Corporate and other customers of Xcel Energy Inc. in Minnesota will have the option of signing long-term deals to get their electricity from wind and solar farms under a proposed program called Renewable Connect announced Thursday by the utility.
The program, which requires state regulatory approval, would be open to all customers. But key features are aimed at large business power users that have corporate sustainability targets or wish to market themselves as powered by renewable energy.
“It is something we have heard from our customers that they are really interested in,” said Laura McCarten, a regional vice president for the Minneapolis-based utility.
Like Xcel’s existing Windsource program offering customers wind energy, Renewable Connect’s electricity also will be priced at a premium. But two long-term pricing options have more advantageous terms that insulate customers from fuel price increases and offer certainty about long-term energy costs, Xcel executives said.
Xcel submitted its proposal to the Minnesota Public Utilities Commission, which could take a year to review it. Xcel said the utility won’t earn a profit on the program, which also is designed so that its costs won’t be shifted to non-participants.
The U.S. voluntary “green power” market is a growing segment of the electric industry, driven by corporate policies at power-intensive companies like Apple, Google and Microsoft. In 2014, the market grew by 10 percent in the United States, but still represents only 2 percent of total power sales, the National Renewable Energy Laboratory reported last month.
“Businesses are more careful about how they source everything, including energy,” said Bill Blazar, a vice president of the Minnesota Chamber of Commerce. “It is almost like a kosher seal on a chicken — they are looking for that something to offer to their customers who want it. They are responding to the market.”
Renewable Connect is designed so that its customers end up with the electricity’s renewable energy certificates (RECs), which certify it’s green energy, Xcel said. That’s important because the under Federal Trade Commission rules, it’s deceptive marketing for companies to say they use renewable energy if they don’t holds RECs.
The program differs from Xcel’s shared solar program called Solar Rewards Community in which customers, including corporations, can subscribe to community solar gardens. Under that program, companies don’t necessarily end up with RECs needed for green marketing. But Xcel said customers could simultaneously participate in Solar Rewards Community and Renewable Connect.
Jeff Swenerton of the Center for Resource Solutions, a San Francisco-based organization that runs the Green-E certification program, said more companies are choosing renewable energy as part of their business strategy. He said the center always advises companies making green energy claims to make sure they have RECs.
“The FTC is serious about enforcement,” he added.
To get Renewable Connect started, the utility proposes to set aside 75 megawatts from the planned Odell Wind Farm near Windom, Minn., and the North Star Solar project near North Branch, Minn. Both are expected to be operating in 2017. If the program is a success, Xcel said it later would add incremental renewable generation to meet the demand.
Customers such as Internet server farms, corporate headquarters or manufacturing plants could offset all or part of their electricity with a wind-solar mix. One payment option is month-to-month, similar to Windsource, in which customers can opt out. But slightly better pricing is available in longer-term contracts, according to the regulatory filing.
“They will be able to choose a 5- or a 10-year offer that allows them to lock into the benefits of renewable energy,” said Kevin Schwain, Xcel’s director of program strategy.