Guide to 

Purchasing 

Green Power

Renewable Electricity, Renewable 

Energy Certificates, and On-Site 

Renewable Generation

DOE/EE-0307
This guide can be downloaded from:

www1.eere.energy.gov/femp/technologies/renewable_purchasingpower.html

www.epa.gov/greenpower/ 

www.wri.org/publications

www.resource-solutions.org/publications.php

Office of Air (6202J)

EPA430-K-04-015

www.epa.gov/greenpower

March 2010

ISBN: 1-56973-577-8
Guide to Purchasing Green Power i

Table of Contents

Summary........................................................................................................................................................1

Chapter 1: Introduction ....................................................................................................................................2

Chapter 2: Green Power Defined......................................................................................................................4

Chapter 3: The Benefits and Costs of Green Power ............................................................................................5

The Benefits.......................................................................................................................................................... 5

The Costs.............................................................................................................................................................. 7

Chapter 4: Options for Purchasing Green Power................................................................................................9

Renewable Electricity Products............................................................................................................................. 9

Renewable Energy Certificates (RECs)................................................................................................................ 10

On-site Renewable Generation............................................................................................................................ 11

Chapter 5: Steps to Purchasing Green Power...................................................................................................14

Setting Goals ...................................................................................................................................................... 14

Identifying Key Decision-Makers ....................................................................................................................... 14

Gathering Energy Data ....................................................................................................................................... 15

Choosing Green Power Options ......................................................................................................................... 15

Evaluating the Purchase ..................................................................................................................................... 16

Chapter 6: Procuring Renewable Electricity and Renewable Energy Certificates ..................................................18

Developing Criteria for Screening Suppliers and Products................................................................................. 18

Collecting Product Information ......................................................................................................................... 20

Creating a Procurement Plan ............................................................................................................................. 20

Chapter 7: Planning an On-site Renewable Generation Project..........................................................................24

Screening the Technologies ............................................................................................................................... 24

Obtaining Resources and Assistance ................................................................................................................. 25

Creating a Project Plan ...................................................................................................................................... 25

Anticipating Possible Barriers ............................................................................................................................ 27

Installing and Operating an On-site Renewable Generation System ................................................................. 28

Chapter 8: Capturing the Benefits of the Purchase............................................................................................29

The Environmental Benefits ............................................................................................................................... 29

Internal Promotion ............................................................................................................................................. 30

External Promotion ............................................................................................................................................ 30

Chapter 9: Conclusion ...................................................................................................................................32

Chapter 10: Resources for Additional Information ............................................................................................33

Glossary.......................................................................................................................................................40

Appendix: Green Power Considerations for Federal Agencies...........................................................................43
ii

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Guide to Purchasing Green Power 1

Summary

T

his Guide to Purchasing Green Power is intended for 

organizations that are considering the merits of buying green power as well as those that have decided to 

buy it and want help doing so. The guide was written 

for a broad audience, including businesses, government agencies, universities, and all organizations wanting to diversify 

their energy supply and reduce the environmental impact of 

their electricity use.

First published in 2004, the Guide to Purchasing Green Power

provides an overview of green power markets and describes 

the necessary steps to buy green power. The 2010 version 

represents the first major update to the guide and includes 

new market information and terminology, case studies, an 

updated additional resources section, and new resources for 

Federal agencies to use when planning on-site renewable 

projects or purchasing green power. 

This section summarizes the guide to help readers find the 

information they need.

Chapter 1 describes the concepts of renewable energy and 

green power and discusses their differences from conventional energy sources. This section also summarizes recent 

changes in electricity markets and the current availability 

and use of green power sources.

Chapter 2 defines green power.

Chapter 3 summarizes the benefits and costs of purchasing 

green power. 

Chapter 4 defines three options for purchasing green power 

products: renewable electricity, renewable energy certificates, 

and on-site renewable generation. 

Chapter 5 outlines the general steps needed to prepare to 

buy green power: setting goals, identifying the key decisionmakers, gathering energy data, choosing the specific green 

power options available to the purchaser’s facilities, and 

evaluating the purchase.

Chapter 6 discusses the steps to procure renewable electricity or renewable energy certificates: developing screening 

criteria, collecting product information, and drawing up a 

procurement plan.

Chapter 7 describes the steps to establish an on-site green 

power system: screening the technologies best suited to the 

purchaser’s site, obtaining technical and financial resources 

and assistance, creating a project plan, anticipating possible 

barriers, and installing and operating the on-site generation 

system.

Chapter 8 explores ways of taking advantage of promotional 

opportunities after buying green power. This section covers promotion both inside and outside the organization and 

options for quantifying the environmental benefits of the 

purchase.

Chapters 9 and 10 of the guide conclude with a list of 

resources offering more information about all aspects of 

green power. Because electricity from renewable resources 

is relatively new and may be generated in a variety of ways, 

many institutions are working to facilitate the development 

of green power markets. Several of these organizations’ programs—the U.S. Department of Energy’s Federal Energy 

Management Program (FEMP), the U.S. Environmental 

Protection Agency’s Green Power Partnership, the Green 

Power Market Development Group of the World Resources 

Institute (WRI), and the Green-e Energy Certification 

Program administered by the Center for Resource 

Solutions—worked together to write this purchasing guide. 

The guide also includes a glossary of terms commonly used in 

the green power field.

Finally, the appendix discusses considerations specific to 

federal agencies that buy green power, particularly the procurement regulations that cover the purchase of green power.
2 Introduction

Chapter 1

Introduction

T

oday, the energy sources used to create electricity differ in many ways, including in their environmental 

impacts. In the United States, electricity is most often 

generated using fossil or nuclear fuels—forms of 

power generation that can have detrimental effects on human 

health and the environment through air emissions and other 

problems. Despite advances in pollution controls over the 

last 30 years, this conventional power generation is still the 

nation’s single largest source of industrial air pollution and is 

a major contributor to greenhouse gas emissions.

Electricity markets now offer cleaner ways of producing 

power, however, and give many consumers the ability to 

choose how their power is generated. One of these choices is 

power from renewable sources, or “green power.” 

In some parts of the United States, consumers can buy green 

power from the provider of their electricity. All consumers 

can buy green power in the form of renewable energy certificates (RECs), which are available nationally regardless of 

whether a customer’s local electricity provider offers a green 

power product. 

While no form of electric power generation is completely 

benign, electricity generated from renewable resources such 

as solar, wind, geothermal, small and low-impact hydropower, and biomass has proved to be environmentally preferable 

to electricity generated from conventional sources such as 

coal, oil, natural gas, and nuclear. This Guide to Purchasing 

Green Power focuses on electricity generated from renewable 

resources, both delivered through the grid and generated onsite. Although renewable energy can also be used for heating 

needs or for transportation fuels, this guide does not address 

those applications.

According to the U.S. Environmental Protection Agency 

(EPA), on average, replacing each kilowatt-hour (kWh) of traditional power with renewable power avoids the emission of 

more than one pound of carbon dioxide. Because of the sheer 

quantities of electricity involved nationwide, consumers have 

enormous influence to reduce environmental impacts from 

conventional power generation. If the typical commercial 

building switched to 100 percent renewable electricity, the 

use of green power would have the equivalent environmental 

impact of avoiding the carbon dioxide emissions of nearly 28 

vehicles each year.

A wide range of organizations purchase green power, 

including: federal, state, and local governments; universities; businesses; nonprofit organizations; and individual 

consumers. By purchasing green power, these organizations 

are helping the environment and meeting their own goals, 

such as financial benefits, public relations benefits, and even 

national security benefits. In 2008, renewable electricity generation in the United States (excluding hydropower) equaled 

nearly 124 million megawatt-hours (124 billion kilowatthours)—enough to meet the annual electricity needs of 

nearly 12 million average U.S. homes.

Many states already require utilities to supply some of their 

electricity from renewable sources. These state mandates 

(known as “compliance” markets) require a percentage of 

the utility’s power mix to come from renewable sources, so 

that utility customers will “green” their power mix somewhat 

without taking any conscious action. Voluntary purchases, 

however, are still an important strategy for organizations that 

want to buy most or all their power from renewable sources 

or want to promote innovative development of green power. 

Voluntary green power purchases have played an important 

role in driving development of the market (see Figure 1) and 

are expected to be an important part of the market for the 

foreseeable future.
Chapter 1

Guide to Purchasing Green Power 3

Leading organizations are finding that using green power 

is an effective part of a strategic energy management plan. 

Successful energy management plans are based on a “portfolio analysis” that considers options such as energy efficiency, 

load management, power purchases, on-site generation, and 

non-electric (thermal) energy needs. As with any investment 

portfolio, the best mix of these options depends on the organization’s goals, the cost of various alternatives, and external 

market conditions.

While voluntary purchases of green power are becoming 

more common practice in today’s electricity markets, these 

markets offer a wide range of choices. This guide is intended 

for organizations that have decided to buy green power but 

want help in figuring out how to do it, as well as for organizations that are still considering the merits of buying green 

power.

The Guide to Purchasing Green Power addresses the following 

commonly asked questions:

• What is renewable energy and green power? (p. 4)

• What benefits will my green power purchase bring? 

(p. 5)

• How do I make a business case for buying green power? 

(p. 5)

• What is the cost of green power? (p. 6)

• What are the options for purchasing green power? 

(p. 9)

• What is the importance of product certification and 

verification? (p. 19)

• How should an organization choose a green power 

product? (p. 15)

• What are the best ways of buying green power? (p. 18)

• What are the steps to installing on-site renewable generation? (p. 24)

• How do I communicate my green power purchase to 

stakeholders? (p. 30)

0

5,000

10,000

15,000

20,000

25,000

2004 2005 2006 2007 2008

millions of k

Wh annually

Voluntary

Compliance (new renewables)

Figure 1. Comparison of voluntary and compliance markets for renewable energy, 2004-2008

Figure 1. Comparison of voluntary and compliance markets for renewable energy, 2004–2008

Note: “New” renewable resources generally refer to renewable facilities that began operation in 1997 or later.

Source: Bird, Lori, Claire Kreycik, and Barry Friedman. 2009. Green Power Marketing in the United States: A Status 

Report (2008 Data). Golden, CO: National Renewable Energy Laboratory.
4 Green Power Defined

Chapter 2

Green Power Defined

T

he term green power is used in a number of different 

ways. In the broadest sense, green power refers to 

environmentally preferable energy and energy technologies, both electric and thermal. This definition 

of green power includes many types of power, from solar 

photovoltaic systems to wind turbines to fuel cells for automobiles.

In this guide, green power refers specifically to electricity 

generated from a subset of renewable resources, including 

solar, wind, geothermal, biogas, biomass, and low-impact 

hydroelectric sources. These electricity sources are derived 

from natural resources that replenish themselves over short 

periods of time, including the sun, wind, moving water, 

organic plant and waste material (biomass), and the Earth’s 

heat (geothermal).

Note that the terms green power, environmentally preferable, 

clean power, and renewable energy may be used in slightly 

different ways, which differ primarily according to the varying assessments of the environmental impacts of harnessing 

specific resources and of the relative significance of each 

impact. The exact definitions of these terms, while always 

important, take on added significance when dealing with 

state and federal government requirements or determining 

eligibility for government and utility incentives. For more 

discussion of how each of the organizations that collaborated 

on this document defines green power, please refer to their 

Web sites, listed in Chapter 10, Resources for Additional 

Information. 

Helping Consumers Identify 

Green Power

To help consumers more easily identify green power products, 

the “Green-e Energy” certification program has coordinated 

the development of market-based, consensus definitions for 

environmentally preferable renewable electricity and renewable energy certificates (RECs). The Green-e Energy program, 

administered by the nonprofit Center for Resource Solutions, 

certifies and verifies renewable energy products offered in 

competitive electricity markets, sold in utility green pricing 

programs, and sold in national markets for RECs. Further 

details about Green-e Energy certification are available from 

the Green-e Web site listed in Chapter 10.
Guide to Purchasing Green Power 5

Chapter 3

The Benefits and Costs of Green Power

The Benefits

Green power can offer organizations a variety of 

environmental, financial, stakeholder relations, 

economic development, and national security 

benefits. This Guide is designed to help buyers 

navigate the costs, contracting challenges, and public relations risks.

Environmental

• Reduce environmental impacts. Conventional electricity generation is a significant source of greenhouse 

gas emissions as well as the single largest industrial 

source of air pollution in the U.S. The emissions from 

conventional electricity generation contribute to a number of serious environmental problems, including acid 

rain, fine particulate pollution, and climate change. 

Green power generates less pollution than conventional 

power and produces no net increase in greenhouse gas 

emissions, helping protect human health and the environment. 

Financial

• Provide a hedge against risks posed by:

• Electricity price volatility. Purchasing electricity 

generated by renewable energy sources may provide 

the buyer protection against unstable or rising fossil 

fuel prices, for example through long-term, fixedprice supply contracts directly with developers or 

generators. Organizations can also encourage stable 

electricity prices by supporting new renewable 

power resources on the local grid, thereby diversifying the energy mix with resources that are not 

subject to the rise and fall of fuel costs.

• Fuel supply disruptions. On-site renewable generation can reduce the risk of disruptions in fuel 

supplies, like natural gas, resulting from transportation difficulties or international conflict.

• Additional environmental regulation. To address 

global climate change and regional air quality 

issues, federal and state regulations could effectively 

increase the price of conventional electricity, making 

green power financially more attractive.

Stakeholder Relations

• Meet organizational environmental objectives. 

Reducing an organization’s environmental impact is 

one of the main motivations for buying green power 

and is often important to stakeholders. For example, 

buying green power can help reduce greenhouse gas 

emissions from electricity consumption. If an organization is interested in creating a third-party certified 

environmental management system (e.g., ISO-14001 

certification for environmental performance) or is 

conducting an organization-wide inventory of its greenhouse gas emissions, a program for reducing emissions 

will be an important part of this certification process.

Price Stability of Green Power

Unlike power generated from fossil fuels, some green power 

products are not subject to the impact of volatile fuel prices. 

For this reason, companies like IBM and Advanced Micro 

Devices (AMD) use green power to hedge against energy 

cost variability. 

In 2001, the energy managers at IBM’s Austin, Texas, facility 

were able to lock in power rates by signing up for Austin 

Energy’s GreenChoice® program. With GreenChoice, the 

normal fossil fuel charge on the customer’s bill is replaced by 

a green power charge for the amount of green power that 

the customer chooses to buy. Unlike the fossil fuel charge, 

the green power charge is fixed until 2011. As it turned out, 

Austin Energy’s fuel charge for conventional power spiked in 

2001 and IBM saved $20,000 in its first year in the program. 

When the fuel charge increased again in 2004, IBM saved 

more than $60,000. 

Similarly, AMD saw significant cost savings after its first 

purchase of renewable energy in 2000 from Austin Energy. 

Shortly after AMD’s purchase, natural gas prices soared and 

became more costly than the fixed green power premium. 

By 2001, AMD saved approximately $100,000 and, in 

response, doubled the company’s green power purchase for 

the following year. In 2009, AMD purchased nearly 74 million kilowatt-hours of green power annually, which supplies 

100 percent of its Austin facility’s energy needs.
Chapter 3

6 The Benefits and Costs of Green Power

• Demonstrate civic leadership. Being among the 

first in a community to purchase green power is a demonstration of civic leadership. It makes a statement that 

an organization is willing to act on its stated 

environmental or social goals. These purchases also 

demonstrate an organization’s responsiveness to its customers, the majority of whom favor renewable energy. 

See Chapter 10, Resources for Additional Information, 

for details.

• Generate positive publicity. Buying green power 

affords an opportunity for and builds on existing public 

recognition and public relations activities. Companies 

that are in the public eye need to be responsive to 

the concerns of environmentally conscious customers, shareholders, regulators, and other constituents. 

Programs promoting green power, such as EPA’s Green 

Power Partnership or Green-e Marketplace, provide 

assistance in reaching broad audiences to convey the 

benefits of green power purchases.

• Improve employee morale. Progressive action and 

leadership on environmental issues like renewable energy may improve employee morale, which 

in turn can reduce employee turnover, attract new 

employees, and improve productivity. In a survey of 

464 organizations, sponsored by the National Wind 

Coordinating Collaborative, improving employee 

morale was cited as the third most important motivation for buying green power.

• Differentiate products or services. By purchasing 

green power, a company may be able to differentiate 

its products or services by, for example, offering them 

as “made with certified renewable energy.” Purchasers 

of green power can also join their power supplier to 

market their products together. In addition, purchasers of products certified by the Center for Resource 

Solutions’ Green-e Marketplace program can display the 

Green-e logo on their product packaging to indicate a 

commitment to using 100 percent green power in the 

manufacturing of the product. Many companies are also 

finding that producing their products with green power 

gives them an advantage in selling to their business 

customers who are trying to “green” their supply chain.

Economic Development and National 

Security

• Stimulate economies. Manufacturing, installing, and 

operating renewable resources in the United States 

requires a clean energy workforce. By purchasing green 

power, an organization can help create new, domestic 

jobs. These high-quality, often well-paying, jobs help 

grow the local economy. Renewable power facilities can 

also increase a local tax base and can provide income 

for farmers and rural communities through landowner 

lease payments. The renewable energy industry is an 

important growth sector that can simultaneously boost 

the nation’s economy while meeting the nation’s energy 

challenges.

• Increase fuel diversity. Green power diversifies the 

nation’s electricity portfolio—a good way to manage 

risk—and, because renewable resources are indigenous, 

Demonstrating Community 

Leadership: City of Bellingham, 

Washington

By a unanimous city council vote in mid-2006, Bellingham, 

Washington, took a leadership role in promoting renewable energy by choosing to purchase 100 percent green 

power for all electricity used in city-owned facilities. From 

September 2006 through Earth Day 2007, the city partnered with the local utility’s green power program and a 

local nonprofit organization to conduct the “Bellingham 

Green Power Community Challenge.” The goal of the challenge was to increase green power purchasing among the 

city’s residents and businesses to meet at least two percent 

of the citywide electric load. Bellingham’s results have far 

exceeded original challenge goals. To date, the green power 

annually purchased by more than 2,680 households, 125 

businesses, and five large volume purchasers totals 82.8 million kilowatt-hours of renewable energy certificates (RECs) 

and represents approximately 12 percent of the community’s 

total yearly electricity use. The community’s purchase resulted 

in EPA recognizing Bellingham as the first EPA Green Power 

Community in Washington State. Green Power’s Role in Overall 

Environmental Strategy 

A recent survey of corporate participants in the Green-e 

Marketplace program indicates that most companies view 

their renewable energy purchases as part of a larger commitment to environmental sustainability.

• 75 percent said support of renewable energy was part of 

a multi-pronged corporate environmental strategy. 

• 70 percent differentiate their company as an environmental 

leader by supporting renewable energy. 

• 45 percent of respondents indicated that developing an 

environmentally friendly brand was very important.

A Web link to the full survey is provided in Chapter 10, 

Resources for Additional Information.
Chapter 3

Guide to Purchasing Green Power 7

green power reduces the country’s dependence on 

imported fuels.

• Reduce infrastructure vulnerability. The distributed 

nature of renewable resources allows for the distributed generation of renewable energy, thus, reducing the 

country’s reliance on a vulnerable, centralized electricity infrastructure.

• Economies of Scale. Most renewable energy technologies are manufactured on assembly lines, where mass 

production can reduce costs. By purchasing green 

power, organizations can help build demand, which in 

turn could lead to lower production costs and potentially lower prices.

The Costs

Green power can be priced differently than standard power 

sources. It has usually been more expensive than conventional electricity sources, largely due to the relative newness 

of renewable technologies and their gradual diffusion into 

mainstream markets, compared with conventional electricity. 

Chapter 6, Procuring Renewable Electricity and Renewable 

Energy Certificates, suggests ways of minimizing these costs in 

conjunction with a procurement plan. Nonetheless, the cost of 

green power is continuing to fall as growing demand drives the 

expansion of manufacturing facilities and reduces production 

costs. Figure 2 illustrates the levelized costs of renewable and 

fossil fuel technologies, showing that several green power technologies are now cost-competitive with conventional sources.

