Green energy credits have value
L’ANSE TOWNSHIP — The proposed Summit Lake Wind Project will produce about 130 megawatts of renewable energy, according to Renewable Energy Systems (RES).
This would mean the owners would receive 130 renewable energy credits (REC), transferable tokens that represent green energy as a commodity.
“Electricity is a weird commodity because it has to be used within a few milliseconds of when it’s produced,” said Sarah Green, a professor of chemistry at Michigan Technological University (MTU) who also serves as co-vice chairwoman of the Global Environmental Outlook scientific advisory panel of the United Nations.
Because of the instantaneous nature of electricity, large, interconnected grids work best for distribution, according to Green. Electricity production has to match consumption almost exactly moment-by-moment, and large grids offer many points of consumption with many points of generation to provide flexible electricity production.
There is no way of telling what energy on the grid was produced in what way.
“Electrons are electrons,” said Robert Handler, senior research engineer at MTU’s Sustainable Futures Institute.
Once renewable energy is put on the grid, it is indistinguishable from any other electricity, like a drop of water in a river. But this causes a problem with initiatives like Michigan’s renewable energy standard, which requires energy producers to create at least 10 percent of their energy renewably with things like wind farms or biomass plants. RECs provide a way to track sustainably produced energy.
“A renewable energy system like the L’Anse Warden biomass facility operates by generating renewable energy, and when this electricity gets distributed into the grid, they are issued RECs for each unit of electricity,” Handler said.
Those RECs can then be sold to other energy producers around the country who don’t have sustainable generation facilities or to businesses who want to claim they run on green energy.
A REC represents 1 megawatt hour of electricity produced sustainably, and the owner of the REC can claim they’ve used sustainable energy in line with renewable energy standards.
By 2021, the Michigan renewable energy standard requires power production to climb from 10 percent to 15 percent. This means power producers across the state will be looking to either build sustainable energy generation facilities, or buy more RECs from companies that do.