Trust. This trust is dedicated to building new renewable energy projects in the U.S.

“Even though the voluntary REC market isn’t as tight as the Class 1 market, the premium that our customers are paying for those RECs is directly supporting new renewable energy projects,” Brandt elaborates.

Additionally, under the contract that the Compact has negotiated with NextEra to serve the Compact’s power supply customers, NextEra is entitled to a fee for their services but has agreed with the Compact to deposit the fee into the EarthEra Trust instead of keeping it for their bottom line. This contribution further aids the Compact’s efforts in supporting renewable energy. By the end of 2018, between the supplier’s fees and the EarthEra REC premium, Compact customers are expected to have contributed over $6 million to the EarthEra Trust.

Even with these investments in the future of renewable energy, Cape Light Compact’s Power Supply Program has succeeded at staying price competitive with the utility’s basic service. Since the Compact began exclusively contracting a power supply that was 100% renewable in 2016, the Compact has had lower residential power supply pricing than Eversource over each pricing term.

From a financial standpoint, the difference between the Compact’s previous non-renewable power supply aggregation program and the newer, renewable program that includes all aspects for supporting renewable energy is about a tenth of a cent per kWh. Meaning that for a minimal premium, the Compact and its customers have made a significant impact with their progressive power supply program.

If you’re unsure whether you’re a participating customer in the power supply program, Brandt encourages residents and business owners to first check the supplier listed on their Eversource bill. If your supplier reads as “NextEra Energy Services MA” – the current supplier the Compact has a contract with – and below that, in smaller print it reads, “Billing for Cape Light Compact,” then you’re already a participant.

If you aren’t a participant but you’re interested in signing up, the best way to do so is by calling the Compact’s power supply number at 800-381-9192, which will put you in touch directly with the Compact’s supplier, NextEra Energy Services, who handles customer enrollments – or you can sign up online. Be sure to have your latest Eversource bill available so that you can offer customer support all the necessary information.