100

120

140

160

180

200

0

20

40

60

80

Energy

Efficiency

Wind

(onshore)

Biomass Natural

Gas

Coal Nuclear Solar PV

Current Levelized Costs ($/MWh)

Geothermal

a

b

Figure 2. Levelized cost of new power generation technologies in 2008

a Represents estimated implied cost in 2012 for crystalline PV system

b Represents a leading thin film PV company's targeted implied cost of energy in 2012

Note: Costs have been levelized over the lifetime of the technology and include construction, fuel, and operation and maintenance 

costs. The bars represent typical cost ranges at average capacity factors for each technology.

Source: Lazard. February 2009. Levelized Cost of Energy Analysis, Version 3.0.

<blog.cleanenergy.org/files/2009/04/lazard2009_levelizedcostofenergy.pdf> .
Chapter 3

8 The Benefits and Costs of Green Power

The actual price for green power depends on a number of 

factors, including the availability and quality of the resource, 

manufacturing capacity and world demand for the technology, the availability of subsidies to encourage green power, 

and the quantity purchased and terms of the contract. 

Generally, the price of green power ranges from less than 

that of the standard power mix, especially in competitive 

markets and where state subsidies exist, up to one to four 

cents more per kilowatt-hour. When the market price of 

conventional electricity is high, purchasers of green power at 

a fixed price may actually save money. Of course, when the 

market price of conventional electricity drops, they will be 

paying a premium. Since 2000, the average price premium 

has dropped at an average annual rate of eight percent (see 

Figure 3).

Contracting Challenges

Green power may also be more difficult than conventional 

power for an organization to purchase, causing transaction 

costs in addition to any price premiums. Although organizations that are buying green power for the first time might 

need to invest extra effort, these costs fall significantly over 

time as the electricity purchasers gain experience. Following 

the information and strategies provided in this guidebook, 

particularly Chapter 6, Procuring Renewable Electricity 

and Renewable Energy Certificates, should help reduce the 

contracting challenges faced by new purchasers of green 

power. In addition, sample contract templates are publicly 

available to help buyers avoid difficulties in signing a green 

power contract (see Chapter 10, Resources for Additional 

Information).

Public Relations Risk

Some stakeholders might regard the purchase of green 

power as a token effort or “greenwashing.” Organizations 

can improve the credibility of their green power purchase 

by buying green power as part of a broader environmental management program and by working with third-party 

organizations for independent auditing, certification, 

endorsement, and minimum purchasing benchmarks.

0

0.5

1

1.5

2

2.5

3

3.5

4

2000 2001 2002 2003 2004 2005 2006 2007 2008

Residential Premium (cents/kWh)

Average

Median

Figure 3. Trends in utility green pricing premiums, 2000-2008

Figure 3. Trends in utility green pricing premiums, 2000–2008

Source: Bird, Lori, Claire Kreycik, and Barry Friedman. 2009. Green Power Marketing in the 

United States: A Status Report (2008 Data). Golden, CO: National Renewable Energy Laboratory.
Guide to Purchasing Green Power 9

Chapter 4

Options for Purchasing Green Power

Green power can be procured several different 

ways. The main distinction among the options is 

the type of supplier and where the electricity generation equipment is located: on the electric grid 

or at the facility. For electricity delivered over the power grid, 

the status of utility restructuring in that state will determine 

whether an organization is limited to buying green power 

from its local distribution utility or whether it can choose 

among competitive power suppliers. Even if the state has no 

green power marketers or the utility does not offer a green 

power option, an organization can buy renewable energy 

certificates (RECs). For on-site green power, the resources 

available at that site (e.g., solar, wind, biomass) are the main 

factors determining a project’s feasibility.

The range of supply options in the market provides considerable flexibility to green power buyers. Organizations are 

able to consider factors such as price, specific green power 

generation resource (e.g., wind versus solar), ease of procurement, and the location and year of the generating facility 

in their purchasing decisions. By considering these issues, 

buyers may be able to choose a specific type of green power 

product or mix and match green power products to meet 

their desired goals. 

Renewable Electricity Products

Customers in many states have the ability to purchase a 

green power product directly from their electricity provider. 

In regulated electricity markets, customers may be able to 

buy a green pricing product from their local utility. Green 

pricing is an optional service offered by regulated entities to 

allow customers to support a greater level of utility investment in renewable energy by paying a premium on their 

electric bill. In competitive electricity markets, customers can 

switch electricity service providers if their current provider 

does not offer a green pricing product. In this market, the 

customer can purchase a green marketing product from a provider other than their local utility. Again, a green marketing 

customer pays a small premium in exchange for electricity 

generated from green power resources. 

Most renewable electricity products (i.e., green pricing or 

green marketing products) are one of three types:

• Fixed energy quantity block. A block is a quantity of 

100 percent renewable electricity, often 100 kilowatthours (kWh), offered for a fixed monthly price. The 

price is often expressed as a price premium above the 

price of conventional power. Customers usually may 

sign up for as many blocks as they wish, with the 

monthly cost of these products based on how many 

blocks they buy. This type of product is available in 

some competitive markets but is more often found in 

regulated utility green-pricing programs.

• Percentage of monthly use. Customers may choose 

green power to supply a fixed percentage of their 

monthly electricity use. In practice, this usually 

results in the purchase of blended green and conventional power. This is typically priced as a premium 

on a cents per kWh basis over the standard rate or as 

a fixed charge per kWh. The monthly cost for these 

products varies with use and the percentage of green 

power chosen.

• Long-term fixed price contracts. Buying a portion of 

the output of a renewable energy project in a long-term 

contract can help a project developer secure financing, 

while giving the end-user a stable electricity contract. 

This model has been used with several government 

and academic institutions. WRI’s Green Power Market 

Development Group is exploring this model for commercial users.

Some renewable electricity products require a fixed monthly 

fee to support a given amount of renewable generation 

capacity. Others require contributing to a green power fund 

that finances renewable projects. These products can be an 

effective way to assist the green power industry but do not, 

however, result in a metered amount of renewable electricity 

being generated, which is necessary to quantify the environmental benefits of the green power purchase. For this reason, 

these products are not discussed further in this guide. 

Chapter 6, Procuring Renewable Electricity and Renewable 
Chapter 4

10 Options for Purchasing Green Power

Energy Certificates, provides more details about implementing a renewable electricity purchase.

Renewable Energy Certificates

Renewable energy certificates (RECs), also known as “green 

tags,” “green certificates,” and “renewable energy credits,” 

are tradable instruments that can be used to meet voluntary renewable energy targets as well as to meet compliance 

requirements for renewable energy policies. A REC is a certificate that represents the generation of one megawatt-hour 

(MWh) of electricity from an eligible source of renewable 

energy. Each REC denotes the underlying generation energy 

source, location of the generation, and year of generation 

(a.k.a. “vintage”), environmental emissions, and other characteristics associated with the generator. RECs represent a 

claim to the environmental attributes associated with renewable energy generation, but purchasers should nevertheless 

ensure that their contracts are explicit about which environmental attributes are conveyed to them. Figure 4 (above) 

illustrates the REC transaction path. 

RECs may be sold “bundled”—paired by the electric service 

provider with grid electricity delivered to the buyer—or 

“unbundled” from electricity as a stand-alone product and 

paired by the buyer with its grid electricity purchase. RECs 

combined with plain grid electricity are functionally equivalent to green power purchases from a local utility, no matter 

where the REC may be sourced. Purchasers of RECs may 

make claims about their purchase of green power similar to 

purchasers of renewable electricity products.

Because RECs are not tied to the physical delivery of electrons, they allow organizations to purchase green power from 

Conventional

Power

Green

Power

Electricity

Supplier

REC

Supplier

Electricity

Consumer

POWER GRID

POWER

POWER

POWER

POWER

REC

REC

Figure 4. Renewable energy certificate (REC) transaction path in a voluntary green power market

Note: Figure 4 is not intended to represent a comprehensive view of all the possible ways a REC can be traded and used.
Chapter 4

Guide to Purchasing Green Power 11

suppliers other than their local electricity provider. RECs 

help overcome a major barrier to renewable facility development—the fact that the best renewable resources may not be 

located close to population centers. The sale of RECs allows 

these more remote facilities to benefit from support for green 

power. 

Unlike electricity, RECs do not need to be scheduled on a 

transmission system, and they can be used at a different time 

than the moment of generation. Certificate tracking systems 

have been established in different states or regions to issue 

and record the exchange of RECs, making REC markets even 

more accessible. 

Customers do not need to switch from their current electricity supplier to purchase RECs, and they can buy RECs 

based on a fixed amount of electricity rather than on their 

daily or monthly load profile. Because RECs are independent of the customer’s electricity use, load profile, and the 

delivery of electricity, they provide greater flexibility than 

purchasing bundled RECs and electricity from a utility. 

While RECs offer increased contracting convenience, they 

do not provide the same protection against price volatility 

as long-term contracts.

The price for voluntary RECs can be lower than the premiums for renewable electricity products for several reasons: 1) 

RECs have no geographic constraints and therefore can provide access to the least expensive renewable resources; 

2) the supplier does not have to deliver the power to the REC 

purchaser with the associated transmission and distribution 

costs; 3) the supplier is not responsible for meeting the purchaser’s electricity needs on a real-time basis.; and 4) REC 

prices reflect greater competition because RECs are fungible 

in a voluntary market. To the extent that electricity providers 

are also sourcing their green power products from purchased 

RECs, however, the premium that they would charge might 

not differ greatly from the cost of the unbundled RECs that 

organizations can buy.

An alternative way to buy RECs is through a subscription, or 

“future RECs,” which involves an up-front purchase of RECs 

to be generated in the future by a new or soon-to-be-built 

renewable electricity facility. The advantage of this approach 

is that it promotes new renewable facilities by providing 

up-front financial assistance for their development and construction. In return, the purchaser receives the RECs as they 

are generated over an extended period of years. Nevertheless, 

even though they are paying upfront for future RECs, buyers 

cannot make environmental claims against those RECs until 

they are generated. A risk of this approach is that the facility 

might not be constructed or could be destroyed by a natural 

disaster after construction, and buyers should investigate 

what remedy the seller proposes in such an event. As with all 

products, independent product certification and verification 

of the claims made is an important aspect to consider. 

For a company or institution with operations and offices in 

multiple locations, purchasing RECs can consolidate the procurement of green power thus eliminating the need to buy 

green power for different facilities through multiple suppliers. 

Chapter 6, Procuring Renewable Electricity and Renewable 

Energy Certificates, provides more details about purchasing 

RECs. 

Business and organization purchases of different green power 

product types is shown in Figure 5, but on-site renewable 

generation is not included because equivalent data are not 

available.

On-site Renewable 

Generation

In addition to buying renewable electricity from a utility or 

buying renewable energy certificates, organizations can 

install renewable power generation at their facilities. 

They can either buy the system outright or install a system 

that is owned by another party and buy the electricity as it 

is generated.

On-site renewable generation offers advantages such as 

enhanced reliability, power quality, and protection against 

Note: Nonresidential customers refer to business and institutional customers. Data for 

on-site renewable generation is not available.

Figure 5: Nonresidential Green Power Sales by Product Type, 2008 (Millions of kWh)

Green Pricing Green Marketing REC Markets Total

 2,100 1,200 15,400 18,700

Figure 5. Nonresidential green power sales by product type, 2008 (millions of kWh)

Note: Nonresidential customers refer to business and institutional customers. Data for on-site renewable generation are not available.

Source: Bird, Lori, Claire Kreycik, and Barry Friedman. 2009. Green Power Marketing in the United States: A Status Report (2008 

Data). Golden, CO: National Renewable Energy Laboratory.
Chapter 4

12 Options for Purchasing Green Power

price volatility, as well as a visible demonstration of environmental commitment. It is important to note that selling 

RECs from an on-site facility negates the system owner’s 

claim to using a corresponding amount of renewable electricity generated on site because the REC buyer is buying that 

claim specifically and contractually. In order to claim the 

zero greenhouse gas emissions from electricity generated 

on-site, the RECs would need to be retired and not sold to a 

third party. In many states, excess electricity generated with 

on-site renewable generation may be sold back to the grid at 

the same price at which power is bought, through a process 

called net metering. This arrangement can improve the financial return for on-site renewable power systems, although net 

metering is often limited to small installations. For example, 

the state of California limits on-site generation systems to 

1 megawatt (MW) (10 MW for up to three biogas digesters) 

and the aggregated on-site systems’ capacity may not produce 

more than 2.5 percent of a utility’s peak demand. 

On-site renewable energy technologies for power generation 

include photovoltaic panels, wind turbines, fuel cells, and 

biomass combustion. Large facilities sited near a municipal landfill or sewage treatment plant may be able to use 

recovered methane gas for on-site electricity and/or heat 

production. The following describes each of these options in 

more detail:

• Solar. Solar systems can be configured to almost any 

size from a few kilowatts up to several megawatts. 

On-site photovoltaic (PV) systems may be situated on 

schools, homes, community facilities, and commercial buildings. They can be integrated into a building, 

displacing other building material costs, such as for 

roofing shingles or car park shading.

• Wind. Wind turbines vary in size. A typical small 

unit provides 100 kilowatt (KW) or less, whereas 

large turbines range from 500 kW to more than 3 

MW. On-site applications are usually only possible in 

nonurban areas, and often require zoning permits to 

exceed 35-foot height restrictions (a tower for a 250 kW 

turbine is 130 feet high with a blade sweep of 98 feet). 

Such installations usually require approximately 1 acre 

of land per turbine and wind speeds that average 15 

mph at a 150-foot height. In addition, placing turbines 

in urban areas is inadvisable because nearby buildings 

may create wind turbulence that can disrupt the turbines’ performance.

• Landfill and sewage methane gas. Methane gas 

derived from landfills or sewage treatment plants can 

be used to generate electricity. Methane gas also may 

be generated using digesters that operate on manure or 

agricultural wastes. The methane gas is then converted 

to electricity using an internal combustion engine, gas 

turbine (depending on the quality and quantity of the 

gas), direct combustion boiler and steam turbine generator set, microturbine unit, or other power conversion 

technologies. Most methane gas projects produce from 

0.5 to 4 MW of electrical output.

• Biomass. Biomass is plant material burned in a boiler 

to drive a steam turbine to produce electricity. This 

system is good for producing combined heat and power 

(CHP) at facilities with large thermal loads. Biomass 

projects are best suited to locations with abundant biomass resources (often using waste products from the 

forest industry or agriculture).

• Fuel cells. Fuel cells are another way of producing 

power. They emit essentially no air pollution and are 

more efficient than other forms of generation, but they 

cannot be considered a renewable resource unless they 

operate on a renewably generated fuel, such as digester 

gas or hydrogen derived from PV or wind power.

In this era of power reliability problems and national security concerns, domestic, on-site renewable generation offers 

important advantages over central-station and fossil-fueled 

power plants. Moreover, on-site generation can be designed 

to provide backup power for critical loads when power 

from the grid is interrupted, as well as when the renewable 

resource is not available. This ability to operate independently of the power grid is a great advantage, particularly at 

remote facilities. Because renewable generation technologies 

can be modular and used on a small scale, the on-site genOn-site Generation: BMW 

Manufacturing Company

Automaker BMW pipes methane gas 9.5 miles from a landfill 

to serve the electric and thermal needs of its manufacturing facility in Greer, South Carolina. Rather than invest in 

new internal combustion engines to generate electricity, in 

2003 BMW converted four turbines that previously ran on 

purchased natural gas. In 2009, BMW replaced the original 

four turbines with two new highly efficient turbines that will 

increase the electrical output from 14 percent to almost 30 

percent. By recovering the waste heat from the turbines, the 

11-megawatt combined heat and power project satisfies 

more than 60 percent of the facility’s thermal needs, as well 

as nearly 20 percent of its electricity use. To date, the project 

has saved the automaker an average of more than $5 million 

each year in energy costs. The new turbines installed in 2009 

should return an additional average annual cost savings of 

up to $2 million. With the success of its landfill gas project, 

the facility is exploring on-site wind and has completed a 

study of the site’s wind speed and direction. For more onsite examples, see Chapter 10, Resources for Additional 

Information.
Chapter 4

Guide to Purchasing Green Power 13

eration system can be designed to enhance the redundancy 

and diversity of a facility’s energy supply.

On-site renewable generation typically has higher capital costs 

and lower operating costs compared with installing fossilfueled generation. Although these costs can make the initial 

investment in on-site generation more difficult to justify, 

once that investment has been made, the annual budgets for 

maintaining the system are much easier to justify (compared 

with purchasing renewable electricity), which makes sustaining a commitment to renewable power easier. Additionally, 

there are new financing models for on-site generation being 

developed to lower the upfront capital investment, such as the 

solar power purchase agreement (SPPA).

An organization that installs its own generation capability 

may have problems with the requirements for connecting 

to the utility distribution system, commonly referred to as 

interconnection. Interconnection rules designed for large 

generators often are unnecessarily burdensome for small 

generators. Increasingly, however, state interconnection rules 

are being standardized and simplified for smaller generators. In addition, national standards have been issued by the 

Federal Energy Regulatory Commission (FERC) that may 

ease interconnection in special cases. Chapter 7, Planning an 

On-site Renewable Generation Project, provides more details 

about procuring an on-site renewable generation system. 

Customers considering on-site generation should check with 

their local utility or with the state utility commission about 

interconnection rules. Chapter 10, Resources for Additional 

Information, provides more sources of information about 

utility interconnection.
14 Steps to Purchasing Green Power

Chapter 5

Steps to Purchasing Green Power

T

o buy green power, an organization first should determine what green power products will help fulfill its 

electricity needs and decide how to procure those 

products. Figure 6 illustrates the steps in this process.

The preliminary steps described in this section are the same 

for all types of green power products. The final steps differ 

for purchased green power products (renewable energy certificates [RECs] and utility-supplied) and on-site renewable 

generation. These steps are explained in later chapters of 

this guide.

Setting Goals

The first step in any type of green power purchase is to set 

goals about what the objectives are for purchasing green 

power, considering the following questions at a minimum:

• Why is the organization considering green power?

• What does the organization hope to get from it?

• What selection criteria are important to the 

organization?

• Are independent certification and verification important 

to the organization?

These questions are best considered as part of the organization’s overall energy or environmental management process. 

Such a process is an ongoing effort to improve the energy 

and environmental performance of the organization, usually 

driven by goals set by the organization’s top-level leaders. 

The goals for a specific purchase of green power then flow 

from, and are greatly informed by, these overall goals.

Identifying Key DecisionMakers 

The people in an organization who are interested in green 

power may be high-level decision-makers as well as staff 

from the purchasing, facilities/energy management, environmental health and safety, legal, corporate relations, and/or 

marketing departments. All of their interests and concerns 

must be addressed early in the planning process. Experience 

has demonstrated that not doing so often leads to disagreements later in the process. Because buying green power is 

ultimately a financial decision, it is very important to have 

Capturing the Benefits (8)

Creating a

Procurement Plan (6) Creating a

Project Plan (7)

Obtaining Resources

and Assistance (7)

Screening the 

Technologies (7)

Collecting Product

Information (6)

Developing 

Screening Criteria (6)

Choosing Green Power Options (5)

Gathering Energy Data (5)

Identifying Key Decision-Makers (5)

Setting Goals (5)

Renewable

Electricity

On-site Renewable

Generation

RECs

Anticipating

Possible Barriers (7)

Installing and 

Operating an On-site

Renewable System (7)

Evaluating the Purchase (5)

(Indicates Corresponding Chapter)

Re-assess Green 

Power Purchase

Figure 6. Steps to a successful green power project 
Chapter 5

Guide to Purchasing Green Power 15

the chief financial officer involved in and supportive of the 

decision. In addition, other departments, such as marketing or environment, health, and safety, may also contribute 

funds to help pay for green power.

Designating a contact person who can draw on expertise 

from throughout the organization is an important step. The 

departments chosen to participate will probably depend on 

the type of products being considered. It also is important 

to involve senior management in the planning and decision 

process. In many cases, the greatest advocate of buying green 

power is an executive such as a chief executive officer or 

president. With this high-level support, buying and promoting green power is much easier. Some organizations involve 

their employees (or students, in the case of educational institutions) in selecting the green power products.

Gathering Energy Data

The organization considering green power should take an 

inventory of its energy use, including electricity and thermal. Its annual electricity use can be calculated from the 

utility bills for each facility or business unit and for the 

entire organization. These data will help: 1) compare the 

organization’s energy performance against peer facilities’ 

energy performance and understand energy use patterns and 

trends; 2) determine how much green power to buy; and, 

3) evaluate the environmental impacts of the organization’s 

electricity use. Monthly electricity consumption data are 

the most important, while peak demand and interval-meter 

data are useful if available. Each organization should study 

its consumption data over the past year before specifying its 

requirements in order to have a complete and accurate picture of energy use. Outside consultants or organizations can 

help with these steps.

