Home Renewable Energy Credits: Is It a Viable Strategy to Participate in the Energy Transition in 2021?

By now, most people are thankfully past the point of asking whether they should be concerned about climate change and instead are looking for ways they can contribute to the solutions. Sure, work remains to be done to get 97% of the population to concur with the 97% of scientists who read studies and report on the facts of the climate crisis, but if you’re reading this article I’m going to go ahead and assume you’re already on board with seeking out solutions.

Given that, and since we’re coming up on the New Year when everyone looks for resolutions and ways to improve in the coming year, I thought I’d highlight an opportunity for improving the sustainability of your home that I came across recently (even having named the associated organization as one of my Under the Rader Must-Follows for the past year). The crux of the idea is renewable energy credits, or RECs.

Source: Clean Energy Resource Teams

RECs are not a new concept, having been around in various forms for many years at this point since the renewable energy revolution started to gain favor. The idea behind RECs is that if you, your home, or your business is using dirty fossil fuel energy that’s provided by default from the grid, but you want ‘credit’ for actually being greener, you can opt to buy RECs to offset the carbon-intensive energy you’re actually using. The purchase of a certain number of RECs provides funds directly to a 100% renewable energy generation source that’s contributing to the grid, thus ensuring your total accounting includes the monetary funding of cleaner energy sources while also creating even more of a successful market opportunity for current and future renewable energy projects.

Explained more clearly by the U.S. Environmental Protection Agency (EPA), RECs can be defined as “a market-based instrument that represents the property rights to the environmental, social and other non-power attributes of renewable electricity generation.” The EPA site has a lot of great information on how RECs work and why they’re important, but the concept faces certain criticism as well. Issues with greenwashing climate harming projects or companies, the potential for double counting and thus not being as impactful as they could be, or even just being a half step solution where we need a full-court press as soon as possible are common critiques hurled at RECs and at their sellers and buyers.

For my personal sustainability actions, I hadn’t given RECs much consideration—not sure where I stood on the criticisms and recognizing that they are typically more for businesses than homes, but that was before I was contacted by Ben Pfeffer of the new startup for easy and social RECs via Sustainabode. Sustainabode bills itself as renewable energy for all homes, regardless of income level or home type (where you’re located, owning vs. renting, etc.), that taps into the social nature of people to try to get even greater reach. I told Ben I’d love to give it a try and also chat with him about his idea and how the business is going for my site, warning him that I still carried a bit of skepticism. He responded just how I was hoping he would—by telling me he was game for a good grilling on the efficacy and impact of RECs and Sustainabode. So, what follows is an edited version of our conversation so you can make up your mind (hint on my take: I’m going to be happily extending my membership as a part of Sustainabode):

Matt Chester: Let’s start off right with what’s most important to me and many customers or potential customers. How exactly does my participation lead to a reduced carbon footprint and an impact on the grid? If I’m paying, I want to know this isn’t just a token feel-good measure but it’s creating real change.

Ben Pfeffer: Yeah, great question. At the highest level, when you join Sustainabode you do so to change the way your electricity is produced. Electricity is normally produced by burning fossil fuels, releasing CO2 and other warming gasses. When you sign up with us, you’re buying RECs each month, which ensures your electricity is sourced from 100% renewable projects. Since fossil fuels are no longer being burned to make your electricity, your carbon footprint is much lower. Each year, your Sustainabode membership avoids the same amount of carbon as burning 955 gallons of gas, or the amount sequestered by 11 acres of forest. It’s a really easy change with a really large impact for just $6 a month.

MC: I’m glad you brought up the price. So, for $6 per month, how much renewable generation am I actually funding? 

BP: Each month your $6 is paying for 1,000 kilowatt-hours. To put that in perspective, the average home uses about 900 kilowatt-hours per month. So, a subscription is more than enough to cover most homes. If you typically use more than 1,000 kWh in a month, you can always buy multiple subscriptions to cover your use.

MC: OK, but back to the real tangible impact, you said my purchase makes it so my electricity is coming from renewables and not fossil fuels, but let’s be honest—I’m still plugged into the same grid. The electrons physically going into my home are unchanged once I start subscribing, and my power use is still creating emissions. So, am I really doing any good here?  

BP: I love getting questions like this, because it’s important to think critically about what’s going on under the hood.

One metaphor that some of our customers find helpful is to think of using electricity like drinking water out of a lake. All the water is mixed together, and you can’t physically separate it to drink only the clean water. There are pumps that are adding water back to replace what you’re sucking out. Most of the pumps are putting dirty water back into the lake. Signing up with Sustainabode lets you have clean water pumped into the lake to replace whatever you drink instead. Over time, and with enough people joining in, this will clean up the lake water.

Stepping away from metaphor into reality, you may not like that your electricity use is contributing to local emissions and pollution. One option you have is to stop using all electricity, or to build an off-grid solar and battery setup for your home. The problem is that the rest of your hometown is still running on the dirty grid that’s impacting you directly. So, alternatively, you can support grid-connected renewable energy by purchasing RECs. In doing so, your money provides incentives for developers to build renewable energy. Your question is right that even when people buy renewable energy, dirty power continues to pollute. But if you step back and take a long-term, systemic view of what’s going on the benefits of RECs really stand out.

