GLUMAC - Engineers for a sustainable future

Chien Si Harriman, P.E., LEED^® AP 
San Francisco Senior Mechanical Designer

Renewable Energy Certificates (RECs), are not the easiest concept to convey. In essence, they allow consumers to purchase the environmental benefits of renewable energy sources such as wind or solar power from renewable power generators, without purchasing the renewable electricity directly. This concept is particularly critical for customers, like Glumac in San Francisco, who wish to support wind power market development, but cannot because their local electricity provider does not offer the option to buy wind power directly through their electricity bill. Industry experts often refer to this as "unbundling" the emissions from the electricity.

As an example, let™s imagine a market where this "green power" is available. Your electricity providers will charge a small premium on their normal cost of electricity, which usually amounts to a couple of cents per kilowatt-hour. This premium is essentially a way for the power company to recoup the costs of building new wind farms and solar farms. In Northern California, though, since green power is not available directly from the power provider, should a conscientious company still wish to support the development of wind power, they can do so through a third party. In that case, the individual or company continues to buy their power from their electricity provider, as usual, but also signs a contract with a third party, paying this third party a cent or two per kilowatt-hour. This additional premium is used by the third party to promote and develop new wind power projects.

Another common description for RECs is "carbon trading", giving the clean energy producer the ability to trade this new commodity on an open market to people or corporations obligated, or simply interested (as in the Glumac case), in reducing their carbon footprint. However, these are not the carbon credits that have been receiving press. Carbon trading is actually something conducted under the auspices of the Kyoto Protocol, allowing entire countries to meet regulatory carbon levels in the cheapest means possible. In some cases, this means purchasing carbon offsets on an open market. Just like commodities, both carbon credits and RECs can change in price and fluctuate with supply and demand. However, they are fundamentally different. United States entities cannot directly compete in the Kyoto carbon-trading scheme, since the United States has not ratified the treaty. Any American corporation can purchase RECs, though¦individuals, corporations, or small businesses. In this way, American corporations and individuals who support the ideals of the Kyoto Protocol can still participate in the Carbon Emissions market, on their own terms.

The extra money raised by the renewable energy providers through the sale of RECs, allows renewable energy producers to either invest their dividends into more projects, or to offset the cost of expensive forms of renewable energy production. This helps to make renewable energy more competitive with the costs of fossil fuel or nuclear electricity generation. It also creates a regulatory body that monitors and tracks carbon emissions worldwide, utilizing a commodity that can ultimately be traded throughout the United States, in support of green power, without borders.

A bit on Carbon

Carbon has received so much press lately, because of its potential impact on global warming, and the potential changes to weather patterns and global sea levels. Whether it is in films playing at the local theater, or in books, the opinions of global weather experts are beginning to align and be heard“weather is changing, glaciers are melting, and many scientists are in global consensus on one simple fact. Man-made sources of CO₂ are causing atmospheric levels of Carbon to rise, with potentially devastating consequences. Some experts believe that the atmosphere is already over a threshold that has never been surpassed in the history of the planet. The consequences are not entirely known, but scientists understand that drastic changes are already taking place, and CO₂ is the cause. Reducing CO₂ means not using energy, becoming more efficient in the use of energy ("doing more with less"), or finding ways to create energy that produces no CO₂ emissions at all.

Glumac San Francisco™s Target to Reduce its Carbon Footprint “ How They Got There

Since we are in the business of sustainable engineering, it made sense to support other areas of this new emerging free market that valued the same ideals“finding natural systems that reduce reliance on fossil fuel. Regardless of the political debate over global warming, and its consequences, we also believe reducing carbon levels is part of our goal to be responsible citizens. Unfortunately, major local Northern California energy providers do not offer any form of green power to purchase, unlike Oregon and Washington. RECs became the perfect and logical choice“they are traded without borders, and are guaranteed and monitored to come from 100% renewable sources. The process began with some very simple steps.

To begin the process, Glumac™s engineers studied their energy bills to determine their energy consumption. In so doing, they found their annual electricity consumption, which happened to be less than the LEED^® recommended target value because of northern California™s unique temperate weather. The calculation to determine electricity consumption in our case was very simple“use last year™s energy bills. In some cases, it is more complicated; some make a computer simulation to determine annual electricity, and others pursuing LEED^® certification, who have neither a simulator nor energy bills, can use industry standards. However, that value is an overestimate of the electricity consumed in a Northern California climate.

Why RECs

RECs are an essential part of renewable energy infrastructure development in the United States. The United States National Renewable Energy Laboratory (NREL), a division of the Department of Energy, cites RECs as critical to the growth of the industry. The goal? Ultimately to help consumers consume emission-free electricity, but also to reduce the likely oncoming shocks in energy prices associated with rising and volatile fossil fuel prices. Currently, renewable power in the United States is growing at a rate of 1.5% of its total energy consumption per year without any technological innovations. Some experts believe that number could triple with stronger government incentives or break-through technologies. Wind power in particular is growing at a rate of 30% of its capacity annually, and experts at NREL believe as much as 20% of the nation™s energy could come from wind power.