As mentioned earlier, green power can be considered part of 

an energy portfolio that includes energy efficiency upgrades, 

load management, and combined heat and power. The more 

an organization’s energy requirements can be reduced, the 

less green power it will need to buy to achieve a given objective, which in turn makes green power more affordable. 

Some organizations have saved enough money from energy 

efficiency upgrades to enable them to pay for their green 

power purchases.

Many resources are available to help improve the energy 

efficiency of buildings and equipment. A good starting point 

is the ENERGY STAR Portfolio Manager, an online tool that 

compares a building’s energy usage with that of similar 

buildings. The ENERGY STAR Web site <www.energystar.

gov> offers simple energy-saving tips and a directory of energy services companies to provide additional assistance, such 

as a facility energy audit.

Calculating an organization’s annual electricity use can determine the quantity of emissions associated with that use and 

help estimate the emissions that could be prevented by buying green power. EPA offers an online tool to help estimate 

emissions from an organization’s current conventional electricity use at <www.epa.gov/cleanenergy/powerprofiler.htm>.

Choosing Green Power 

Options

The next step is finding the appropriate green power solutions for the organization. Another goal of this step is 

becoming familiar with the electricity markets in the organization’s area and the available green power technologies.

The first decision is whether to generate power on-site and/or 

to purchase power or RECs from outside vendors. The main 

differences between these options are the ease and cost of 

implementation, the need for capital investment, the ability 

to hedge risk, and the length of time over which one realizes 

the benefits. On-site renewable generation typically requires 

an up-front investment (as part of either a financed project or 

a capital appropriation), but the reduction in the consumption of conventional energy can last for as many as 30 years. 

There are new financing models being developed to help 

overcome the upfront financial barriers to on-site generation. These models are discussed in more detail in Chapter 7, 

Planning an On-site Renewable Generation Project.

Renewable electricity purchases and RECs usually require no 

up-front capital and are relatively easy to procure, but they 

deliver benefits only for the term of the purchase contract.

An organization’s motivations for purchasing green power 

will help decide which costs and benefits are most important 

and thus which type of green power is most appropriate. For 

example, an organization that wants to manage fuel price 

risk might be more interested in buying fixed-price renewable electricity. An organization that finds the reliability of its 

power supply to be most important might be more interested 

in on-site renewable generation. These options can also be 

combined. For instance, an organization might install on-site 

generation to meet part of its electricity needs and purchase 

RECs to match the remainder of its electricity use. Likewise, 

organizations with facilities in multiple locations must determine whether to procure green power from one provider for 

all sites, or whether to procure green power from multiple 

providers based on unique options that might be available to 

an individual site. Organizations with facilities in multiple 

locations must also select the appropriate green power product for each site.

The green power options available to an organization are 

determined partly by the electricity market structure in the 
Chapter 5

16 Steps to Purchasing Green Power

state in which the facility is located. Each state has different 

rules governing power marketers, and the level of competition varies among the states. Large electricity purchasers 

might be able to work with their local utility or electricity 

provider to tailor a product to meet their needs. 

For on-site renewable generation, the organization should 

assess the renewable energy resources available at its facility, 

including the quality of wind and solar resources, the availability of biomass fuel or landfill gas, and siting constraints 

(such as space limitations or shading from neighboring 

buildings). The cost of conventional power at the facility also 

is important to consider. The organization should read over 

its utility’s and state’s interconnection rules to make sure 

there are no obvious provisions that would prohibit gridconnected, on-site generation. The goal at this stage is to 

eliminate any renewable options that are clearly not feasible 

for the organization.

When considering green power options, it is useful to 

consider the motivations of other green power purchasers. A 2008 survey of corporations by the World Resources 

Institute (WRI) and the Climate Group found that the top 

criteria against which companies evaluate low-carbon technology projects include:

• Financial metrics. The return on investment (ROI) of 

projects is of paramount importance.

• Marketing value. The ability of projects to improve 

a company’s brand value or image is a key factor in 

decision-making.

• Carbon dioxide (CO2) benefit. The extent to which 

projects can help companies reach their emission 

reduction goals is also a factor they considered.

The key conclusion from the WRI-Climate Group survey 

is that low-carbon technology projects must be able to 

compete financially with non-renewable related projects in 

order to be funded. 

It is also important to anticipate barriers to making a purchase, so that the process can be structured to overcome 

these barriers. The same WRI-Climate Group survey found 

that the most common barriers to wider investment and 

greater deployment of low-carbon technologies include:

• Cost of the technology.

• Insufficient financial performance.

• Availability of financing.

• Lack of staff capacity and knowledge.

• Inadequate baseline energy data against which to demonstrate improved performance.

• Lack of a streamlined decision-making process.

Evaluating the Purchase

Once the green power purchase has been implemented, it is 

important to collect information and evaluate how well the 

purchase achieved the purchase’s preliminary goals. Areas of 

evaluation could include:

• How well the procurement process worked.

• Whether the vendors delivered what was expected.

• Whether the green power purchase is providing protection against rising fossil fuel prices.

Using Energy Efficiency Savings 

to Purchase Green Power: 

University of Pennsylvania

The University of Pennsylvania is funding its sizeable wind 

power purchase with savings achieved through energy conservation. Over the past few years, the university reduced 

peak electricity demand by 15 percent. This reduction enabled 

the university to purchase nearly 193 million kilowatt-hours 

of wind-generated renewable energy certificates (RECs), an 

amount equivalent to 46 percent of its total campus electricity use. Penn’s long-term commitment to buying green power 

helps support development of new wind generation facilities, 

including a 12-turbine, 20-megawatt Pennsylvania wind farm.

Finding Green Power Suppliers

• Organizations with facilities in several states should use a 

national locator such as EPA’s Green Power Locator <www.

epa.gov/greenpower/pubs/gplocator.htm> or the Green-e 

Energy “Find Renewable Energy” locator <www.green-e.org/

buy>. The latter is also useful for locating certified products.

• Many state governments, often the public utilities commission, 

maintain a list of power marketers offering green power 

products in the state, especially if state electricity markets 

have been restructured.

• Smaller facilities (such as retail stores) may find it easier to 

have a single point of contact compiling this information and 

making it available across the entire organization. Larger 

facilities (such as factories or research campuses) often 

have enough expertise to gather information and negotiate 

contracts on their own.

• See Chapter 10 for more resources.
Chapter 5

Guide to Purchasing Green Power 17

• How well the organization promoted its green power 

commitment.

• How well the organization educated employees about 

the green power commitment.

• Whether the green power purchase is helping the organization meet its corporate or institutional goals related 

to environmental improvement and sustainability.

Additional evaluation factors apply for on-site generation 

systems, such as how much energy the system is producing 

(both initially and over time), how the system operation and 

maintenance costs compare to expected, and whether output 

is being appropriately reported to tracking systems for the 

issuance of RECs that the owner will use to substantiate its 

renewable electricity use claims. 
18 Procuring Renewable Electricity and Renewable Energy Certificates

Chapter 6 

Procuring Renewable Electricity 

and Renewable Energy Certificates

T

o select the green power supplier and the product, it 

is helpful to develop specific criteria for judging the 

alternatives. These criteria can be ranked, keeping in 

mind the goals identified early in the process when 

the project team was assembled. 

Developing Criteria for 

Screening Suppliers and 

Products

The following criteria might be helpful when screening suppliers and products:

• Reputation. A supplier’s reputation is influenced by 

factors such as how well it honors its commitments, 

how easy it is to work with, its list of clients, and how 

well it is viewed by the industry. Assessing a supplier’s 

reputation may require references and a perusal of the 

energy industry’s literature. Environmental groups also 

might have information about the supplier.

• Financial strength and credit. To research the financial health of a power supplier, look at its Web site and 

perhaps its annual report, Securities and Exchange 

Commission filings, and bond ratings.

• Location. If buying green power from a local supplier 

is important, call the supplier and find out where its 

renewable generation is located. Public utility commissions’ Web sites often have contact information for 

registered retail suppliers.

• Product choice. Some suppliers offer several green 

power products, varying in the amount of renewable 

power and types of resources. If a supplier offers a 

choice of green power products, this may enable the 

organization to change the product it purchases in the 

future without having to search for a new supplier and 

negotiate a new contract.

• Environmental performance. Assessing a supplier’s environmental performance can be useful. 

Organizations should review the supplier’s annual 

financial or environmental report, examine its other 

electricity products, and review its other business 

activities.

For renewable electricity products, consider the following 

additional criteria:

• Price. When considering price, organizations should 

make sure they are comparing apples to apples. Prices 

might reflect different types of products, so it is essential that organizations understand how products under 

consideration might differ. For example, renewable 

electricity products might quote total price per kilowatthour for electricity including the green attributes, which 

can be compared to the standard electricity price, but 

other products, such as renewable energy certificates 

(RECs) and many utility green pricing products, quote 

only the incremental cost of green power, which must 

be added to standard electricity rates. Furthermore, 

prices might be fixed or escalate over time, or can vary 

according to a price index such as the wholesale price 

of electricity. Finally, the purchase of some utility green 

power products might offer an exemption from variable 

fuel charges or environmental taxes, which should be 

factored into the ultimate price.

• Percentage of renewable energy. For a particular green 

power product, the resource mix can range from 1 to 

100 percent renewable power. When buying certificates 

or bundled products, an organization can still calculate 

the percentage of its electricity use served by renewable 

power.

• Percentage of new or incremental renewable sources.

Many experts argue that only new generation provides 

incremental environmental benefits. “New” renewable resources generally refer to renewable facilities 

that began operation in 1997 or later, which is when 

the voluntary market for green power began to grow. 

Besides the direct impact of purchases from new renewable sources, these purchases also help create the 

demand necessary for constructing additional renewable resources.
Chapter 6

Guide to Purchasing Green Power 19

In states that have adopted a renewable portfolio standard (RPS), electricity providers are required to include 

a minimum percentage of renewable electricity in 

their standard product offering. Renewable electricity products create additional environmental benefits 

only if the power purchased is not already part of the 

provider’s minimal RPS requirement. In other words, 

an organization should purchase a renewable electricity 

product that is not already being used to satisfy a RPS 

mandate or goal imposed on a utility nor is the renewable electricity product included in the utility’s standard 

electricity service. 

• Renewable energy/resource mix. A renewable energy/

resource mix refers to the kinds of resources used in 

the green power product. For example, is the product 

generated from wind, biomass, solar, geothermal, or 

hydro? Some resources have a greater environmental 

impact than others. Wind, solar, and geothermal power 

usually are the most environmentally preferable energy 

sources. Each is renewable and nonpolluting, with 

limited impact on the land or local habitats. Certain 

environmental groups regard some types of hydropower, biomass, and municipal solid waste as less desirable. 

Hydropower dams may drastically alter river habitats 

and fish populations; biomass facilities may emit significant quantities of smog-forming pollutants; and 

burning municipal solid waste may release heavy metals and other toxins into the environment. Municipal 

solid waste may also include nonrenewable materials 

derived from fossil fuels, such as tires and plastics, 

which when burned release carbon dioxide into the air. 

It also is important to check the environmental characteristics of any nonrenewable generation resources, 

as they will contribute to the overall environmental 

impact of the power purchased. 

Renewable energy resources also have different associated costs. For instance, a green power product 

generated from a resource that is scarce in one part of 

the country will be more expensive than purchasing the 

same resource-derived product from another part of the 

country.

• Length of contract. Some buyers prefer a short-term 

contract in case the market changes and better offers 

come along. But an organization may be able to lock in 

a lower price if it signs a multiyear contract. A longerterm contract might also offer greater price stability as 

well as provide better support to new renewable energy 

projects. When determining the value of price stability, 

be aware of “typical” market fluctuations in power prices and how the price of renewable electricity can vary. 

Finally, a contract may include options for renewal, 

which can offer flexibility in the future. Before entering 

into a long-term contract, however, buyers should take 

into consideration potential policy changes (most notably, a carbon cap-and-trade program) that impact future 

environmental claims for purchasing green power.

• Third-party certification and verification. A green 

power product can be certified and verified by an 

independent third party. Such certification can provide 

credibility and confirmation of the product’s environmental value. By purchasing a product that has 

met specific environmental and consumer protection 

guidelines adopted by the certifying organization, a 

purchaser will be better positioned to address stakeholder questions about purchase quality and credibility. 

Visit <www.green-e.org> for more information about 

certification and verification.

• Location of generation. In order to support the local 

economy and to contribute local environmental benefits, some organizations may prefer local or in-state 

renewable generation. Some renewable electricity 

products, however, use resources located out-of-state, 

and renewable energy certificates may be based on generation located outside of the purchaser’s region. For 

example, purchasing RECs from a state in which fossil 

fuel comprises more of the electric generation mix may 

provide greater environmental benefit than purchasing RECs from a state in which renewable electricity 

The Role of Product Certification

One of the major concerns with buying green power is 

ensuring that purchasers get what they pay for. It can be 

difficult to substantiate claims made about the quantity and 

characteristics of the product purchased. Also, it is important 

to ensure that two organizations are not claiming to have 

purchased the same green power, or are double-counting 

the same green power benefits. Moreover, purchasers may 

be unable to ensure public acceptance of their purchase and 

avoid criticism from external stakeholders without independent information about the product. Third-party certification 

addresses these concerns by setting standards for green 

power products in the following areas:

• Minimum levels of environmentally acceptable renewable 

resources

• Overall environmental impact

• Ethical conduct for suppliers, including advertising claims 

and regular reporting

Third-party certification usually also requires independent 

verification by an auditor to document that green power sellers have generated or purchased enough renewable energy 

to match their sales commitments. Visit <www.green-e.org> 

for additional information about third-party certification and 

verification.
Chapter 6

20 Procuring Renewable Electricity and Renewable Energy Certificates

generation is plentiful; RECs, therefore, do not necessarily represent a uniform set of environmental impacts 

or attributes. As a reporting convention, EPA allows 

Climate Leader Partners to claim emission reductions 

based on the regional average emissions rate for where 

the REC was generated. Regional average emissions 

rates can be found by visiting EPA’s Emissions and 

Generation Resource Integrated Database (eGRID) at 

<www.epa.gov/egrid>. Further guidance can be found 

in Chapter 10, Resources for Additional Information. 

• Specific generation facility. Some green power providers generate their power at a specific site, such as 

a nearby wind farm, rather than offering green power 

from a mix of different resources. These products, such 

as the annual output of one particular wind turbine, 

are sometimes preferred by customers because such 

products offer a closer sense of connection between 

a purchase and a specific environmentally beneficial 

facility. 

Collecting Product Information

A good place to start collecting information about specific 

green power options is the many Internet sources listed in 

this guide. Be sure to collect enough information to answer 

the decision criteria listed earlier. For useful comparisons, 

the information should be as consistent as possible among 

suppliers and among products. A good way to find consistent 

information is through an exploratory letter or a request for 

information (RFI) addressed to specific suppliers.

In many states, competing electricity suppliers are required 

to provide an electricity label—like a list of food ingredients—that provides information in a standard format and 

makes product comparisons easier. This information is generally available from the state’s public utility commission. 

Another source of public information is third-party certifiers, 

such as Green-e Energy, which can provide information 

about the products they have certified to meet minimum 

environmental standards. 

The next step is estimating the cost of green power for the 

organization and calculating the cost/benefit ratio. For help 

finding cost data, contact one of the organizations that sponsored this guidebook (listed in Chapter 10, Resources for 

Additional Information).

Creating a Procurement Plan

A procurement plan documents the project team’s decisions 

and addresses possible problems in buying green power. A 

procurement plan can also help convince others in the organization that purchasing green power is a wise choice.

The main audience for the procurement plan is the managers 

who need to support the purchase decision. Their support 

should be secured as early in the process as possible. As soon 

as the team can show the costs and benefits of purchasing 

green power to the organization, they should present their 

information to management. Expect managers to ask about 

the products the organization would buy, their cost, and their 

benefits. Also find out whether management might limit 

a green power purchase or whether they would buy more 

aggressively.

Besides providing the information that management needs 

to make the decision, a procurement plan can also help 

overcome resistance to green power within the organization. 

Some organizations have outdated perceptions of the reliability of renewable energy technologies, misunderstandings 

about using a variable resource, or worries about the cost. 

As part of the procurement process, the project team will 

probably need to educate others about these topics and the 

benefits of green power. The organizations that sponsored 

this guidebook can provide helpful information to overcome 

these misconceptions.

The scope and detail of the procurement plan will depend 

on the organization’s needs and requirements, but it should 

address the following:

Scope of Procurement

Specify the amount of power that will be purchased (as a 

fixed quantity, a fixed amount of money, or a percentage of 

total power use) and for which facilities. If this procurement 

is a trial that may lead to additional purchases in the future, 

spell out the criteria that will be used to judge the trial’s 

success. Also discuss whatever is known at this point about 

future procurement phases.

Expected Benefits

Keeping in mind the general benefits outlined earlier in this 

guide, list the particular benefits hoped for by buying green 

power for the organization. Wherever possible, these benefits 

should be linked to the organization’s environmental goals.

Financial Considerations

The procurement plan should discuss cost. Cost has traditionally been the primary concern with green power, but 

there are an increasing number of financing models for purchasing green power that result in a cost benefit over the 

long-run. Negotiating the right contract can have a big effect 

on the financial costs and benefits of buying green power. 
Chapter 6

Guide to Purchasing Green Power 21

Several strategies are available to help minimize and manage 

the extra cost of green power:

• Seek a fixed-price contract. Because its cost of fuel 

is predictable, renewable energy is often available at a 

fixed price without any fuel-cost adjustments. Check 

with the supplier, particularly if the organization is 

considering a utility green-pricing program, to see 

whether green power customers are exempted from 

fuel-cost adjustments.

• Buy green power for only part of the organization’s 

electricity use. Green power does not have to be 

used for all electricity consumption. For example, the 

organization might buy green power for just 5 or 10 

percent of its electricity use. Buying 10 percent green 

power may add less than 1 percent to the organization’s 

electricity bill. Alternatively, some renewable electricity 

products cost less because they contain less than 100 

percent green power or offer lower-percentage options.

• Make a longer-term purchase. Consider the contract’s 

length in conjunction with the quantity and cost of 

power purchased. A short-term contract (typically less 

than three years) might offer greater flexibility in the 

future but also might cost more. But a longer contract 

(e.g., 10+ years) can reduce the risk to the supplier, 

allowing it to offer a lower price than under a shorter 

contract. The right contract length is based on the particular situation and products available.

• Use a contract for difference. A contract for difference 

(CFD) is a financial agreement that allows renewable 

power suppliers and purchasers to lock in stable power 

prices and revenues by agreeing to pay the difference 

between the actual power price and an agreed-upon 

benchmark or “strike” price. CFDs have tended to 

be used most often for government and college and 

university customers. Consult with your auditor to 

understand any associated accounting issues. To learn 

more about the CFD model, visit <www.epa.gov/

grnpower/events/mar31_webinar.htm>.

• Offset the cost with savings from energy efficiency.

Reducing the total amount of electricity purchased 

helps make green power more affordable. When reviewing green power providers, organizations may find that 

some providers also offer energy efficiency services, 

with the goal of no net increase in their customers’ 

power bills.

• Use savings from competitive choices. Competitive 

choices of either green power or commodity electricity can lead to savings on energy costs, which can be 

used to buy green power. Or the extra cost of green 

power can be limited to the amount of savings from 

competition. Be aware that switching to less expensive 

conventional power can also mean dirtier power, so 

ask the electricity supplier for information about the 

emissions from its product, and make sure those emissions do not cancel out the benefits of the green power 

bought with the savings.

• Specify a price cap or maximum total budget. Specify 

the maximum price per kilowatt-hour or the total cost, 

or simply place a cap on the renewable portion of the 

purchase. A drawback of this approach is that suppliers 

are likely to bid at or near the specified price cap. But if 

the organization is interested mainly in other aspects of 

green power, such as environmental benefits or hedge 

value, this can be a good approach. Even if a price cap 

is not the most important consideration, it is a good 

idea to decide on the highest price the organization is 

willing to pay for green power, as part of its internal 

procurement planning.