The key to this is that all the RECs we buy use modern tracking systems to make sure they are never duplicated or used twice. When you buy RECs from us, we retire them for you, which means they are marked as “used” and can never be bought or sold again. We also take care to only buy what we consider to be high-quality RECs, which means they come from relatively new projects and have all their tracking information in order.

Source: Mass Climate Action Network

MC: I can understand that, the need to look at the big picture and how if the accounting is done robustly and accurately, then a difference can in fact be made. So, in terms of those renewable energy projects my subscription would fund, is my small contribution really helping them stay afloat and profitable? And what actual projects are being paid with Sustainabode RECs?

BP: RECs run on a supply and demand system. If nobody is buying them, renewable energy projects can’t sell them for anything. If everybody wants to buy them, those projects would bring in a lot more money than they do now. The more people who demand them, the higher their price, and the more money renewable energy projects get from selling them. This is how Sustainabode helps more renewable energy get built. By growing the community of people who are supporting the industry, we raise the demand for renewables. This raises the price of RECs, which makes the economics favorable for building more renewable energy projects.

All the renewable energy we buy is produced in the United States. Unfortunately, we don’t have the capability to buy localized renewable energy for each of our members right now. In the future, we’d love to source renewable energy for you from your region of the country, but to be able to offer that we need more buying power. Once we have more members it’s a feature we would love to add.

MC: Let’s get a bit philosophical on this now, because one of the under-discussed aspects of energy programs and initiatives in my opinion is the idea of moral licensing. This typically manifests itself in the way that people who buy more fuel-efficient cars will feel more entitled to drive further distances and actually increase fuel consumption, or once someone installs efficient lightbulbs they’re less likely to feel motivated to turn them off and overall energy use can actually increase. In the instance of RECs, do you have any concerns about similar issues? 

BP: This is definitely something that I’ve struggled with. But climate change is an emergency. We’ve got to stop putting CO2 into the atmosphere, and there’s no time to waste. In those efforts, solutions that bring energy conservation and efficiency are vitally important tools that we need to use in the fight against climate change, and we’ve got to work together and use every tool we have.

Too many times I’ve seen environmental conversations get framed as one solution vs. another. I hate this because the fact is that climate change is a big, complex, multifaceted problem. There are no silver bullet answers. The only way we’re going to succeed in fixing this problem is with an all-hands-on-deck approach. So, I think it’s important to think of energy efficiency and renewable energy (and many, many other solutions) as complementary, not as an either-or choice.

MC: Fair points. Let’s say I’m convinced about getting involved with something in the world of RECs. What’s the value in the approach you take at Sustainabode compared with other types of carbon offsets that may be available? 

BP: Usually the drawback with buying RECs is that it’s invisible. You’re supporting renewable energy, but there’s no obvious way for your friends or neighbors to learn about it. You probably don’t spend much time thinking about it yourself. It becomes out of sight, out of mind. Instead, Sustainabode is built to make RECs social. We include a nice-looking metal sign with every subscription, plus some stickers and a magnet. The reason for this is that Smarter people than me have studied this, and what they’ve found with rooftop solar is that when one person puts it on their roof, their neighbors become much more likely to put it on their roofs, too. Solar spreads socially. They’ve found this is true across the country with many different types of people. And it makes sense, right? Renewable energy is really popular, no matter who you ask. It’s one of the few things that most people support, regardless of their race, where they live, how they vote, or how much money they make.

A big part of the idea for starting this company was to try to build that same social aspect into the process of buying RECs. Rooftop solar is great, but I live in an apartment. I know other people who can’t afford solar at this point, or whose roofs are too shady to support solar. RECs are available to anyone no matter their living situation, and they don’t require a big down payment.

The other benefit of our approach comes from the practice of making this a monthly habit. We use a subscription model for a reason. It’s the same reason organizations often prefer smaller, recurring donations to big one-off gifts. Change happens from the small, day-to-day actions of many people more than it comes from big, splashy one-time events.

Our impact comes from raising the demand for RECs and buying them on a one-off basis may create a temporary spike in demand, but it won’t create a steady uptrend that allows renewable energy producers to count on that income for years in the future. That steady uptrend is what’s going to allow more renewable energy to be built.

The sign neighbors will see in the window of my home office when walking by.

MC: What’s the long-term outlook? What are your current goals and the growth plan? 

BP: If all goes well, five years from now we’ll have enough scale to make a significant impact on the demand for renewable energy. By that point, people will know that buying renewable energy is an option, regardless of their living situation. There will be yard signs and social media posts popping up all over the place, and our grid will be getting cleaner and cleaner because of it.

Long term, we want to be so successful that we put ourselves out of business. Our goal is to get the grid to 100% renewable power. Once sustainability is “built-in” instead of “opt-in,” there won’t be any need to pay extra for renewable energy, so Sustainabode won’t need to charge people money for it. Hopefully, we’ll find another way to do good for the future of the planet, but I’m not sure what that will look like. We’re still a long way off from that kind of situation, but that’s the dream!

MC: OK, one last question of the grilling—you’re on the elevator with someone who wants to know more about Sustainabode. What’s your quick last pitch to them about why they should participate? 

BP: I’d challenge them to think about the next generation, and about how history will remember us 100 years from now. I don’t have any kids right now, but I might in the future. I really want to leave the world to my children’s generation in a better state than I found it in. I hope that the kids don’t have to worry about the effects of catastrophic climate disasters because of the actions we took (or didn’t take) here today.