By Andra Coberly, (Bio) acoberly@fortcollinsnow.com
1:05 a.m. MT Mar 20, 2008

How RECs work

When a renewable energy facility is generating power, the power goes on the grid and displaces power produced by coal-power or other non-renewable power plants. But once the electricity joins the grid, whether it is generated from renewable sources or not, it is indistinguishable from any other form of electricity. That's why even the homes and businesses of those who purchase wind are not really powered by renewable energy; they are essentially paying for that amount of wind energy to be put on the grid. With renewable energy credits (REC), the benefits of putting renewable energy on the grid—and thus mitigating the emissions that come from high-polluting power plants—has been given a monetary value. So, when one purchases a REC, they are purchasing a claim to the environment benefit that came from the generation of renewable energy. RECs were created to give incentives for developing renewable energy by giving generators extra funding. A 2007 Fort Collins Weekly article, however, showed that RECs purchased by the city could not be shown to have actually benefited new renewable energy development.

Dan Bihn sat down to write an article about the Kyoto Protocol that would highlight how a new president could bring the United States back into the global climate change discussion and how American businesses could have new opportunities created by mechanisms in the protocol.

But that's not what came out.

Bihn's March Solar Today article instead turned into a reflection on the lessons he's learned while helping Fort Collins become a leader in renewable energy—on what he calls “the lessons I have learned.” Having served on the Fort Collins Electric Board for several years, Bihn watched in 2003 as City Council set the groundbreaking goal of ensuring that 15 percent of its energy use came from renewable sources by 2017, a more aggressive target than the board had recommended. And he's also the man who suggested using renewable energy credits, also known as RECs, to help the city make that goal more attainable. It was how Bihn thought Fort Collins could get the “biggest bang for our buck” and reach that 15 percent goal without jacking up electric rates for residents.

“Had we not had RECs, the amount of money (needed) to make that goal would have broken the bank,” he said in a recent interview. “No one on the board was against RECs at the time. Now, however, I don't think anyone on the board is for going forward with them—including me.”

RECs have gotten more and more attention in recent years, especially as renewable energy has become more affordable and no longer need that financial incentive. Critics of the tools say RECs are confusing, complicated and opaque, and they question if more renewable energy is being developed because of RECs. Local critic Eric Sutherland has become the thorn in the side of the city, the electric board and municipal utility Platte River Power Authority, which oversees Fort Collins’ renewable energy portfolio, by asking question after question about the city's RECs and how they fit into the electric energy policy.

Sutherland's incessant criticism has become a bit of a catalyst, Bihn admits, for reconsidering the policy and for looking forward. Now, the electric energy supply policy is being reviewed and Bihn is pushing for shifts in how the city sets and realizes its goals. And his Solar Today article, what Sutherland calls an “excuse” for Fort Collins' sustainable efforts over the past few years, is not his apology for the “biggest bang of the buck” approach to renewable energy. Instead, it's a reflection on what Bihn has learned from the city's ventures into renewable energy: that cheaper isn't always better.

“By focusing on the biggest GHG (greenhouse gas) bang for the buck, we wind up making the cheapest short-term investment to solve a long-term problem without considering how that might help us achieve the end goal of a low-carbon economy,” Bihn wrote in Solar Today.

His new outlook on RECs is not necessarily a change of heart but a change in time. While others may disagree, Bihn says RECs were once the best thing for the city.

“We were searching in the dark trying to figure out what we were going to do. It was a very open process,” Bihn said of working on the 2003 electric energy supply policy. “The RECs came out of that as a very inexpensive alternative to meet a very aggressive goal.”

The electric energy supply policy, which was created in 2003 to help the city set renewable goals, does not specifically discuss RECs. Bihn says the board had talked about purchasing RECs while creating the policy but never put it in writing. RECs were attractive because they would make a rate hike to residents a bit more digestible. The new effort would increase electricity rates to every resident by 1 percent.

“If we set an aggressive policy and it's going to raise everyone's rates by 10 percent, nobody's going to like that,” Bihn said. “So, it was like this opportunity to set an aggressive goal, this historically aggressive goal, at a price we felt the community can afford.”

But things have changed, and RECs, which were established to incentivize renewable energy and give communities without green energy projects the ability to go green by buying into other communities’ projects, become less attractive as renewable energy becomes almost as affordable as traditional energy.

Bihn does not foresee the board encouraging the purchase of RECs too much longer—at least until a viable alternative is found.

“This is not something that needs to be subsidized. In the world where renewable generation is on the same level as conventional generation, a REC has no value and no meaning,” Bihn said. “RECs have no meaning in Colorado in 2008.”

Bihn says the electric board's goal is now making the city a “low-carbon, vibrant economy by mid-century.” In thinking about reducing the city's carbon footprint, as opposed to just increasing investment in green energy, it leads to different solutions.

“Renewable energy is one way to lower carbon emissions but it is not the only way,” Bihn said. “So, all of a sudden energy efficiency is on that same playing field.”

One goal is to lessen the need to grow coal-fired power plants, so then the solutions become making efforts to build more energy-efficient housing, making houses solar ready and even inspiring innovation.

With that said, “biggest bang of the buck” is no longer his priority.

“In Fort Collins, our failure to invest for the long term made it hard to know if purchasing RECs is better or worse than investing in our own wind farm, concentrating solar panels plan or energy-efficient low-income housing,” Bihn wrote in his Solar Today article. “If the ultimate goal is to develop low-carbon economy, investing in projects and programs that reduce our need to build new coal-fired power plants seems essential. It is when we look for short term, low-cost GHG-reduction projects that we can lose sight of that overarching goal-here in Fort Collins and globally.”



See Fort Collins Now on Friday for more coverage on renewable energy.

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