Procurement Methods

Organizations can purchase green power in several different 

ways, depending on the options available as well as the organization’s procurement rules. Generally, the greater the load 

that the organization can bundle together in one purchase, 

the more attractive it will be to a supplier.

The following explains typical ways to buy green power. 

Federal agencies must work within the procurement rules 

applicable to the federal government, which are explained 

further in the Appendix.

Price Hedging With Renewables

Southern New Hampshire University (SNHU) has found 

an innovative financial arrangement to stabilize its energy 

budget while also reducing its carbon emissions. The university has entered into a 15-year renewable energy hedge 

agreement with wind farm owner, Iberdrola Renewables. 

The hedge is structured as a contract-for-differences financial 

swap under which the parties agreed to a strike price and 

duration for the agreement. SNHU continues to buy power 

from its current supplier, and Iberdrola Renewables continues 

to sell into the local electricity spot market. The energy sales 

are then analyzed. If the sales income received by Iberdrola 

Renewables is greater than the strike price, Iberdrola 

Renewables pays SNHU the difference between the income 

and strike price. If the income is less that the strike price, then 

SNHU pays Iberdrola Renewables the difference. The hedge 

has stabilized the cost of the 15-million kWh of electricity 

used by the university annually. If energy costs increase even 

modestly over the 15 years, SNHU could save an average 

of $1.2 million per year for both electricity and natural gas.
Chapter 6

22 Procuring Renewable Electricity and Renewable Energy Certificates

• Call several sellers. An organization can keep the 

procurement process relatively simple by calling a few 

green power providers—either REC marketers, utilities, 

or other electricity providers that may be available to 

them. An off-the-shelf product may meet its needs. If 

the organization wants something different, it can ask 

for an informal proposal. After a discussion, the organization may be ready to negotiate directly with one 

of the suppliers about product definition, certification, 

price, and terms. Or if the organization is planning a 

large purchase, the suppliers might be willing to tailor 

something to its needs.

• Negotiate with the utility. Buying power is simple, 

though the choices are fewer, if the organization is 

served by a single utility in a regulated market. If the 

local utility offers green power, the organization can 

collect information by visiting the utility’s Web site and 

calling to discuss its interest. Perhaps the only issue is 

the quantity the organization wants to buy, but it may 

be able to negotiate a slight price break if it is making a 

large purchase. If the utility does not offer green power 

and the organization is a large, highly visible customer, 

it may be able to encourage the utility to offer green 

power by promising to buy a large amount. Likewise, 

the organization may be able to persuade the utility to 

seek third-party certification if its product is not currently certified.

• Request proposals. Large companies and public institutions, in particular, often issue a formal solicitation or 

request for proposals (RFP). An RFP requires more time 

and effort for preparation, evaluation, and negotiation, 

but it might be more suitable for a large purchase and 

when many green power options are available. With an 

RFP, it is important to understand the organization’s 

own objectives and communicate them clearly in the 

solicitation. Third-party certification and verification 

can be specified in the RFP evaluation criteria.

RFPs can be as simple as a letter sent to selected suppliers, describing the organization’s objectives and asking 

for a bid. RFPs can also be more formal, casting a wider 

net through a broadly advertised solicitation. The latter 

requires more effort to prepare and evaluate responses. 

Government agencies must follow the procurement 

rules governing their agency.

A two-step process is possible as well, in which the 

organization first issues a request for information (RFI) 

and, based on the responses, sends a more detailed RFP 

to those suppliers that meet its general qualifications. 

The RFI would be broadcast to a larger audience, not 

only to find out who meets the organization’s qualifications, but also to gauge the amount of interest.

For large purchases, RFPs may be addressed to renewable power generators (wholesale) as well as retail 

suppliers. Buying directly from generators might lower 

the cost but probably will require longer-term purchase 

commitment. Buyers will still need to work with a 

retail supplier to integrate the wholesale contracts, so 

active engagement with your preferred retail supplier 

will be important. In addition, for RECs there have 

been instances where market-setting purchasers using 

the RFP process have yielded higher prices in the short 

term due to the large purchase size. In this case, buyers planning to make a large purchase may elect not to 

issue a public RFP but rather contact specific suppliers 

individually in the market.

EPA’s Green Power Partnership offers assistance to 

partners putting together a green power purchase RFP, 

and the Department of Energy’s (DOE’s) Federal Energy 

Management Program (FEMP) provides the same service for federal agencies. For RECs, the DOE Green 

Power Network maintains an online listing of green 

power RFPs that can be used as models at <apps3.eere.

energy.gov/greenpower/financial/>.

• Use an electronic auction. Electronic auction platforms (also known as electronic procurement or 

“e-procurement”) allow for real-time transparent bidding and “reverse auctions” to drive bid prices lower 

than might be achieved otherwise. Initially used in the 

1990s by pools of buyers in retail markets that allowed 

for direct access competition, these electronic auction 

mechanisms are being tried with varying degrees of 

success by utilities and large customers and can offer a 

new forum for renewable energy transactions. 

Online auctions can provide significant price transparency and control that the paper-based RFP process does 

not always provide. With the reverse auction approach, 

price quotes are delivered in real-time via a Web-based 

Using an RFP versus an RFI

An RFI may be a productive way to engage suppliers about 

innovative, new purchasing strategies. Suppliers might not 

want to respond to an RFP if the request is not “cookie cutter,” 

as they know there would have to be significant negotiations 

once the winner is selected that could require changes to 

their costs while being locked into a pricing commitment. 

To ensure broad participation and validate interest from 

the market about new purchasing ideas, an RFI can provide 

important information to purchasers. Based on the results of 

the RFI, you can either proceed directly to negotiating with a 

particular vendor or refine your procurement goals in order 

to issue a detailed RFP that will have a better chance of multiple qualified bidders.
Chapter 6

Guide to Purchasing Green Power 23

platform, which results in dynamic bidding and helps 

achieve rapid downward price pressure that is not normally achieved using conventional paper-based bidding 

and procurement. Buyers (currently, utilities) can either 

award contracts to the suppliers who bid the absolute 

lowest price, or those that best meet the buyer’s specific, pre-established terms for quality, capacity, or other 

value-adding capabilities.

Special Considerations for RECs

RECs can be bought from marketers or sometimes directly 

from renewable energy generators. Several environmental 

brokers are active in REC markets, offering another approach 

to procurement that is increasingly being used by large purchasers. Brokers do not own the certificates but rely on their 

knowledge of the market to connect buyers and sellers for a 

fee. They can help negotiate deals that take into account an 

organization’s unique interests.

When buying RECs, organizations should make sure that 

the RECs they buy have not been double-sold and claimed 

by another party. For example, voluntary purchases of RECs 

should not also be counted by utilities for compliance with 

regulatory requirements such as renewable portfolio standards 

(RPSs), and RECs used to comply with such requirements 

should not be sold into voluntary markets. If they are double-counted, the voluntary purchaser would not create any 

benefits over and above what is already required by public 

policy. Utilizing tracking systems and third-party certifiers 

can help ensure that RECs are not claimed by more than one 

party. To avoid potential double claims on environmental 

benefits, contracts for RECs should be explicit about what 

environmental characteristics are included with the sale.

Sometimes RECs are incorrectly referred to as carbon offsets, 

but RECs and offsets are not the same. RECs are tradable 

instruments, expressed in terms of a unit of electric generation (1 megawatt-hour [MWh]), that represents the source’s 

resource type, facility location, direct emissions, and generation date, among other characteristics. Offsets are expressed 

in tons of emission reduction and may come from a variety 

of project types not related to power generation. In voluntary markets to date, some renewable energy projects have 

qualified as sources for offsets; however, the associated 

environmental attributes from a green power project that are 

used to generate a REC cannot also be claimed for offset purposes. See Chapter 10, Resources for Additional Information, 

for details.

REC Tracking Systems 

A tracking system is an electronic database that is used to 

track the ownership of RECs or MWh of electricity, much like 

an online bank account. A tracking system issues a uniquely 

numbered certificate for each MWh of electricity generated 

by a generation facility registered in the system, tracks the 

ownership of certificates as they are traded, and retires the 

certificates once they are used or claims are made based on 

their attributes or characteristics. Because each MWh has a 

unique identification number and can only be in one owner’s 

account at any time, this reduces ownership disputes and the 

potential for double counting.

A tracking system can be used to verify compliance with a 

RPS, to help create environmental disclosure labels, and to 

substantiate voluntary green power or environmental claims. 

Tracking systems are not substitutes for product certification 

and verification, as tracking systems only monitor wholesale 

transactions; individual retail green power customers do 

not generally hold accounts in tracking systems unless they 

make very large purchases. See Chapter 10, Resources for 

Additional Information, for details.

Reducing the Cost of Green 

Power: State of Connecticut

In late 2007, the state of Connecticut successfully used Webbased reverse auctions to secure electric supply contracts 

totaling 909 million kilowatt-hours between November 

2007 and June 2009. The supply contracts include more 

than 22 percent electricity from green power sources, which 

was a prerequisite of the state. The online auction allowed 

Connecticut and the energy suppliers to participate in realtime with full price visibility, which heightened competition 

among suppliers and allowed the state to lock in the lowest 

price. Under these contracts for electric supply reported savings through December 2008 are $19.5 million, as compared 

to the price that would have been paid for standard service.
24 Planning an On-site Renewable Generation Project

Chapter 7 

Planning an On-site Renewable Generation 

Project

Depending on the size of the system, on-site generation projects tend to take more steps than do other 

green power purchases because they can require 

more external coordination with the organization’s 

utility, local governments, and contractors. For this reason, 

it is helpful to enlist outside technical expertise and not 

underestimate the length of time needed to get an on-site 

project up and running. Due to the complexity of building 

on-site renewable energy projects, organizations are increasingly turning to power purchase agreements (PPAs). With 

PPAs, a third-party project developer coordinates the building and maintenance of an organization’s on-site system. The 

organization needs to purchase only the power output. The 

following steps, along with the information listed in Chapter 

10, Resources for Additional Information, can help. In the 

end, the on-site renewable system—whether self-financed or 

third-party financed—will generate power and other benefits 

for many years to come.

Screening the Technologies

Based on work done in the first steps of the process of purchasing green power (Chapter 5, Steps to Purchasing Green 

Power), the organization should have a good idea of its 

energy needs and the renewable resources available at its site. 

The next step is to perform a screening analysis to find those 

options best suited to the site. This screening should evaluate 

the options being considered, comparing the cost-effectiveness of the organization’s current energy situation with that 

of a renewable power system. This screening should be based 

on the financial assessment methods that the organization 

would normally use for any capital investment, such as lifecycle cost, rate of return, and net present value. 

The analysis should account for state and federal financial 

incentives, interconnection rules (e.g., insurance requirements or standby charges), and net metering laws that might 

apply to the on-site generation facility. Each renewable technology has unique characteristics that make it more or less 

appropriate for a given situation. The evaluation criteria need 

to be defined in a way that objectively compare the various 

technologies. The result of this screening will be a specific 

technology that best meets the organization’s energy needs.

For on-site renewable power, bundling energy efficiency with 

renewable power is a common practice. The organization’s 

site-specific situation (e.g., whether the generation system is 

connected to a grid, the facility’s load shape, the utility’s rate 

structure) determines the appropriate efficiency measures to 

include. At this point, it is a good idea to consider whether 

energy efficiency projects should be implemented together 

with the renewable generation technologies being considered.

An economic analysis must consider the approximate size of 

the renewable power system that the organization hopes to 

install. The size can be determined by the load to be served 

by the system, the organization’s capital budget, or physical 

constraints at the site (such as rooftop area for photovoltaic 

[PV] systems or the rate of biomass fuel production). One 

option is to install the system incrementally, purchasing what 

the organization can afford now and adding more capacity over time. The modular nature of PV technology makes 

it especially suited to this approach, although wind can 

also be installed in larger modules. A contractor or utility 

representative can help choose the right size system, or the 

organization can also use one of the software tools listed in 

Chapter 10, Resources for Additional Information.

Most on-site systems will be grid-connected, so that when 

the on-site renewable generation is less than the organization’s electricity demand, remaining power needs can be met 

by the utility grid. The economic analysis will be affected if 

the organization wants to include energy storage (e.g., batteries, capacitors, flywheels) or backup generation to provide 

power when the utility grid is down. This is a separate decision, however, from the decision to install on-site generation. 

If backup power is included, the additional cost of the backup system and electrical equipment for switching from utility 

to backup power must be considered. The economic analysis 

will also be affected by whether the renewable generation 

will be part of a combined heat and power system (applicable 

to systems involving fuel combustion, such as landfill gas 

and biomass).
Chapter 7

Guide to Purchasing Green Power 25

Obtaining Resources and 

Assistance

If the organization chooses to own and operate an on-site 

power system, it has much to learn, but excellent information resources are available. Before making a purchase, the 

organization’s project team should study the technology 

and understand its objectives and what questions to ask, 

in order to be able to write a procurement specification. At 

this point, the organization should seriously consider seeking outside experts who can help with the technical and 

financial aspects of a renewable power project. Technical 

assistance may be available through the local utility, the 

state energy office, energy service providers, energy service 

companies, consultants, manufacturers, and equipment 

vendors. In addition, the Department of Energy’s Federal 

Energy Management Program (FEMP) offers technical assistance to federal agencies.

The financial details are usually what make or break an onsite project, so the project team should collect information 

about incentives and financing options (including PPAs) that 

could make the project more cost-effective. Some state programs might also require that only certified installers install 

systems. Many states offer financial incentives specifically 

for customers that install qualified renewable generation systems. These incentives may take the form of direct payments 

(rebates), competitive solicitations, consumer financing, or 

lower taxes (either sales or property tax exemptions). In addition, the federal government offers an investment tax credit 

for solar and geothermal energy systems, among other incentives for renewable energy. (For more information, visit the 

Database of State Incentives for Renewable Energy at <www.

dsireusa.org>.) The state energy office, local utility, or renewable energy equipment vendor will also have information 

about which incentive programs apply to its situation.

Utility rate impacts should also be investigated carefully. 

The organization should check with the local utility to see 

whether on-site generation would lower its demand charges 

or generate electricity at a time of day when prices are higher. 

Creating a Project Plan

Once the organization has decided on a specific generation 

technology, it is time to conduct a detailed feasibility study. 

This study will quantify all the costs and benefits of the 

project to evaluate its cost-effectiveness. The study should be 

based on inputs that are as specific as possible to the organization’s situation, such as quoted prices from vendors.

If the project appears feasible, the project team can then 

decide on a plan to have the renewable power system 

financed, built, and installed. Financing is a critical aspect 

of the project, and it should account for any federal and state 

incentives for which the organization’s system is eligible. 

Make sure that the system is designed to meet the requirements of the applicable incentive programs.

In addition, some renewable resources, such as biomass, 

will probably require air permits from the local air resources 

control board. The project plan should account for the time 

and expense of acquiring these permits. As with any other 

type of facilities project, the team must secure the necessary 

land-use and building permits and variances required for the 

project. The team also will need to apply for interconnection 

with the local electric utility (for grid-connected systems), 

which can be a complex and time-consuming process.

Procurement Strategy

Purchases for on-site generation differ from power purchases. 

In many cases, an organization may buy, own, and operate its own generation equipment. In some circumstances, 

though, it can enter into a PPA to buy the electricity generated by a renewable energy system installed on its property 

without actually owning the system. This approach may not 

be widely available in states that allow electricity to be purchased only from a qualified utility. Moreover, it is important 

to consider how the choice of who owns the system will 

affect the availability of tax credits and incentives (for 

instance, non-taxable entities are not eligible for tax credits).

An organization can handle the procurement options for onsite generation in the following ways:

• Act as the general contractor. If the organization 

has design engineers on staff, they can draw up the 

specifications and then solicit bids for equipment and 

Using Incentives to Finance an 

On-Site Generation System: 

Sierra Nevada Brewing Company

The Sierra Nevada Brewing Company installed a 1.2-MW 

DC fuel cell system at its brewery in Chico, California. The 

fuel cell is powered by natural gas and supplemented by 

digester gas from the treatment of brewing wastewater; its 

waste heat is harvested in the form of steam and used for the 

brewing process as well as other heating needs. The 1.2 MW 

of electricity, combined with 1.9 MW solar panels, supplies 

about 90 percent of the brewery’s overall power requirements. The capital cost of the fuel cell system was funded 

by a $2.4-million incentive from the local utility (Pacific Gas 

and Electric Company), $1 million in financial support from 

the U.S. Department of Defense Climate Change Fuel Cell 

Program, and a 30 percent federal investment tax credit. 

These incentives covered about two-thirds of the upfront 

capital cost for the system.
Chapter 7

26 Planning an On-site Renewable Generation Project

installation. This arrangement works well if the organization wants to do some of the work in-house. Keep in 

mind, however, that if the organization has no experience with renewable energy systems, it runs the risk of 

ending up with a poorly performing system.

• Hire a qualified contractor for a turnkey system. An 

organization probably will use a request for proposal 

(RFP) to select an equipment manufacturer, a system 

designer, or a system installer to help design the system 

to its needs, to buy the materials, to arrange for installation, and to commission the system. There are some 

companies (particularly in the PV industry) that are 

vertically integrated, from manufacturing to design and 

installation to operations and maintenance. Before hiring a contractor, an organization should check with the 

state government to see if contractors must be licensed 

to install an on-site system.

• Hire an energy services company (ESCO). The ESCO 

will be responsible for design, installation, maintenance, and financing. This arrangement differs from 

a turnkey project in that ESCOs typically work under 

performance contracts, meaning that they are paid 

according to how well the project is carried out. Usually 

this is through energy savings, but success can also 

be based on the amount of electricity generated or the 

system’s reliability. ESCOs also often provide at least 

part of the project financing, which can be very helpful 

for organizations—such as government agencies—with 

very limited capital budgets. Usually, ESCO projects 

need to be large, or part of a larger contract, in order to 

justify the transaction costs.

• Host an independently owned system via a PPA.

When considering on-site green power, some companies decide not to install solar PV systems because of 

the high capital investment, maintenance costs, and 

financial returns that fall short of company standards. 

To overcome these barriers, an organization can host an 

on-site generation system and agree to buy the power 

without actually owning the equipment, with no upfront cost. This approach is known as a power purchase 

agreement (PPA), and it can greatly simplify the process 

of installing on-site renewable power. Under a PPA, a 

third party owns the renewable energy system and sells 

the power to the site host under a long-term contract 

(usually 10 to 20 years). The power payments from 

the site host pays for the capital cost of the system. 

A third-party project developer typically handles all 

aspects of the project development including site assessment, system configuration, procurement, installation, 

and financing. The project developer is also typically 

responsible for system operations and maintenance. 

A PPA project usually involves two contracts: 1) a site 

license or lease, and 2) a power purchase agreement. 

The contractual arrangements are shown in Figure 7.

As with other types of green power purchases, organizations should make sure that the contract also defines the 

ownership of the renewable energy certificates (RECs) 

and therefore the rights to claim the use of renewable 

Project

Developer

Manufacturer-Installer

Investor

Host

On-site solar

PV system

10–20 year PPA

Sales and

O&M revenue

Financing

ROI

Equipment, installation,

warranties

■ Receives solar power 

 from on-site system 

 under long-term PPA

■ Provides space and access 

 for solar PV array but does 

 not own system

■ No capital required

■ Receives income 

 from sale 

 of electricity

■ Arranges financing 

 and system design 

 and construction

■ Receives revenue from sale of 

 panels, inverters, O&M, etc.

■ Provides warranties for 

 equipment and performance

■ Receives ROI from electricity

 sales, state and federal incentives

■ Provides capital and owns system

 for at least 5 years

Figure 7. Power purchase agreement (PPA) contractual relationships 

Note: Nonresidential customers refer to business and institutional customers. Data for on-site renewable generation is not available.

Source: Hassett, Timothy C., and Karin L. Borgerson. 2009, Harnessing Nature’s Power: Deploying and Financing On-Site Renewable Energy. Washington, DC: 

World Resources Institute. 
Chapter 7

Guide to Purchasing Green Power 27

electricity. A host of an on-site system under a PPA wishing to claim environmental benefits such as a reduction 

of carbon emissions from the on-site system will need to 

retire the RECs generated from the on-site system.

