Blog › A market for renewables opens in Ohio where coal gets more help


A market for renewables opens in Ohio where coal gets more help

Marc Lefkowitz  |  12/02/15 @ 9:45am  |  Posted in Clean energy

For critics of the “ratepayer bailout” that Ohio handed to FirstEnergy for its aging, dirty coal power this week, an answer may be to stimulate the market for alternatives.

Because of Ohio’s deregulated energy market, more homeowners have been introduced to the option of shopping for green power in recent years.

<br />Cleveland area homeowners could purchase power from wind farms like this one in Illinois.

We did a little browsing for details on Cleveland’s and the Northeast Ohio Public Energy Council’s (NOPEC) green power offers, and found that the deals are getting better.

NOPEC, a non-profit council of governments, offers an aggregation service where it negotiates on behalf of entire communities like the suburbs of Shaker Heights and South Euclid, for group rates on electric power. It has introduced a program where residential customers can opt in to 100% green power.

Both Cleveland and the suburbs through NOPEC source most of their green power from wind and hydro produced in the U.S., providing a burgeoning market for clean energy investment on the supply side.

NOPEC works with First Energy Solutions to offer renewable energy at a fixed rate of 6.80 cents per kilowatt/hour. That is practically the same as the current price of 6.75 cents for the non-renewable, fixed option, says Case professor, Norm Robbins.

And yet, few have signed up for the program. In fact, Robbins was the first Shaker resident to sign on. He is working with a sustainability committee of citizens and Shaker Heights officials to improve participation.

What attracted Robbins to the program was his desire to take action on climate change.

“It’s so easy,” he said, “and a lot cheaper than buying a Prius. You drop your carbon emissions by 13%. Not bad for a phone call.”

Meanwhile, Cleveland is entering the second round of its green energy aggregation program. This time, a new supplier, Constellation Energy Services, Inc., will manage the city’s green energy procurement.

Two years ago, Cleveland inked a deal with First Energy Solutions that signed on nearly all 65,000 Cleveland Electric Illuminating (CEI) company customers to receive 100% renewable power at 21% below the floating, “cost to compare” rate. This year, the same segment of the Cleveland market will be opted in to 50% renewables, but at a fixed rate of 7 cents per kWh. That is competitive with the current price for power produced from coal, says Matt Gray, Director, Cleveland Office of Sustainability.

“The (price) projections for the next couple of years fluctuate wildly,” explains Gray. “The market is shifting to the point where it wasn’t competitive to offer 100% green power. We opted for price stability.”

Still, CEI customers in Cleveland who want to pay a small premium can opt in for 100% renewable electricity.

By striking a green power procurement deal, Cleveland offers its residents direct, low cost access to renewables, and it fulfills a commitment in its Climate Action Plan to lower its carbon emissions from energy use.

“We’re still going to be a top 20 city in green power procurement nationally,” Gray says. “I think it will have a big impact (on the city’s climate commitment), for sure.”

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2 years ago

The way the program works is your purchase of renewable energy is used by FES to "retire" renewable energy credits (RECs), a tradable commodity. The RECs market is certified, so that the credits can only be retired once. RECs in essence help pay for the development of renewable energy.

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2 years ago

If I opt into FES's program, how do I know that my electricity is actually coming from 100% renewables?

2 years ago

Austin - please try the link in the second paragraph under the picture of this post. My understanding is the premium to have 100 percent renewables through the NOPEC plan is the twenty five cents per kilowatt hour difference. But, please contact the company for more specifics on the fine print.

2 years ago

Does First Energy Solutions require a premium or any other additional charges for participation in its 100% renewables program?

2 years ago

Tim - thanks for the calculation. It is more likely as you point out that the cost difference will be closer to tens of dollars even if the "cost to compare" with standard power goes down. The cost difference is fairly minimal for choosing renewables right now.

2 years ago

I'm curious as to the methodology behind estimating that opting for the 100$ renewables contract through the Cleveland aggregation program carries a $100 annual premium. Based on Constellation's webpage for the program, here are the fixed prices, per kWh, for each of the 3 aggregation options:

0% renewables: $0.0695/kWh
50% renewables: $0.0701/kWh
100% renewables: $0.0708/kWh

Generally, electric utilities in Ohio base cost estimates upon the assumption that the average household uses 750 kWh per month. Translated over a 12-month period, that would equal 9,000 kWh annually. Let's calculate the costs for each of the three options, based on those fixed prices:

0%: $0.0695 x 9,000 kWH = $625.50/year
50%: $0.0701 x 9,00 kWh = $630.90/year
100%: $0.0708 x 9,000 kWh = $637.20/year

Now, obviously, those numbers do not reflect the true costs of what people participating in the aggregation program will pay, as there are additional charges for distribution, transmission, taxes, fees, riders, etc. But it does account for the actual price per kWH, including the administrative fee that the City of Cleveland takes to manage the program. I'm not sure how we go from a base rate premium of $11.70 all the way up to $100.

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