Choosing a Vendor

When choosing a vendor, obtaining more than one bid is 

recommended, so the first step is to find several possible 

vendors for a given project. The Web sites for the major trade 

groups in this area—the Solar Energy Industries Association 

and the American Wind Energy Association—offer information about their members’ expertise and interests, and 

Chapter 10, Resources for Additional Information, lists more 

sources.

When choosing a vendor, the organization should obtain 

comparative information from the companies it is considering, usually through either an RFP or an RFI as described in 

Chapter 6, Procuring Renewable Electricity and Renewable 

Energy Certificates. An RFP is appropriate if the organization 

already has a detailed system design and simply wants a vendor to implement that design. An RFI is better for comparing 

vendors’ qualifications and experience and should be used to 

select a vendor to design and implement the system. Because 

the design of on-site renewable systems tends to be site specific and because design details are often resolved differently 

by different vendors, the RFI approach often leads to the system best tailored to the organization’s needs.

Some factors to consider when choosing a provider of on-site 

generation include the following:

• Experience. The vendor’s experience and familiarity 

with the type of system the organization is considering 

is extremely important. Also determine the vendor’s 

experience with interconnection issues (if the system 

will be connected to the grid). A quick way to judge 

a vendor’s experience is the length of time it has been 

in business and the number of similar systems it has 

installed.

• Performance history. It is very important to check 

references from previous customers, preferably for systems similar to the one the organization is considering. 

Another important factor is whether there are any judgments or liens against the vendor, which would indicate 

problems with previous projects.

• Licenses and certification. To be eligible for state 

incentives, some states require that the system be 

installed by a licensed contractor, whereas other states 

certify installers that have received the relevant training. As with any other capital project, licenses and 

certifications are an indicator of a contractor’s qualifications.

• Liability and professional insurance. If any problems 

arise with the system during installation or operation, it is important that the contractor have adequate 

insurance to protect the purchasing organization from 

liability. The contractor should also be responsible for 

any problems with interconnecting to the grid.

Anticipating Possible Barriers

When implementing a renewable generation project, the 

organization must work with various entities to obtain 

permits, connect to the utility system, and perform other 

activities external to the facility. Some of these steps will 

end up requiring more time, effort, or money than originally 

anticipated and may pose barriers that must be overcome.

Generally these barriers fall into three categories: 1) technical, 2) financial, and 3) regulatory. Most technical barriers 

pertain to the local utility’s electrical interconnection requirements. Other technical barriers are fuel availability and 

storage; space limitations; power-quality impacts; fire, safety, 

Procuring On-Site Generation 

Through a Solar Power Purchase 

Agreement: Staples & Kohl’s

To avoid the large upfront capital outlays required of an 

on-site power generation system, many organizations have 

entered into solar power purchase agreements. Under these 

agreements, an organization hosts a PV system and agrees 

to purchase its output for a given period of time, while a 

third-party developer owns, operates, and maintains the 

system. Two companies that have been leaders in advancing the solar services model are Staples and Kohl’s. As of 

June 2009, Staples is hosting 24 active rooftop solar systems 

on its stores, distribution centers, and offices throughout the 

country and has more than 100 more systems under development. The company’s fleet of hosted solar systems totals 

almost 4,000 kW and produces about 4 million kWh per 

year. Staples has used solar power through a solar power 

purchase agreement since 2005. The fixed price for power 

in the agreements is competitive with local commercial rates 

and acts to hedge against price volatility in retail electricity. 

Similar to Staples, Kohl’s entered into a solar power purchase 

agreement for a 20-year term in 2007. The company’s nearterm goal is to have 100 activated solar locations on its 

store rooftops. As of June 2009, Kohl’s has 67 solar power 

systems activated in California, New Jersey, Wisconsin, and 

Connecticut, with another 10 in various stages of construction. The company estimates that, on average, a hosted solar 

system provides roughly 40 percent of a store’s annual electricity needs. Kohl’s is currently the largest retail host of solar 

electricity production in the world.
Chapter 7

28 Planning an On-site Renewable Generation Project

and zoning requirements; and operations and maintenance 

issues. Financial barriers come as a result of changing economic conditions, such as the availability of tax credits, 

direct subsidies, or the climate for loans and project finance 

opportunities. Regulatory barriers pertain mainly to the 

required permits and approvals, such as air emissions permits, utility standby charges, exit fees, and land-use permits.

Often the contractor for the project can be made responsible for overcoming these barriers as they arise. If this 

seems like a good option, the project team should explore 

it with the contractor when writing the RFP and reviewing 

the proposals. 

Installing and Operating 

an On-site Renewable 

Generation System

Once the organization’s on-site generation system has been 

designed, it is time to put the contracts in place and begin 

construction. As with any capital project, it is important to 

stay involved during the construction to resolve any problems that might arise.

When the construction has been completed, the project team 

should monitor and verify the system’s energy performance. 

Does everything work as planned? What is the system’s 

actual energy production? If it is not as estimated, what can 

be done to improve the system’s performance? Information 

about system performance is useful in communicating the 

benefits of the project to internal and external audiences.

Measurement and validation generally proceed in two steps. 

The first is the post-construction evaluation (or commissioning), in which a contractor’s work is inspected and the 

system is tested to make sure that it meets regulatory and 

design specifications. The second step is monitoring and verifying the system’s performance over a longer period, such as 

the first year of operation (although continuous monitoring 

is necessary to catch any performance problems that arise). 

It is important to plan for this stage at the early phases of the 

project, in order to design a useful data acquisition system.

Finally, all renewable power systems require periodic maintenance in order to perform as intended. The organization 

must decide whether its staff has the expertise and time to 

do this or whether it should contract with the equipment 

vendor or a service company to maintain the system.
Guide to Purchasing Green Power 29

Chapter 8 

Capturing the Benefits of the Purchase

An organization should provide and seek recognition for its green power commitments in order to 

sustain momentum and support for the renewable energy program. An organization should 

consider various internal and external promotional and 

marketing strategies to generate measurable, positive publicity and public relations benefits. To maximize the positive 

publicity, the use of green power should be made part of the 

organization’s comprehensive environmental management 

efforts. Purchasers of renewable energy may make claims 

about use of renewable energy by combining their renewable 

energy certificates (RECs) with their own electricity usage or 

through a utility green power purchase.

The Environmental Benefits

When an organization highlights its green power purchase, 

it is important that it know the quantity of any emissions 

avoided. These emissions can be greenhouse gases (GHGs)—

primarily carbon dioxide, as well as other pollutants that 

affect the environment and human health, such as particulate 

matter. A buyer of green power can calculate its reduction 

of emissions using a tool provided by EPA’s Green Power 

Partnership at <www.epa.gov/greenpower/pubs/calculator.

htm>. 

Despite the estimates provided by these calculation tools, 

organizations should be careful about claiming avoided emissions because the ability to make emission reduction claims 

vary according to the regulatory policies affecting the emissions in question. Under voluntary programs, such as EPA’s 

Climate Leaders program, it has become common practice to 

use the zero emissions attributes of green power purchases to 

reduce indirect or “Scope 2” emissions (from purchased electricity) as permitted by the program’s reporting guidelines. 

Under a mandatory cap and trade program, these accounting 

practices may change, so buyers of green power should check 

with EPA or other authorities about any updated greenhouse 

gas accounting rules prior to making new environmental 

claims.

The concern about climate change has prompted many 

organizations to complete a GHG emissions inventory. An 

inventory is a detailed list of emissions by source and type of 

greenhouse gas, usually expressed in metric tons of carbon 

dioxide equivalent (MTCO2e).

An inventory serves many purposes, including:

• Identifying opportunities for reduction and managing 

GHGs.

• Participating in public reporting and voluntary reduction initiatives.

• Participating in mandatory government-reporting programs.

• Trading in GHG emissions markets.

An inventory also allows organizations to record their emission information in an official registry with a government 

agency. Several GHG registry programs have been established 

to record GHG inventories, including The Climate Registry, 

Wisconsin’s Voluntary Emissions Reduction Registry, the 

U.S. Department of Energy’s l605b Voluntary Greenhouse 

Gas Reporting program, the American Carbon Registry, and 

the Regional Greenhouse Gas Registry. For more information, see the GHG accounting standards developed by the 

World Resources Institute (WRI)/World Business Council for 

Sustainable Development (WBCSD) GHG Protocol Initiative 

at <www.ghgprotocol.org>.

Renewable energy purchases and on-site generation may 

earn building owners credit toward a variety of green building standards. For example, the U.S. Green Building Council 

(USGBC) runs the Leadership in Energy and Environmental 

Design (LEED) certification program, which recognizes 

buildings that generate or purchase renewable energy for a 

certain amount of their electricity use, awarding credit proportional to generation and purchase amount. For purchased 

renewable energy, LEED requires that renewables meet the 

criteria of Green-e Energy. 
Chapter 8

30 Capturing the Benefits of the Purchase

Internal Promotion

One of the benefits of buying green power is improving 

employee morale. It is also important to maintain internal 

support for purchasing green power. To achieve these goals, 

companies and organizations often choose to promote their 

purchase or installation internally using the following 

methods:

• Include “energy news” in internal publications.

Internal publications, such as newsletters, are valuable 

ways of communicating information to an organization’s employees, stakeholders, and affiliates and also 

helps support the organization’s mission, growth, and 

development.

• Establish a staff adoption and recognition program.

Such a program encourages employees to buy green 

power for their home electricity use through an organization-wide program. A staff adoption program should 

create incentives, provide information, set milestones 

for staff purchases over time, and recognize individual 

achievements.

External Promotion

Strategic external public relations maximize the positive 

publicity surrounding an organization’s purchase of green 

power. In addition to the public relations benefits, the purchase can motivate additional purchases by the general 

public, the organization’s customers, and its affiliates, thereby 

extending the impact of the initial purchase. To be effective, 

organizations must be sure to substantiate any claims made, 

per Federal Trade Commission and National Association of 

Attorneys General marketing guidelines (see Chapter 10, 

Resources for Additional Information).

• Construct a public relations plan. Construct a plan 

to publicize to target audiences the organization’s purchase or installation. The plan should include strategies 

for using existing distribution channels such as e-mail, 

Web sites, and direct mail to promote the organization 

and its commitment to renewable energy. An organization can create special print materials and press 

releases for distribution, and conduct e-mail campaigns 

that distinguish it as an innovative leader. Retail companies sometimes circulate special offers and coupons 

and even host events—such as renewable energy 

celebrations—at stores to attract new customers and 

communicate the benefits of the organization’s green 

power purchase.

• Use media contacts and press. An organization may 

wish to write a press release describing its purchase 

and circulate it to local and national media outlets. An 

organization can also research and contact local environmental writers and publications to encourage feature 

stories about the organization and its commitment to 

improve the environment.

• Train staff to promote the organization’s purchase.

Purchasers can instruct their staff about the details 

of the organization’s purchase and the best ways to 

highlight it to customers in daily sales interactions. 

Organizations might also teach staff how to answer 

general questions about renewable energy.

• Take advantage of all opportunities to promote the 

purchase. Effective organizations use strategic business 

engagements and speaking events as well as existing 

interactions with the public to talk about the organization’s environmental commitment and promote its 

purchase of green power. These opportunities might 

include marketing the organization’s purchase on its 

products and encouraging its suppliers and affiliates to 

follow its lead and buy green power.

• Work with third-party organizations. Third-party 

organizations can help provide credibility to green 

power purchases that meet minimum purchasing 

benchmarks. These organizations also offer publicity 

channels that promote renewable energy and highlight 

environmental commitment. All the organizations 

sponsoring this guidebook help their partners and companies publicize their achievements in buying green 

power. Members of EPA’s Green Power Partnership and 

Using Green Power for 

Promotion and Branding

Lundberg Family Farms supports the use and implementation 

of renewable energy through both on-site solar generation 

and the purchase of wind-based RECs. In 2008, the familyowned enterprise purchased 4.8 million kilowatt-hours (kWh) 

of renewable electricity, which accounts for 100 percent 

of its annual electricity use. In addition to this purchase, 

Lundberg installed two solar photovoltaic arrays on company 

warehouses, which produce nearly 688,000 kWh annually. 

To promote its commitment to renewable energy, Lundberg 

Family Farms is a member of both EPA’s Green Power 

Partnership and Green-e Marketplace. Lundberg features 

its purchase on product packaging and spreads the word 

about green power through its public Web page, speaking 

events, newsletters, and at industry trade shows. Multiple 

local broadcast stations have also featured stories about the 

company’s green power activities.
Chapter 8

Guide to Purchasing Green Power 31

those who participate in Green-e Marketplace can also 

use these programs’ respective logos in their promotional activities.

• Create marketing partnerships with green power 

suppliers. Offer retail customers the opportunity to 

sign up for green power, and reward them with benefits 

such as gift or discount cards, merchandise, or collateral products (e.g., T-shirts, hats) that tout the company’s 

image as an environmental leader.

• Awards competitions. A number of entities recognize 

leadership in the purchase of renewable energy, including EPA’s Green Power Partnership and the Center for 

Resource Solutions’ Green-e Energy program as part of 

the annual Renewable Energy Markets conference. See 

Chapter 10, Resources for Additional Information, for 

more details about these awards. 
32 Conclusion

Chapter 9 

Conclusion

P

urchasers of electricity can have a significant impact 

on the way that power is produced, now and in 

the future. Businesses, governments, and nonprofit 

organizations have an unprecedented and increasing range of options for buying green power. In those states 

that have restructured their electricity markets, retail access 

allows customers to choose their electricity supplier and, by 

extension, how their electricity is produced. In regulated 

markets, utility green-pricing programs enable customers to 

support the addition of renewable energy to the grid without 

leaving their current utility. Renewable energy certificates 

and on-site renewable generation allow organizations everywhere to support green power. Organizations that act in their 

own—and society’s—best interests can take advantage of the 

strategies outlined in this guidebook to help move the United 

States toward a more sustainable energy future.
Guide to Purchasing Green Power 33

Chapter 10 

Resources for Additional Information

U.S. Department of Energy

The Department of Energy’s Office of Energy Efficiency and 

Renewable Energy (EERE) works to strengthen the United 

States’ energy security, environmental quality, and economic 

vitality through public-private partnerships. It supports this 

goal by enhancing energy efficiency and productivity and by 

bringing clean, reliable, and affordable energy technologies to 

the marketplace.

As a part of EERE, the Department of Energy’s Federal 

Energy Management Program (FEMP) facilitates the federal government’s implementation of sound, cost-effective 

energy management and investment practices to enhance 

the nation’s energy security and environmental stewardship. 

FEMP provides project transaction services, applied technology services, and decision support services. All of these 

services are available to assist federal agencies with deploying 

renewable technologies.

• Federal Energy Management Program: 

<www1.eere.energy.gov/femp>

• Green Power Network: 

<apps3.eere.energy.gov/greenpower/> 

• FEMP Renewable Power Purchasing: 

<www1.eere.energy.gov/femp/technologies/renewable_

purchasingpower.html>

U.S. Environmental Protection 

Agency

The U.S. Environmental Protection Agency’s (EPA’s) Green 

Power Partnership is a voluntary program that encourages 

organizations to buy green power as a way to reduce the 

environmental impacts associated with purchased electricity 

use. The partnership has more than 1,200 partner organizations voluntarily purchasing billions of kilowatt-hours of 

green power annually. Partners include a wide variety of 

leading organizations such as Fortune 500 companies; small 

and medium sized businesses; local, state, and federal governments; and colleges and universities. 

• Green Power Partnership: 

<www.epa.gov/greenpower>

• Green Power Equivalency Calculator: 

<www.epa.gov/greenpower/pubs/calculator.htm>

• Clean Energy: 

<www.epa.gov/cleanenergy>

• Climate Leaders: 

<www.epa.gov/climateleaders>

• Landfill Methane Outreach Program: 

<www.epa.gov/lmop>

• eGRID Database: 

<www.epa.gov/cleanenergy/egrid>

• Power Profiler: 

<www.epa.gov/cleanenergy/powerprofiler.htm>

• Green Power Leadership Awards: 

<www.epa.gov/greenpower/awards/index.htm>

• ENERGY STAR: 

<www.energystar.gov>

World Resources Institute

World Resources Institute (WRI) is an environmental think 

tank that goes beyond research to find practical ways to 

protect the Earth and improve people’s lives. WRI’s mission 

is to move human society to live in ways that protect the 

Earth’s environment and its capacity to provide for the needs 

and aspirations of current and future generations. Its work 

is organized around four key programmatic goals: People & 

Ecosystems, Governance, Climate Protection, and Markets 

and Enterprise.

WRI has been engaging the private sector on climate policy 

and low-carbon technology deployment for a decade. These 

projects are designed to achieve two primary goals: 1) accelerate corporate deployment of renewable energy, and 2) build 

a business constituency that is more informed on climate 
Chapter 10

34 Resources for Additional Information

and energy policy. WRI’s business network is composed of 

more than 70 large corporations that are engaged through 

the Green Power Market Development Group (GPMDG), 

along with its California and European affiliates, and the 

U.S. Climate Business Group, with regional workgroups in 

the Northeast, Midwest, and Southeast. This activity has 

achieved several important milestones. For instance, GPMDG 

partners have procured more than 1,000 MW of new, 

cost-competitive renewable energy, while several GPMDG 

members have made the list of top corporate users of solar 

photovoltaics.

• World Resources Institute: 

<www.wri.org>

Green-e Programs

The Green-e® certification programs are among the nation’s 

leading voluntary certification and verification programs, 

designed to help businesses and households compare and 

select clean renewable energy and carbon offset options. 

Renewable energy products that meet the Green-e Energy 

standards and carbon offsets that meet Green-e Climate standards are identified by the Green-e logo. Renewable energy 

products that meet the Green-e Energy standards and carbon 

offsets that meet Green-e Climate standards are identified by 

the Green-e logo, as shown below.

The Green-e Web site, <www.green-e.org>, and toll-free 

number (888-63-GREEN) are widely used resources that 

allow consumers to compare certified products in any region 

and to select the superior green power option that meets 

their needs. 
Chapter 10

Guide to Purchasing Green Power 35

Additional Resources

The Additional Resources section is not intended to be an exhaustive list of all resources on a certain subject, but rather an 

introduction for learning more on a topic of interest.

Developing a strategic energy management plan:

ENERGY STAR’s Guidelines for Energy Management: 

<www.energystar.gov/index.cfm?c=guidelines.guidelines_

index>

Electricity restructuring:

2002. May. A Primer on Electric Utilities, Deregulation, and 

Restructuring of U.S. Electricity Markets. U.S. Department of 

Energy. <eere.pnl.gov/femp/publications/Primer-Electric

UtilitiesDeregulationRestructuring.pdf>

Status of Electricity Restructuring by State Web Site. Energy 

Information Administration. <www.eia.doe.gov/cneaf/

electricity/page/restructuring/restructure_elect.html>

Current state of green power markets:

Bird, Lori, Claire Kreycik, and Barry Friedman. 2009, 

September. Green Power Marketing in the United States: A Status 

Report (2008 Data). Golden, CO: National Renewable Energy 

Laboratory. NREL/TP-6A2-46581. <www.nrel.gov/docs/

fy09osti/44094.pdf>

(Updates will be posted on the Green Power Network’s Web 

site at <apps3.eere.energy.gov/greenpower/>). 

Bird, Lori, David Hurlbut, Pearl Donohoo, Karlynn Cory, and 

Claire Kreycik. 2009, March. An Examination of the Regional 

Supply and Demand Balance for Renewable Electricity in the 

United States through 2015. Golden, CO: National Renewable 

Energy Laboratory. NREL/TP-6A2-45041. <www.nrel.gov/

docs/fy09osti/45041.pdf>

Lazard. 2009, February. Levelized Cost of Energy Analysis, 

Version 3.0. <blog.cleanenergy.org/files/2009/04/lazard2009_

levelizedcostofenergy.pdf> 

Motivations for purchasing green power:

Holt, E., R. Wiser, M. Fowlie, R. Mayer, and S. Innes. 2001, 

January. Public Goods and Private Interests: Understanding 

Non-Residential Demand for Green Power. Prepared for the 

American Wind Energy Association and the National Wind 

Coordinating Committee. <www.osti.gov/bridge/purl.cover.

jsp;jsessionid=445E0FC0F548B77F59233E8382997384?pu

rl=/776644-jFINOn/webviewable/>

The Green-e Marketplace survey of green power purchasing 

motivations is available at:<www.resource-solutions.org/

publications>

Center for Resource Solutions/Natural Marketing Institute. 

2008. Unlocking the Power of Renewable Energy Certification to 

Build Credibility with Consumers.

<www.resource-solutions.org/pub_pdfs/NMI%20Case%20

Study%200609.pdf>

Economic development and job creation:

Environmental and Energy Study Institute (EESI). 2008, 

October. Jobs from Renewable Energy and Energy Efficiency.

Washington, DC. <www.eesi.org/files/green_jobs_factsheet_102208.pdf>

Kammen, Daniel M., Kamal Kapadia, and Matthias Fripp. 

2006, January. Putting Renewables to Work: How Many Jobs 

Can the Clean Energy Industry Generate? Berkeley, CA: UC 

Berkeley. <rael.berkeley.edu/old-site/renewables.jobs.2006.

pdf>

Environmental Law and Policy Center. 2003. Job Jolt: The 

Economic Impacts of Repowering the Midwest: The Clean Energy 

Development Plan for the Heartland. <www.repowering

themidwest.org/reports/job-jolt>

Environmental benefits:

Serchuck, Adam. 2000, April. The Environmental Imperative for 

Renewable Energy: An Update. College Park, MD: Renewable 

Energy Policy Project (REPP), University of Maryland. <www.

repp.org/repp_pubs/articles/envImp/envImp.pdf>

Environmental claims guidance:

Federal Trade Commission. 1998. Guides for the Use of 

Environmental Marketing Claims. <www.ftc.gov/bcp/grnrule/

guides980427.htm>

National Association of Attorneys General. 1999. 

Environmental Marketing Guidelines for Electricity. <apps3.eere.

energy.gov/greenpower/buying/pdfs/naag_0100.pdf>

Renewable energy certificates (RECs):

EPA’s Green Power Partnership. 2008. Renewable Energy 

Certificates. <www.epa.gov/greenpower/documents/gpp_

basics-recs.pdf>

Aga, Jaineel and Chris Lau. 2008. Bottom Line on Renewable 

Energy Certificates. Washington, DC: World Resources 

Institute. <www.wri.org/publication/bottom-line-renewableenergy-certificates> 

Hamrin, Jan, and Meredith Wingate. 2003, May. Regulator’s 

Handbook on Tradable Renewable Certificates. San Francisco: 

Center for Resource Solutions. <www.resource-solutions.org/

pub_pdfs/Regulators%20Handbook%20on%20TRCs.pdf>

American Bar Association, American Council on Renewable 

Energy, and Environmental Markets Association. Master 

Renewable Energy Certificate Purchase and Sale Agreement.
Chapter 10

36 Resources for Additional Information

<www.abanet.org/environ/committees/renewableenergy/

RECMasterContract.pdf> 

Lieberman, Dan. 2004. Tradable Renewable Certificates and 

Emissions Values: The CRS Perspective on Best Practices in 

Marketing. San Francisco: Center for Resource Solutions. <www.

resource-solutions.org/pub_pdfs/TRCs_and_Emissions.pdf>

EPA’s Green Power Locator provides links to retail and 

wholesale marketers of renewable energy certificates: 

<www.epa.gov/greenpower/pubs/gplocator.htm> 

The Green Power Network lists brokers, wholesale marketers, 

and retail products: <www.eere.energy.gov/greenpower/markets/certificates.shtml>

Green-e lists certificate marketers and brokers that offer certified products: <www.green-e.org/base/re_products>

The World Resources Institute Green Power Market 

Development Group, Guidelines for Writing a REC Request for 

Proposal and Sample Contract for Renewable Energy Certificates.

<www.thegreenpowergroup.org/tools.cfm?loc=us> 

Renewable energy tracking systems:

EPA’s Green Power Partnership page on REC tracking systems: <www.epa.gov/greenpower/gpmarket/tracking.htm>

Environmental Tracking Network of North America 

(ETNNA): <www.etnna.org/>

Electric Reliability Council of Texas (ERCOT): 

<www.texasrenewables.com/>

New England Power Pool/Generation Information System 

(NEPOOL/GIS): <www.nepoolgis.com/>

PJM Generation Attribute Tracking System (GATS): 

<www.pjm-eis.com/>

Western Renewable Energy Generation Information System 

(WREGIS): <www.wregis.org/>

Midwest Renewable Energy Tracking System (M-RETS): 

<www.mrets.net/>

APX’s North American Renewables Registry: 

<narenewables.apx.com/>

Utility green-pricing programs:

The Green Power Network updates lists of top utility programs: <apps3.eere.energy.gov/greenpower/>

Bird, Lori, and Kaiser, M. 2006. Trends in Utility Green Pricing 

Programs. National Renewable Energy Laboratory. <apps3.

eere.energy.gov/greenpower/pdfs/42287.pdf>

Bird, Lori, Claire Kreycik, and Barry Friedman. 2008, 

October. Green Power Marketing in the United States: A Status 

Report (11th Edition). Golden, CO: National Renewable Energy 

Laboratory. NREL/TP-6A2-44094. <www.nrel.gov/docs/

fy09osti/44094.pdf>

U.S. Department of Energy, Energy Information 

Administration. 2009, April. Green Pricing and Net Metering 

Programs. <www.eia.doe.gov/cneaf/solar.renewables/page/

greenprice/green_pricing.html>

Holt, Edward, and Meredith Holt. 2004. Green Pricing 

Resource Guide. 2nd ed. Washington, DC: American Wind 

Energy Association. <www.awea.org/greenpower/greenPricingResourceGuide040726.pdf>

Jenkins, J. 2006, September. Powerful Choices VI: A Survey 

of Retail Green Power Programs in the Pacific Northwest.

Renewable Northwest Project, Portland, OR. <www.rnp.org/

Resources/PC6%20report_v2.pdf>

Lieberman, Dan. 2002, October. Green Pricing at Public 

Utilities: A How-to Guide Based on Lessons Learned to Date. 

Center for Resource Solutions and Public Renewables 

Partnership. <www.resource-solutions.org/pubs_archive.php>

Green power product lists:

The Green Power Network maintains lists of products offered 

in each state: <apps3.eere.energy.gov/greenpower/>

The EPA Green Power Partnership supports a Green Power 

Locator: <www.epa.gov/greenpower/pubs/gplocator.htm>

Green-e maintains a list of certified products offered in each 

state: <www.green-e.org/base/re_products?cust=b>

On-site renewable energy generation:

FEMP. 2002, May. Using Distributed Energy Resources: A Howto Guide for Federal Facility Managers. Washington, DC: U.S. 

Department of Energy, Federal Energy Management Program. 

DOE/GO-102002-1520. <www1.eere.energy.gov/femp/

pdfs/31570.pdf>

U.S. Department of Energy. 2007. Small Wind Electric Systems: 

A U.S. Consumer’s Guide. <www.windpoweringamerica.gov/

pdfs/small_wind/small_wind_guide.pdf>

Wind Powering America. <www.windpoweringamerica.gov/

index.asp> (See “Quick Links to States” for state-specific 

information).

Massachusetts Renewable Energy Trust. 2009. The 

Commercial Buyer’s Guide to Solar Electricity in Massachusetts.

<www.masstech.org/cleanenergy/cando/

SolarGuide-spreads.pdf>

Midwest Region Consumer’s Guide to Buying a Solar Electric 

System. <www.state.mn.us/mn/externalDocs/Commerce/

Consumer_Guide_to_Solar_Systems_123002022801_

pvguide3.pdf>
Chapter 10

Guide to Purchasing Green Power 37

Hassett, Timothy C., and Karin L. Borgerson. 2009, March. 

Harnessing Nature’s Power: Deploying and Financing On-Site 

Renewable Energy. Washington, DC: World Resources 

Institute. <www.wri.org/publication/harnessing-naturespower> 

Government incentives for renewable energy:

The Database of State Incentives for Renewable Energy 

includes information about capital cost incentives and netmetering laws at the state level, as well as information about 

federal and utility incentives: <www.dsireusa.org>

The Clean Energy States Alliance is composed of “Clean 

Energy Funds” or “State Funds,” a growing number of public 

funds in the United States whose objective is building markets for renewable energy and clean energy resources. The 

alliance collects and disseminates information and analysis, 

conducts original research, and helps to coordinate activities 

of the state funds: <www.cleanenergystates.org>

The American Wind Energy Association lists state incentives 

for small wind installations: <www.awea.org/smallwind/

states.html>

Bolinger, Mark, Ryan Wiser, Karlynn Cory, and Ted James. 

2009, March. PTC, ITC, or Cash Grant? An Analysis of the 

Choice Facing Renewable Power Projects in the United States. 

Berkeley, CA: Lawrence Berkeley National Laboratory. LBNL1642E. <eetd.lbl.gov/ea/EMS/reports/lbnl-1642e.pdf>

Interconnection with the utility grid:

Standards Board of the Institute for Electrical and Electronics 

Engineers, Inc. (IEEE). Standard 1547: “Standard for 

Interconnecting Distributed Resources with Electric Power 

Systems”: <grouper.ieee.org/groups/scc21/dr_shared> 

This standard has several components:

• IEEE 1547.1 2005 Standard for Conformance Tests 

Procedures for Equipment Interconnecting Distributed 

Resources with Electric Power Systems 

• IEEE 1547.2 Application Guide for IEEE 1547 Standard 

for Interconnecting Distributed Resources with Electric 

Power Systems

• IEEE 1547.3 2007 Guide For Monitoring, Information 

Exchange, and Control of Distributed Resources 

Interconnected with Electric Power Systems

• IEEE P1547.4 Draft Guide for Design, Operation, and 

Integration of Distributed Resource Island Systems with 

Electric Power Systems

The Federal Energy Regulatory Commission (FERC) has 

issued standard procedures and a standard interconnection 

agreement for the interconnection of generators to the power 

grid. The rules differ depending on whether the generator is 

larger or smaller than 20 megawatts: <www.ferc.gov/

industries/electric/indus-act/gi.asp>

The DSIRE database lists state interconnection rules: 

<www.dsireusa.org/> (click on “Summary Tables” then 

“Rules, Regulations, & Policies for Renewable Energy”).

California Rule 21: standards for interconnection of distributed energy resources: <www.energy.ca.gov/distgen/

interconnection/california_requirements.html>

Department of Energy (DOE) Office of Electricity Delivery 

and Energy Reliability: <www.oe.energy.gov/renewable.htm>

DOE Federal Energy Management Program (FEMP), 

Interconnection and Permitting Guide. <www1.eere.energy.

gov/femp/technologies/derchp_ipg.html>

Haynes, Rusty, and Chuck Whitaker. 2007. Connecting to the 

Grid: A Guide to Distributed Generation Interconnection Issues.

Fifth Edition. Interstate Renewable Energy Council (IREC). 

<www.irecusa.org/index.php?id=31>

Measurement and verification of renewable system 

performance:

Webster, Lia, and James Bradford. 2008, April. M&V

Guidelines: Measurement and Verification for Federal Energy 

Projects, Version 3.0. Washington, DC: Federal Energy 

Management Program. <www1.eere.energy.gov/femp/pdfs/

mv_guidelines.pdf>

PVWATTS is a calculator to estimate the output from photovoltaic solar installations. The model calculates monthly 

and annual energy production in kilowatt-hours and monthly 

savings in dollars. <www.nrel.gov/rredc/pvwatts/>

PV systems:

American Solar Energy Society: <www.ases.org>

Solar Electric Power Association: 

<www.solarelectricpower.org>

Solar Energy Industries Association: <www.seia.org>

North Carolina Solar Center: <www.ncsc.ncsu.edu>

California Energy Commission. 2000, April. Buying a 

Photovoltaic Solar Electric System: A Consumer Guide. <www.

energy.ca.gov/reports/500-99-008.PDF>

California Energy Commission. 2001, June. A Guide to 

Photovoltaic (PV) System Design and Installation. <www.energy.

ca.gov/reports/2001-09-04_500-01-020.PDF>

Bolinger, Mark. 2009, January. Financing Non-Residential 

Photovoltaic Projects: Options and Implications. Berkeley, CA: 

Lawrence Berkeley National Laboratory. 

<eetd.lbl.gov/EA/EMP/reports/lbnl-1410e.pdf>
Chapter 10

38 Resources for Additional Information

Merry, Liz, and Elisa Wood. 2008, October. The Customer’s 

Guide to Solar Power Purchase Agreements. The Rahus Institute. 

<www.californiasolarcenter.org/sppa.html>

Cory, Karlynn, Jason Coughlin, and Charles Coggeshall. 

2008, May. Solar Photovoltaic Financing: Deployment on 

Public Property by State and Local Governments. Golden, 

CO: National Renewable Energy Laboratory. NREL/

TP-670-43115. <www.solaramericacities.energy.gov/PDFs/

Solar_Photovoltaic_Financing_Deployment_on_Public_

Property_by_State_and_Local_Governments.pdf>

Renewable energy trade associations:

American Council on Renewable Energy: 

<www.acore.org>

American Solar Energy Society: 

<www.ases.org>

American Wind Energy Association: 

<www.awea.org>

Biomass Coordinating Council: 

<www.acore.org/committees/biomass_council>

Geothermal Energy Association: 

<www.geo-energy.org>

Geothermal Resources Council: 

<www.geothermal.org>

Interstate Renewable Energy Council: 

<www.irecusa.org>

Low Impact Hydropower Institute: 

<www.lowimpacthydro.org>

Midwest Renewable Energy Association: 

<www.the-mrea.org>

National Hydropower Association: 

<www.hydro.org>

National Wind Coordinating Collaborative: 

<www.nationalwind.org>

Northeast Sustainable Energy Association:

<www.nesea.org> 

Renewable Energy Markets Association: 

<www.renewablemarketers.org>

Solar Electric Power Association: 

<www.solarelectricpower.org>

Solar Energy Industries Association: 

<www.seia.org>

Utility Wind Integration Group: 

<www.uwig.org>

Windustry: 

<www.windustry.com>

On-site renewable generation financial analysis tools:

Each of the many available tools offers different features, 

which should be examined closely to determine whether they 

are appropriate to the particular situation. 

RETscreen International 

Developer: Natural Resources Canadas CANMET Energy 

Diversification Research Laboratory (CEDRL). 

Assesses the economics of various renewable energy installations: <www.retscreen.net>

RETFinance

Developer: Energy Analysis Team at NREL 

Simulates a 30-year nominal dollar cash flow for renewable projects, including earnings, debt payments, levelized 

cost-of-electricity, after-tax internal rate of return, and debt 

service coverage ratio (net operating income divided by total 

debt service): <analysis.nrel.gov/retfinance>

Carbon Value Analysis Tool

Developer: World Resources Institute

A screening tool to help companies integrate the value of 

carbon dioxide emissions reductions into energy-related 

investment decisions: <www.wri.org/publication/carbonvalue-analysis-tool>

Clean Power Estimator 

Developer: Clean Power Research 

Offers a quick cost-benefit analysis for photovoltaics, solar 

thermal, wind, and energy efficiency for both residential and 

commercial buildings: <www.cleanpower.com/Home> 

A version for California facilities is offered by the CEC: 

<cec.cleanpowerestimator.com/cec.htm>

ProForm

Developer: Lawrence Berkeley National Laboratory 

Allows an integrated environmental and financial prefeasibility analysis of on-site renewable energy and energy efficiency 

projects: <poet.lbl.gov/Proform>

Federal Renewable Energy Screening Application (FRESA)

Developer: U.S. Department of Energy, Energy Efficiency and 

Renewable Energy 

Compares opportunities for renewables and conservation at 

federal facilities: <analysis.nrel.gov/fresa/>

Hybrid Optimization Model for Electric Renewables 

(HOMER)

Developer: NREL 

Compares the cost-effectiveness of off-grid renewables with 

grid extensions or stand-alone generators: 

<www.nrel.gov/homer>
Chapter 10

Guide to Purchasing Green Power 39

Real Options Analysis Center

Developer: NREL

Provides online models for the valuation of renewable energy 

research and development and the valuation of distributed 

generation assets: <www.nrel.gov/realoptions>

PV Watts

Developer: NREL

Provides estimated system output and savings calculations 

based customizable system specifications and in the field system performance data. User inputs their system information 

and selects a system in the general area of the user’s own site 

to provide calculations. <www.nrel.gov/rredc/pvwatts/>

Greenhouse gas resources:

World Resources Institute/World Business Council for 

Sustainable Development Greenhouse Gas Protocol: 

<www.ghgprotocol.org>

U.S. Environmental Protection Agency’s Climate Leaders, a 

voluntary government-industry partnership: 

<www.epa.gov/climateleaders>

Guidance from Climate Leaders about treatment of RECs and 

other green power purchases in greenhouse gas inventories: 

<www.epa.gov/climateleaders/documents/

greenpower_guidance.pdf>

The Climate Registry: 

<www.theclimateregistry.org>

Carbon Disclosure Project: 

<www.cdproject.net>

U.S. Department of Energy’s voluntary GHG registry: 

<www.eia.doe.gov/oiaf/1605/>

World Wildlife Fund’s (WWF) Climate Savers:

<www.worldwildlife.org/climate/climatesavers2.html>

World Resources Institute Carbon Value Analysis Tool: 

<www.wri.org/publication/carbon-value-analysis-tool> 

The California Energy Commission has summarized state 

activities related to greenhouse gas inventories at 

<www.climatechange.ca.gov/>

The Regional Greenhouse Gas Initiative: 

<www.rggi.org/rggi>

EPA rulemaking

In response to the FY2008 Consolidated Appropriations 

Act (H.R. 2764; Public Law 110161), EPA published 

the Mandatory Reporting of Greenhouse Gases Rule in 

September 2009. This rule requires reporting of greenhouse 

gas (GHG) emissions from large sources and suppliers in the 

United States, and is intended to collect accurate and timely 

emissions data to inform future policy decisions. 

<www.epa.gov/climatechange/emissions/ghgrulemaking.

html>

Metzger, Eliot. 2008. Bottom Line on Climate Policy 

Terminology. Washington, DC: World Resources Institute. 

<www.wri.org/publication/bottom-line-climate-policyterminology>

Heilmayr, Robert. 2008. Bottom Line on GHG Emissions 

Registries. Washington, DC: World Resources Institute. 

<www.wri.org/publication/bottom-line-ghg-emissionsregistries>

Carbon Offsets:

Climate Action Reserve

<www.climateactionreserve.org>

Green-e Climate Standard: 

<www.green-e.org/docs/climate/G-e%20Climate%20

Standard%20V1-1.pdf>

Green-e Climate Protocol for Renewable Energy:

<www.green-e.org/docs/climate/Green-e_Climate_Protocol_

for_RE.pdf> 

World Resources Institute Bottom Line on Climate Policy 

Terminology:

<www.wri.org/publication/bottom-line-climate-policyterminology> 

Voluntary Carbon Standard Registry: 

<www.vcsregistry.com>
40 Glossary

T

his glossary defines some of the important terms used 

in this guide. More definitions can be found at <www.

epa.gov/cleanenergy/energy-and-you/glossary.html>.

Annual consumption. The amount of electricity used by a 

consumer in one year, typically measured in kilowatthours (kWh). This information can be acquired from an 

electricity bill or by contacting the energy provider.

Cap and trade. A policy for limiting the amount of pollution emitted. The cap is a limit on the total amount of 

pollution that can be emitted (released) from all regulated sources (e.g., power plants); the cap is set lower 

than historical emissions in order to reduce emissions. 

Trading is a system in which emission sources can buy 

or sell allowances on the open market. Because the total 

number of allowances is limited by the cap, emission 

reductions are assured. For more information about cap 

and trade programs, see the EPA’s cap and trade Web 

page at <www.epa.gov/captrade/>.

Capped and uncapped markets. Power markets in the 

United States that are either subject to carbon dioxide 

emission caps (most notably the northeastern states) or 

not, as of mid-2009. The treatment of avoided carbon 

dioxide emissions due to renewable power purchases 

differs depending on the type of carbon market in which 

the purchaser is located.

Carbon dioxide. A gas created in the atmosphere from 

burning fossil fuels. Burning fossil fuels releases carbon that has been stored underground for millions of 

years that transforms during the combustion process 

into carbon dioxide, the predominant gas contributing 

to the greenhouse effect. Increases in the emissions of 

carbon dioxide and other gases, such as methane, due to 

the burning of fossil fuels and other human endeavors, 

accelerate heat-trapping processes in the atmosphere, 

gradually raising average temperatures worldwide. 

Carbon dioxide is absorbed and released at nearly equal 

rates by natural processes on the Earth, an equilibrium 

that is disrupted when large amounts of carbon dioxide 

are released into the atmosphere by human activities, 

such as burning fossil fuels.

Combined heat and power (CHP). An electricity generation 

technology, also known as cogeneration, that recovers 

waste heat from the electric generation process to produce simultaneously other forms of useful energy, such 

as usable heat or steam. On average, two-thirds of the 

input energy used to make electricity is lost as waste 

heat. In contrast, CHP systems are capable of converting 

more than 70 percent of the fuel into usable energy.

Commodity electricity. Generic electricity not associated 

with a particular power generation source.

Competitive markets. Allowing consumers to choose from 

among several electricity suppliers. Until recently, most 

consumers received generation, transmission, and distribution services from one local utility company. As a 

regulated monopoly, the utility was given an exclusive 

franchise to provide electricity to consumers in a particular community. Rates were set, and consumers had 

little choice but to pay the rate for their area. In the late 

1990s and early 2000s, however, several states restructured their electricity industry and now give consumers 

a choice of competing suppliers.

Conventional power. Power produced from nonrenewable 

fuels such as coal, oil, natural gas, and nuclear fuels. 

These fuels are a finite resource that cannot be replenished once they have been extracted and used.

Distributed generation. Small, modular, decentralized, gridconnected, or off-grid energy systems located in or near 

the place where energy is used.

Electricity supplier. As states restructure their electricity markets, more and more customers will be able to 

choose from a range of energy suppliers that market different types of power products, including green power 

from renewable energy. Restructured local utilities offer 

electricity products generated exclusively from renewable resources or, more frequently, electricity produced 

from a combination of fossil and renewable resources. 

In states without restructured electricity markets, local 

utilities may offer green-pricing programs, in which customers may elect to have their utility generate a portion 

of their power from renewable sources.

Energy efficiency. When products or systems use less energy 

to do the same or a better job than conventional products or systems can. Energy efficiency saves energy, saves 

Glossary
Glossary

Guide to Purchasing Green Power 41

money on utility bills, and helps protect the environment 

by reducing the amount of electricity (and associated 

environmental impacts) that needs to be generated.

Fossil fuels. Coal, oil, and natural gas, the United States’ 

principal source of electricity, due largely to their low 

cost. All three were formed many hundreds of millions 

of years ago; hence the name fossil fuels. Because fossil fuels are a finite resource and cannot be replenished 

once they have been extracted and burned, they are not 

considered renewable.

Global climate change. Long-term alteration in the Earth’s 

climate, compared to what would be expected naturally, 

due to human activities. For most of human history, 

changes in the Earth’s climate resulted from natural 

causes that took place over thousands of years. But 

today, human activities are beginning to affect the climate in serious and immediate ways by rapidly adding 

greenhouse gases to the atmosphere. These gases trap 

heat close to the Earth that would otherwise escape into 

space, intensifying a natural phenomenon called the 

greenhouse effect. Over the next century, scientists project that global temperatures will increase 2 to 6 degrees 

Fahrenheit as a result of rising concentrations of greenhouse gases. Scientists also believe that this rate of global 

warming will be unprecedented compared with that of 

the past 10,000 years. Global warming could result in 

a rise in sea levels, changes in patterns of precipitation, 

more variable weather, and many other consequences. 

These changes threaten our health, agriculture, water 

resources, forests, wildlife, and coastal areas. For more 

information on the science and impacts of global climate 

change, visit EPA’s Climate Change Web site at 

<www.epa.gov/climatechange/>.

Green power. Electricity that is generated from renewable 

energy sources. Green power is a term that implies a 

lesser environmental impact than from conventional 

electricity generation. The resources that qualify as green 

power vary depending on the state or organization. 

For more details, see Chapter 2, Green Power Defined.

Green power marketers. Energy suppliers operating in 

states that permit retail competition in the electricity 

markets. This term can also include utilities that offer 

green power options under what are typically referred to 

as green marketing products.

Green power products. Electricity generated exclusively 

from renewable resources or from a combination of fossil 

and renewable resources if they are differentiated from 

the standard mix of generation resources.

Green pricing. An optional service offered by regulated 

utilities to allow customers to support a greater level 

of utility investment in renewable energy by paying a 

premium on their electric bill. Usually green pricing is 

offered in areas that do not allow retail competition.

Greenhouse effect. A natural process whereby greenhouse 

gases allow incoming solar radiation to pass through the 

Earth’s atmosphere, while preventing part of the outgoing infrared radiation from the Earth’s surface and lower 

atmosphere from escaping into outer space. This process has kept the Earth’s temperature about 59 degrees 

Fahrenheit warmer than it would otherwise be. Current 

life on the Earth could not be sustained without the 

natural greenhouse effect. 

Greenhouse gases (GHGs). Gases in the Earth’s atmosphere 

that produce the greenhouse effect. Changes in the concentration of certain greenhouse gases, due to human 

activities such as the burning of fossil fuels, increase the 

risk of global climate change. Greenhouse gases include 

water vapor, carbon dioxide, methane, nitrous oxide, 

halogenated fluorocarbons, ozone, perfluorinate carbons, 

and hydrofluorocarbons.

Interval meter. An electricity meter that measures a facility’s 

energy usage in short increments (typically 15 minutes). These meters are useful for determining electricity 

demand patterns and participating in real-time pricing 

programs.

Kilowatt-hour (kWh). The basic unit for measuring the 

generation and consumption of electrical energy. A 

megawatt-hour (MWh) of electricity is equal to 1,000 

kilowatt-hours. A kilowatt and a megawatt are units of 

generation capacity.

Low-impact hydropower. Hydroelectric power generated 

with fewer environmental impacts than large-scale 

hydropower, by meeting criteria such as minimum river 

flows, water quality, fish passage, and watershed protection. These hydropower facilities often operate in a “run 

of the river” mode, in which little or no water is stored 

in a reservoir.

Net metering. A method of crediting customers for electricity that they generate on-site. Customers generating their 

own electricity offset what they would have purchased 

from their utility. If they generate more than they use in 

a billing period, their electric meter turns backward to 

indicate their net excess generation. Depending on the 

individual state or utility rules, the net excess generation 

may be credited to their account (in many cases at the 

retail price), carried over to a future billing period, or 

ignored.

New renewable generation facilities. Facilities built in the 

recent past or will be built to meet the growing market 

demand for green power. Currently, new generation 

must be from renewable energy generating facilities that 
Glossary

42 Glossary

began operation on or after January 1, 1997, according to 

the Green-e Energy certification standard and EPA Green 

Power Partnership requirements.

Offsets. Expressed in tons of emissions reduction and may 

come from a variety of project types not related to power 

generation. In voluntary markets to date, renewable 

energy projects have qualified as sources for offsets, relying on a rigorous review and criteria that assess whether 

the emissions reductions are real, additional, measurable, permanent and verified. However, output from a 

project that is used as a REC for energy purposes cannot 

also be claimed for offset purposes, too. 

On-site renewable generation. Electricity generated by 

renewable resources using a system or device located at 

the site where the power is used.

Peak demand. The maximum power consumption for a 

facility, measured over a short time period such as 15 

minutes or an hour.

Power marketer. An entity that buys and sells power generated by others. A green power marketer is an electricity 

supplier that offers a green power product.

Power purchase agreement (PPA). A contract to purchase 

power from a third-party project developer for a specified period and price. This type of contract can be used 

to purchase power from on-site renewable generation 

systems, avoiding large capital investments for the enduser.

Registry. Usually refers to “climate registries,” which are 

systems that set consistent and transparent standards 

to calculate, verify, and publicly report greenhouse gas 

emissions. 

Renewable electricity. Power generated from renewable 

resources and delivered through the power grid to end 

users.

Renewable energy certificates (RECs). Tradable instruments that can be used to meet voluntary renewable 

energy targets as well as to meet compliance requirements for renewable energy policies. A REC is a 

certificate that represents the generation of 1 megawatthour (MWh) of electricity from an eligible source of 

renewable energy. Each REC denotes the underlying 

generation energy source, location of the generation, 

and year of generation (a.k.a. “vintage”), environmental 

emissions, and other characteristics associated with the 

generator. RECs represent a claim to the environmental 

attributes associated with renewable energy generation, 

but purchasers should nevertheless ensure that their 

contracts are explicit about which environmental attributes are conveyed to them. RECs are also known as 

“green tags,” “green certificates,” and “renewable energy 

credits.”

Renewable energy resources. Resources that are continuously replenished on the Earth, such as such as wind, 

solar, geothermal, hydropower, and various forms of 

biomass. Some definitions also include municipal solid 

waste as a renewable resource.

Renewable portfolio standard (RPS). More recently called 

a renewable electricity standard. A regulatory mandate or 

target stating that a minimum percentage or amount of 

each electricity supplier’s resource portfolio must come 

from renewable energy.

Tracking system. An electronic database that is used to 

track the ownership of RECs, much like an online bank 

account. A tracking system issues a uniquely numbered 

certificate for each MWh of electricity generated by a 

generation facility registered in the system, tracks the 

ownership of certificates as they are traded, and retires 

the certificates once they are used or claims are made 

based on their attributes or characteristics. Because each 

MWh has a unique identification number and can only 

be in one owner’s account at any time, a tracking system 

reduces ownership disputes and the potential for double 

counting.
Guide to Purchasing Green Power 43

Appendix 

Green Power Considerations 

for Federal Agencies

P

urchasing green, or renewable1, power means making 

a difference by changing the way we purchase basic 

commodities. For the federal government—the largest 

consumer of electricity in the United States with an 

annual electricity bill of more than $4 billion—the ability to 

make a difference is enormous. This appendix provides an 

overview of considerations specific to federal agencies that 

buy renewable power.

Section 203 of the Energy Policy Act of 2005 (EPAct 2005) 

directs that federal agencies meet renewable energy consumption goals, eventually reaching 7.5 percent of the 

electric energy they consume. Executive Order 13423 further 

directs agencies that at least half of their renewable energy 

consumption must come from “new” renewable sources 

(projects built after January 1, 1999) and, to the maximum 

extent possible, renewable energy generation projects should 

be implemented on agency property for agency use.2 The goal 

of these requirements is to make the federal government a 

leader in developing the market for renewable power.

As a result of these policies (and previous executive orders), 

the federal government’s purchases of renewable power have 

increased dramatically over the last decade (Figure A-1). In 

fiscal year 2006, the latest year for which detailed data are 

available, purchases of renewable energy, including renew1 The federal government uses the term “renewable” instead of “green” power because it more clearly defines the product being purchased. The term 

“renewable” will be used in this appendix.

2 The Energy Independence and Security Act (EISA) of 2007 also directs that 30 percent of the hot water demand in new federal buildings (and major 

renovations) be met with solar hot water equipment.

5.00%

6.00%

7.00%

8.00%

0.00%

1.00%

2.00%

3.00%

4.00%

2000 2001 2002 2003 2004 2005 2006 2007 2008

On-Site Generation

Direct Purchases Bonus, Federal or Indian Land

Eligible Old Renewable Electricity New Renewable Electricity

Non-Electric RE

2.5%

Goal Prior to 2007

3.0%

Goal for 2007–2009

5.0%

Goal for 2010–2012

7.5%

EO 13123

EPAct 2005

EO 13423

Goal for 2013 forward

.15% .26% .53%

1.60%

2.78%

6.93% 6.94%

7.30%

5.58%

Figure A-1. Renewable Power Purchases by Federal Agencies

Source: DOE/FEMP; Note: direct purchases during 2000–2006 include RECs; categories changed in FY07 due to a change in the 

renewable reporting requirements.
Appendix

44 Green Power Considerations for Federal Agencies

able power, renewable electricity credits (RECs), and landfill 

gas, comprised more than 80 percent of federal government 

renewable energy use (with the remainder coming from onsite generation, as identified in Table A-1). 

Although the federal government is meeting its current goals, 

many challenges remain in making sure that the government’s power purchases are promoting the development of 

new, high-quality renewable resources in the most cost-effective way. By reading this guidebook and taking advantage 

of the technical support provided by the Department of 

Energy’s (DOE) Federal Energy Management Program 

(FEMP), energy managers are taking an important step in 

helping the federal government achieve these goals. Federal 

agencies that are interested in participating in procurements run by the General Services Administration (GSA), 

the Defense Energy Support Center (DESC), or the Western 

Area Power Administration (Western) should read the section “Procurement Approaches to Renewable Electricity and 

RECs” in this appendix.

Table A-1. Federal Renewable Technologies and 

Purchases, 2006

Source

Annual Energy

Contribution (GWh)

Biomass thermal 109

Green power purchases 2245

Ground-source heat pump 182

Photovoltaics 34

Solar thermal 11

Wind 19

Total 2600

Source: DOE/FEMP. Data FY2006. Purchases include RECs and renewable power 

purchases.

Federal Definitions of 

Renewable Energy

EPAct 2005 (sec. 203) defines “renewable energy” as electric 

energy generated from solar, wind, biomass, landfill gas, 

ocean (including tidal, wave, current, and thermal), geothermal, municipal solid waste, or new hydroelectric generation 

capacity achieved from increased efficiency or additions of 

new capacity at an existing hydroelectric project. Biomass 

resources can only meet the renewable consumption goals if 

they meet carefully defined criteria, which federal agencies 

should ensure they are familiar with before proceeding with 

a biomass-fueled renewable energy project. Federal agencies 

can use the renewable resources listed above as defined in 

EPAct 2005 to meet renewable power use goals. 

FEMP provides guidance on renewable resource definitions 

and other issues relating to Executive Order 13423 and 

EPAct 2005’s renewable use goals on its Web site at <www1.

eere.energy.gov/femp/pdfs/epact05_fedrenewenergyguid.pdf>. 

Note that FEMP guidance is subject to change.

Benefits from Federal 

Renewable Power Purchases

Owing to the large volume of electricity consumed by the 

federal government, agencies purchasing even a slightly 

greater percentage of renewable power can have a large benefit for the environment and the overall renewable power 

market. In addition to the benefits discussed earlier in this 

guidebook, renewable power purchases by federal agencies 

provide benefits specific to federal customers.

Federal agencies accrue many direct benefits from purchasing renewable energy, including: 

• Compliance with federal goals. EPAct 2005, Executive 

Order 13423, the Energy Independence and Security 

Act of 2007 (EISA 2007), and Executive Order 13514 

contain several energy management goals for federal 

facilities, including: energy intensity reduction, greenhouse gas reduction, green buildings, and the use of 

renewable energy. Using renewable energy or installing 

on-site generation systems might help an agency meet 

all four of these goals (although the ability to count 

renewable energy and RECs toward energy intensity 

reduction is being gradually phased out between 2007 

and 2012).

• Accomplishment of an agency’s organizational mission. Many in the federal government understand that 

the government’s overall mission also includes a commitment to environmental protection. Beyond that 

general obligation, individual agencies, such as the EPA, 

have the specific mission of protecting the environment. Purchasing renewable energy is one way to help 

fulfill both goals.

• Demonstration of responsiveness and leadership.

The purchase of renewable energy represents a clear 

demonstration of the agency’s responsiveness to its 

citizens, the majority of whom, according to several 

surveys, favor renewable energy. The federal government has shown that it can be a leader in the area of 

renewable energy.
Appendix

Guide to Purchasing Green Power 45

• Increased visibility. Presidential awards are given to 

federal agency energy management teams that strive to 

comply with federal requirements. Energy scorecards 

for each federal agency are tallied to gauge the degree 

of compliance. Federal agencies that become EPA Green 

Power Partners are also eligible for awards through the 

partnership program.

Federal renewable energy purchases also include societal 

benefits, such as: 

• National security. National security is one of the 

principal responsibilities of the federal government. By 

purchasing domestically produced renewable energy, 

all federal agencies can contribute to the nation’s energy 

security. Because of the special role of government facilities in national security, the use of distributed, on-site 

power generation resources at these facilities enhances 

the country’s overall security.

• Market transformation. Given the size of the federal government’s energy consumption, purchases of 

renewable power by federal agencies help stimulate 

the overall renewable power market. Further, a strong 

federal demand for renewable energy demonstrates that 

switching to renewable energy is a national priority; 

exemplifies renewable power’s societal and customer 

benefits; facilitates the availability of renewable power 

products, which can help lower their cost. 

Regulations Governing 

Renewable Power 

Procurement

Best Value

The Federal Acquisition Regulation (FAR) has traditionally 

focused on minimizing the government’s costs by strongly 

favoring the procurement of the least expensive goods and 

services, often leaving contracting officers little room to consider value. Procurement reform during the 1990s, however, 

more closely aligned federal acquisition procedures with the 

commercial sector’s practices through a stated preference for 

commercial products and the adoption of commercial business practices.

In addition, the traditional focus on least cost procurement 

has shifted to obtaining the best value (FAR Part 1.102[a]). In 

determining best value, contracting officers can consider an 

array of factors besides cost, such as environmental and energy 

efficiency (FAR Part 8.405[c][3]). As formally defined in the 

FAR (Part 2.101), best value means “the expected outcome of 

an acquisition that, in the Government’s estimation, provides 

the greatest overall benefit in response to the requirement.”

Commercial Items

In restructured or competitive electricity markets, the most 

direct path to a renewable energy purchase is to make 

use of the “commercial items” provisions in FAR Part 12. 

Commercial items are broadly defined as goods and services sold competitively in the commercial marketplace in 

substantial quantities (FAR subpart 2.101). Since an active 

competitive market reduces procurement risks, agencies are 

strongly encouraged to favor the purchase of commercial 

items, through both specific language to that effect and the 

authorization to use less stringent acquisition procedures.

With large volumes being commercially traded in public 

markets each day, electricity is undisputed as a standard 

commercial item. But as a specific type of electricity, renewable energy’s status as a commercial item is slightly less 

certain. Support for such a designation is aided by the ongoing development of active renewable energy exchanges in 

which commercial entities buy and sell renewable energy in 

large quantities.

Sources of Federal Authority to 

Purchase Renewable Power

Energy Policy Act of 2005

The Energy Policy Act of 2005 (EPAct 2005) provides the 

fundamental authority for federal agencies to buy renewable power. 

Energy Independence and Security Act of 2007

The Energy Independence and Security Act of 2007 (EISA 

2007) directs federal agencies to purchase solar thermal hot 

water systems and makes it easier for agencies to finance 

renewable energy projects through energy savings performance contracts.

Executive Order 13423

To comply with E.O. 13423, federal agencies must ensure that 

at least half of all renewable energy required under EPAct 

2005 comes from new renewable sources (developed after 

January 1, 1999). To the maximum extent possible, renewable 

energy generation projects should be implemented on agency 

property for agency use. Agencies can also purchase renewable energy to help meet E.O. 13423 requirements.

Executive Order 13514

Federal agencies are required to inventory and manage 

greenhouse gas (GHG) emissions to meet federal goals and 

mitigate climate change. Renewable power is an important 

component of GHG management.
Appendix

46 Green Power Considerations for Federal Agencies

Even in the absence of an active renewable energy market, 

agencies may specify a requirement for electricity (the standard commercial item) generated from renewable resources 

(a specification in addition to the standard commercial item). 

In most cases, the favorable contracting procedures afforded 

to commercial items would still be applicable. While the 

boundary between what is and is not considered a commercial item is often case specific, in general an agency should 

be wary of specifying any requirement beyond what is currently commercially available.

In addition, certification efforts by state and nongovernmental organizations help to establish renewable energy as a 

commercial item by establishing a brand name. Third-party 

certification provides additional value to the federal government through verification and annual audits to eliminate 

double counting of renewable products. When buying renewable power and RECs for federal agencies, the GSA and DESC 

routinely use the commercial item designation and require 

third-party verification.

Utility Services

As a large purchaser of electricity, the federal government 

has well developed methods for purchasing power, known 

as utility services. FAR Part 41 governs these procurements, 

typically from regulated utilities, which have been used by 

agencies to purchase renewable power, RECs, and on-site 

generation systems through a power purchase agreement 

(PPA).

FAR and the Environment

FAR Part 23 seeks to minimize the environmental impacts of 

federal purchases. Subpart 23.2 addresses energy and water 

efficiency, as well as renewable energy. This subpart states, 

“The Government’s policy is to acquire supplies and services 

that promote energy and water efficiency, advance the use 

of renewable energy products, and help foster markets for 

emerging technologies.” Subpart 23.7 directs agencies to 

contract for environmentally preferable and energy-efficient 

products and services. “Environmentally preferable” is 

defined by FAR subpart 2.101 as “products or services that 

have a lesser or reduced effect on human health and the 

environment when compared with competing products or 

services that serve the same purpose. This comparison may 

consider raw materials acquisition, production, manufacturing, packaging, distribution, reuse, operation, maintenance, 

or disposal of the product or service.”

Part 11 of the FAR, “Describing Agency Needs,” states that 

environmental objectives, including the purchase of products and services that use renewable energy technologies, 

must be considered when specifying requirements (FAR Part 

l1.002[d]). Requirements for renewable energy should be 

specific enough to limit the number of factors in competing 

offers to be evaluated but general enough so as not to jeopardize the product’s status as a “commercial item.” In general, 

as the requirements become more specifically defined, the 

importance of price relative to other considerations increases 

(FAR Part 15.101).

Innovative Purchase Opportunities

Even though the procurement of renewable power has 

become common enough that it is generally not “innovative,” 

in some situations the methods outlined above do not apply, 

and innovative methods are needed to implement a purchase. 

The Federal Acquisition Streamlining Act of 1994 and the 

Federal Acquisition Reform Act of 1996 encourage contracting officers to take initiative and pursue opportunities that 

they believe to be in the best interests of the government 

(FAR l.102[d]).

Procurement Approaches 

to Renewable Electricity 

and RECs

Restructured/Competitive Markets

In a restructured or competitive market, agencies must use 

competitive acquisition procedures to “shop” for renewable 

energy from a variety of providers. Since an agency will be 

evaluating competing offers, normal solicitation procedures 

must be followed. Federal agencies should follow one of two 

solicitation approaches: 1) using designated contracting agencies, such as the GSA, the DESC, or, in some cases, Western; 

or 2) serving as the contracting agency themselves. Although 

serving as the contracting agency offers more control and 

flexibility, the designated contracting agencies have gained 

significant expertise in the area of competitive electricity 

power procurement, including renewables.

Fully Regulated Markets

Where retail competition is not available, federal agencies 

may be able to buy renewable power through a green pricing program offered by their local utility. If such a program 

exists, agencies should find out the specific participation 

procedures. If a GSA areawide contract (AWC) is already in 

place with this utility, the agency should complete the utility’s green-pricing contract, as well as the AWC Exhibit A 

contract. A competitive solicitation is not required since it is 

a utility service.
Appendix

Guide to Purchasing Green Power 47

RECs 

Federal agencies can buy RECs throughout the country. 

Since a variety of suppliers offer RECs, normal solicitation 

procedures must be followed. GSA, DESC, and Western have 

experience with REC procurement.

On-site Systems

Federal agencies are encouraged to procure renewable power 

in the form of on-site renewable energy systems. EPAct 

2005 provides a bonus to agencies toward federal renewable 

energy goals by allowing agencies to double count renewable 

energy if it is produced on-site and used at a federal facility, produced on federal lands and used at a federal facility, 

or produced on Native American land and used at a federal 

facility. 

On-site systems can be procured through a variety of financing mechanisms, including energy savings performance 

contracts (ESPCs), utility energy services contracts (UESCs), 

and power purchase agreements (PPAs). ESPCs and UESCs 

allow a third party to provide the capital financing for the 

renewable system to be repaid over the life of the system (for 

more information about ESPCs and UESCs, see the FEMP 

financing page listed at the end of this appendix). Agencies 

can also purchase on-site systems using appropriated funds 

and standard contracting for commercial items.3 Before starting a renewable power project, it is important to contact the 

local utility regarding interconnection procedures, net metering, incentives, power purchase agreement (PPA) rules, tariff 

provisions, and standby charges.

Federal agencies can also purchase renewable power produced by on-site renewable energy systems through PPAs, 

as described in Chapter 7 of this guide. While these types 

of power purchase contracts have become common outside 

the federal government, the federal government has limited 

experience with these procurement methods. PPA purchase 

terms usually extend over 10 to 20 years, as shorter contract 

terms make it harder for project developers to obtain financing. GSA and other agencies have executed power purchase 

agreements with terms of 10 years or less, although this 

shorter term makes the project riskier for the developer and 

thus more expensive for the federal agency. Usually, federal 

agencies purchase electricity as a utility service under FAR 

Part 41, which limits contracts to 10 years. A contract term 

longer than 10 years may be possible if Western acts as the 

procurement agent for facilities in the Western service territory, or if the procurement is done under DoD’s 2922A 

30-year authority. The DESC renewables team has experience 

with entering into PPAs for on-site renewable systems and 

is a good resource for federal agencies looking to make this 

type of purchase.

Some of the factors that need to be considered in a 

PPA include the type of land use agreement, National 

Environmental Policy Act (NEPA) review, default and 

recourse for the agency, and utility incentive payments. As 

with other on-site systems, it is important to coordinate with 

the local utility on issues such as interconnection requirements, net metering rules, and potential standby/tariff 

changes. In addition, it is important that the PPA contract 

ensures that the ownership of RECs produced by the system 

is clearly articulated. In most of the federal PPA projects 

completed to date, the project developer has sold the RECs 

to the local utility to help the utility meet its solar requirement. Selling valuable RECs allows the project developer to 

reduce the PPA price. If the agency does not retain the RECs, 

it needs to purchase “replacement” RECs in order for the onsite system to count toward renewable consumption goals 

(this is known as a “REC swap”). In addition, if the agency 

does not retain the RECs, it will not be able to claim the 

carbon reductions in its comprehensive greenhouse gas emissions inventory. On-site systems whose RECs are swapped 

are still eligible for the double bonus toward federal renewable purchasing goals, as long as the swap is done according 

to FEMP’s guidance on this subject.

Using GSA, DESC, or Western 

GSA Power Procurement Services

GSA has assisted many federal agencies in the procurement 

of renewable power, and its ability to aggregate renewable 

requirements for many agencies might result in lower prices. 

GSA’s support to its federal customers for energy-related products is provided by the GSA Energy Division at <www.gsa.

gov/energy>. Through this division, GSA provides areawide 

contracts (AWC) for the procurement of utilities and aggregate 

purchasing of natural gas and electricity. GSA customizes its 

aggregate electric and natural gas procurements to meet the 

financial and physical supply requirements of its federal and 

non-federal agency clients. In addition, GSA has federal supply schedules for energy services, which federal agencies can 

use to help assess and manage their procurement of renewable power and renewable energy generation systems. Visit 

<www.gsa.gov/energyservices> for more information. 

DESC Power Procurement Services

Under the DESC Electricity and Renewables Program, competitive solicitations are issued for electricity, RECs, and 

on-site renewable power projects. DESC is involved in retail 

electricity purchases in states that have approved and implemented deregulation/restructuring. RECs can be purchased 

3 The GSA supply schedule includes some renewable energy systems.
Appendix

48 Green Power Considerations for Federal Agencies

nationwide. DESC recently expanded its offerings to include 

competitive purchases for on-site renewable generation that 

are financed, owned, operated, and maintained by a third 

party.

Under its Electricity and Renewables Program, DESC:

• Procures electricity for Department of Defense and federal civilian activities.

• Uses aggregation to attract market interest without customer cross-subsidization.

• Acts as procurement agent for on-site PPA projects.

• Works with customers to develop requirements, identify risk preferences, and develop risk-mitigation plans.

• Tailors each solicitation to market conditions and customer requirements.

• Conducts “best value” and “low-price technically 

acceptable” acquisitions, depending on requirements 

and customer preference.

• Contracts for Economic Load Response Services.

• Uses various pricing methods: fixed price, block and 

index, and Locational Marginal Pricing.

• Has extensive experience procuring power for the federal government.

• Performs all contract administration functions.

DESC’s program uses commercial practices for its solicitations and procurement strategy, which has been central to 

successfully engaging the market. In addition, DESC’s program is flexible enough to support unusual and/or “out of the 

box” customer requests and requirements while complying 

fully with applicable procurement regulations. DESC is also 

involved in ESPC and UESC procurements on behalf of DoD 

and federal civilian agencies.

Go to <www.desc.dla.mil> to view ongoing DESC solicitations or to find contact information for DESC’s electricity and 

renewables acquisition team.

Western Renewable Power Products

Regardless of location, federal agencies can purchase RECs 

from Western. An agency pays for the renewable energy/

benefit at cost, plus a fee to cover the administrative cost of 

acquiring the renewable resources from a supplier. For more 

information about these programs, visit Western’s Web site at 

<www.wapa.gov/powerm/pmtags.htm>.

For a federal agency that is a Western customer within the 

Western territory, Western may be able to buy and deliver 

renewable energy to the federal site. Agency costs include 

renewable power generation, transmission (if needed), related 

ancillary services, distribution (if needed), and program 

administration. If the agency receives power from another 

utility, the agency will need to obtain the cooperation of that 

utility before arrangements can be made to deliver renewable 

energy from Western.

If the federal agency has a physical site for a renewable energy project within the Western territory and would be willing 

to host a third-party owned system, Western can purchase 

the energy from that project on behalf of the agency under a 

long-term contract.

Agency Procurement

If an agency does not deem it advantageous to request 

assistance from GSA, DESC, or Western, it may contract 

separately for renewable energy. In this case, the purchase 

should meet the requirements of the FAR section the agency 

has decided to use, such as FAR Part 12 or Part 41.

FEMP Assistance for On-site 

Renewable Generation 

Projects

On-site renewable generation projects face different issues 

than do power purchases. To help federal agencies tap the 

renewable resources that are available at their facilities, 

FEMP offers several programs to assist with on-site generation projects.

Agency-Level Planning

FEMP offers technical assistance to help federal agencies 

identify and prioritize energy projects across the entire agency 

portfolio. This can be useful when the agency elects to develop a long-term strategic vision that can be used to prioritize 

energy management activities over a multi-year period.

Renewable Resource Screenings and 

Assessments

To help agencies and facility managers assess their opportunities for on-site renewable energy generation, FEMP offers 

assistance with renewable resource screenings and assessments. Screenings can be done on a large group of sites to 

identify which of those sites have potential for cost-effective 

renewable projects, or can be done to screen out sites with 

little potential. Screenings can also be conducted on a single 
Appendix

Guide to Purchasing Green Power 49

site or as part of an ESPC or UESC project. While screenings are done at a broader level, assessments dig deeper to 

analyze which specific renewable technologies would be best 

for satisfying the energy needs at particular sites. Screenings 

and assessments take into account such factors as the quality of renewable resources available, applicable incentives or 

rebates, and other site-specific factors. To begin the screening 

or assessment process, information about each site is needed 

including site name, address, longitude and latitude, square 

footage of individual buildings, and utility use and cost data 

for each fuel.

Agencies can generally assess the quality of renewable 

resources at their sites by using renewable resource maps. 

Maps are available at <www.nrel.gov/gis/femp.html> for a 

wide variety of renewable resources including solar, wind, 

biomass, and geothermal. These maps indicate the degree 

of availability of each resource at locations across the entire 

United States. Some maps show where each renewable technology would be cost-effective for federal facilities under 

varying assumptions including electricity and renewable system prices. 

Agencies can also find screening tools on the FEMP Web site. 

By entering basic site information into these software tools, 

agencies can obtain a general indication of which sites have 

potential for cost-effective projects using a particular renewable technology.

Before initiating a project, renewable resources at a site must 

be confirmed, especially for renewable resources that are 

very site-specific, such as wind. Resource maps and screening tools are a good start, but it is important to consult an 

expert for a professional evaluation before implementing 

renewable energy projects.

Technical Assistance

FEMP can also help agencies implement renewable energy 

projects. This technical assistance can include engaging 

stakeholders, developing product specifications, sizing systems, reviewing plans and specifications, designing requests 

for proposals, reviewing and evaluating proposals, choosing the best financing and contract vehicles, and in some 

cases evaluating the performance of installed systems. FEMP 

allocates funding according to a “Call-for-Projects” process, 

in which federal agencies apply through a merit-based selection process for FEMP-funded technical assistance on their 

renewable energy projects, but agencies may also fund assistance through interagency agreements. 

Technical assistance funding is not for system purchases, but 

FEMP does help some project teams acquire additional project financing if needed. Agencies may participate in FEMP’s 

alternative financing programs, through which the contractor 

pays the up-front costs of an energy efficiency or renewable 

energy project and is repaid over the term of the contract 

from the agency’s guaranteed energy cost savings. FEMP 

has helped agencies obtain financing for biomass fuels, geothermal heat pumps, parabolic-trough solar collectors, and 

photovoltaic systems through these financing programs.

Training

FEMP offers various training courses to help federal energy 

managers become more proficient in energy management and 

learn about alternative forms of financing for energy-saving 

projects. For more information, visit FEMP’s training Web 

site listed at the end of this appendix.

Utility-Scale Projects

FEMP encourages agencies to facilitate large renewable energy projects on federal lands. These utility-scale projects are 

typically owned by third parties and can be developed under 

Enhanced-Use Lease (EUL) arrangements, for agencies with 

such authority. The projects offer the opportunity for largescale application of renewable energy technologies, but it is 

very important to coordinate with the local utility regarding interconnection, net metering, tariff changes, etc. before 

moving forward with a utility-scale project.

Power generated from a utility-scale project can be used to 

meet the load of the host federal site, or be sold by the local 

utility to its non-federal customers.

Federal sites in western states should contact the Bureau of 

Land Management (BLM) about opportunities to collaborate 

on utility-scale renewable energy projects on federal lands. 

FEMP and BLM have identified those federal lands with the 

best potential for large renewable energy projects. The joint 

study is available on FEMP’s Web site. 

Key Elements of a Successful 

Procurement or On-site 

Installation

Based on several years of experience buying renewable power 

and installing on-site renewable energy systems, certain lessons for federal agencies have emerged.

Stakeholder Involvement

Renewable power advocates must get agreement in advance 

from internal stakeholders such as comptrollers, energy 

managers, and key decision-makers. The stakeholders must 

participate in the process and make reasoned, balanced 
Appendix

50 Green Power Considerations for Federal Agencies

decisions. It is important to be honest and clear about the 

project’s renewable sources and benefits. A cross-functional 

team with representatives from across the organization will 

result in the best project.

Cost Control

Federal energy management directives specifically allow the 

savings from energy efficiency to be used to pay for renewable energy. Projects that bundle renewable power purchases 

with energy efficiency projects (possibly through an ESPC or 

UESC) can result in a shorter payback period for the combined project. Buying RECs is generally the least expensive 

way to meet renewable energy requirements, but agencies 

should consider making at least a small purchase of renewable power through their local utility, if they have a program.

Developing an Effective Solicitation

An agency’s electricity consumption data should be part of 

any renewable power RFP and are required by GSA, DESC, 

and Western for the procurement of on-site systems. The 

purchasing agency should notify renewable power suppliers 

of the RFP and conduct a pre-proposal meeting with prospective suppliers if the procurement is not standard.

Load Aggregation

Combining several facilities into one acquisition can lead to 

big purchases, but it is best to target these aggregation efforts 

only to big users. Trying to aggregate many smaller users can 

be difficult. It is best to keep the procurement simple.

Supplier Relations

Utility green pricing should be seen as a partnership in 

which the utility and the federal purchaser work together to 

construct a program that meets both their needs. Investorowned utilities are usually not able to launch their own 

renewable power programs without public utility commission 

approval. However, a large federal customer could help persuade a utility to develop a new program that would then be 

made available to other customers. For all electricity suppliers, federal agencies should consider requesting a customized 

product, in order to take advantage of discounted pricing 

that may be available for large volume purchases.

Capturing the Benefits of the 

Purchase

After successfully completing a renewable power purchase, a 

federal agency usually wants to publicize its efforts. In addition to the publicity messages available to other institutions, 

federal agencies can spread the word that the agency is working to fulfill its part of the federal renewable energy goal. 

Agencies with exemplary energy management programs are 

eligible for FEMP awards, which enhance an agency’s image 

both inside and outside the government. Especially with onsite generation, however, it is important to be careful about 

making claims when REC-swapping or selling is involved. 

An agency cannot claim to be using power generated by onsite solar, for example, if the RECs are sold or swapped for 

some other type of RECs.

Federal agencies are required to report annually on their 

progress toward meeting their energy management goals. 

FEMP has published guidelines for counting renewable 

power purchases and on-site renewable energy toward an 

agency’s energy management goals at <www1.eere.energy.

gov/femp/regulations/facility_reporting.html>.

Information for Potential 

Suppliers to the Federal 

Government

All federal government procurements are made competitively 

unless there is a compelling reason for a sole-source contract. 

Renewable energy suppliers should contact the GSA (Ken 

Shutika), DESC (John Nelson), or Western (Randy Manion) 

to be placed on renewable procurement notification lists. 

Contact information is listed at the end of this appendix. 

Summary of Renewable 

Power Opportunities for the 

Federal Government

The benefits of renewable energy are enormous, and as the 

nation’s largest purchaser of electricity, the federal government can have a significant impact on the way that power 

is produced now and in the future. Federal agencies already 

have an unprecedented and growing range of options for 

purchasing renewable energy, and EPAct 2005 directs federal agencies to increase their use of renewable energy. With 

more emphasis on “best value” purchasing and the explicit 

consideration of environmental characteristics, contracting 

officers now have more options than ever for buying renewable energy. Using the strategies outlined in this guidebook, 

federal agencies can meet their renewable energy goals and 

help move the United States toward a more sustainable energy future.
Appendix

Guide to Purchasing Green Power 51

Federal Resources for 

Renewable Power 

Information

For federal agencies buying renewable power, assistance 

is available from the following federal agencies and national 

laboratories:

Green Power Network:

<apps3.eere.energy.gov/greenpower/>

FEMP Web sites:

Renewable energy: <www1.eere.energy.gov/femp/technologies/renewable_energy.html>

Renewable purchasing: <www1.eere.energy.gov/femp/technologies/renewable_purchasingpower.html>

Renewable power purchase agreements: <www1.eere.

energy.gov/femp/financing/power_purchase_agreements.html>

Financing: <www1.eere.energy.gov/femp/financing/

mechanisms.html>

Training: <www1.eere.energy.gov/femp/news/events.html>

Federal Renewable Energy Working 

Group:

<www1.eere.energy.gov/femp/technologies/renewable_

workinggroup.html>

Federal Acquisition Regulation (FAR):

<www.acquisition.gov/far/>

For assistance with program resources:

Department of Energy, Federal Energy Management Program

Mark Reichhardt, Renewable Purchasing (202) 586-4788

mark.reichhardt@ee.doe.gov

Anne Sprunt Crawley, Technical Assistance (202) 586-1505

anne.crawley@ee.doe.gov

For assistance issuing solicitations:

General Services Administration 

Ken Shutika (202) 260-9713 

ken.shutika@gsa.gov

Defense Energy Support Center 

John Nelson (703) 767-8523 

john.nelson@dla.mil

Andrea Kincaid (703) 767-8669

andrea.kincaid@dla.mil

<https://www.desc.dla.mil/DCM/DCMPage.asp?pageid=589>

Western Area Power Administration

Renewable Resources for Federal Agencies Program

Randy Manion (720) 962-7423

manion@wapa.gov

For technical assistance, including market intelligence, 

market rules, and the development of requirements and 

statements of work, contact:

Lawrence Berkeley National Laboratory

Gerald Robinson (510) 486-5769

GTRobinson@lbl.gov

Rich Brown (510) 486-5896

REBrown@lbl.gov

National Renewable Energy Laboratory

Chandra Shah (303) 384-7557

chandra.shah@nrel.gov

Pacific Northwest National Laboratory 

Mike Warwick (503) 417-7555

mike.warwick@pnl.gov

For more information or assistance in developing a plan 

to enhance the security of federal facilities through the 

use of renewable energy, contact:

National Renewable Energy Laboratory

Bob Westby (303) 384-7534

Robert.Westby@nrel.gov 

Sandia National Laboratory, Defense Energy Support 

Program

Dave Menicucci (505) 844-3077

dfmenic@sandia.gov
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Guide to Purchasing Green Power

Renewable Electricity, Renewable Energy 

Certificates, and On-Site Renewable Generation

a collaboration of

March 2010