At EnergySage, we get a lot of questions about alternative ways to support renewable energy without putting solar panels on your roof. One of the easiest ways to do so is buying electricity from someone other than your utility company. But there are a lot of options out there, each one surrounded by a good deal of misinformation and jargon, making it somewhat difficult to weigh the pros and cons of each.
So, we’re here to break down the key differences to some common alternatives to utility electricity, including community solar, community choice aggregation (CCAs), and retail green power plans.
- Community solar, community choice aggregation (CCA), and green power plans are all environmentally-friendly electricity alternatives, but if you want to make an impact locally, look to community solar and CCAs first.
- Among these options, community solar is usually the best for your wallet.
- Renewable energy certificates (RECs) are key to understanding whether you can claim the environmental and societal benefits of renewable electricity.
First, a primer on green power and how renewable energy certificates (RECs) fit in
Green power is an overarching term used to describe electricity generated from renewable energy technologies (and more specifically, “electricity produced from solar, wind, geothermal, eligible biomass, and low-impact small hydroelectric resources,” according to the Environmental Protection Agency). Local governments, companies, organizations, and individual electricity customers often purchase green power as a way to promote sustainability and reduce their own environmental impact.
Here’s the catch: buying green power doesn’t mean your home will run directly on renewable energy. Because of the nature of our electric grid, it isn’t really possible to control exactly where an electron from a renewable power plant goes once it’s on the grid. Despite this, as an electricity customer, you can still claim the environmental and societal benefits of using “green energy” thanks to nifty things called renewable energy certificates (RECs).
RECs are a type of commodity that markets and governments use to track and transfer the “green” aspects of renewable energy. When you buy green power, you essentially buy RECs generated by various renewable power plants – even though you’re not necessarily using electricity from these power plants directly, you have purchased the right to claim the environmental benefit of that electricity as your own.
Power plants produce one REC for every megawatt-hour (MWh) of electricity they generate, and certificates can only be sold once: after you buy that “greeness,” it’s yours and no one else’s – including the person physically using the electricity from the solar panels or wind turbines!
Reviewing common alternatives to utility electricity
If you want to choose a more environmentally-friendly electricity option, here are some common alternatives. Some of these will be more or less available depending on your area.
(Already well-versed in these options? Skip ahead to our section on comparing them!)
Also known as “shared solar” or “roofless solar,” community solar allows you to buy electricity from a portion of a large solar project in your area. Most of the time, you can buy this electricity at a discounted rate.
Community solar is not available in every state just yet, but it’s becoming more accessible by the day – our Community Solar Marketplace is a great place to explore open projects in your area.
Community choice aggregation (CCA)
CCA allows local governments to purchase energy on behalf of electricity customers in their area. As opposed to buying electricity from your utility’s generation sources, cities participating in a CCA arrangement can purchase electricity from specific sources and companies. These plans often offer competitive electricity rates given the aggregate demand and buying power of a whole community. Local governments can use CCA plans to reach clean energy targets (assuming they decide to procure electricity from renewable projects.)
Unfortunately, CCA electricity plans are not available to many people. For one, fewer than 10 states have approved CCA legislation; for another, even if your state allows for CCAs, your city needs to take the initiative and create a CCA option for you to take advantage.
Retail green power plans
If you live in a deregulated electricity market, you’ve likely received mailers advertising green power plans. Retail energy providers (REPs), or Energy Service Companies (ESCOs), often offer “green” or “eco-friendly” energy plans for customers interested in switching to renewable energy (AKA buying RECs.) Companies like this also typically offer various plan types that allow you to opt-into a higher or lower percentage of renewable electricity (i.e. 25 percent renewable, 75 percent from other sources), and pay accordingly.
Electricity from your utility company
Of course, you can continue to rely on your utility company for all of your electricity needs. Utilities will have different electricity mixes by area and distribute varying amounts of green and brown (i.e. fossil-fuel generated) electricity depending on the power plants they use for supply. It’s safe to say that everyone still buying electricity supply from their utility company is buying some electricity generated from coal or natural gas: in 2020, 60 percent of U.S. utility-scale electricity generation still came from fossil fuels!
Comparing options: community solar vs. CCAs vs. retail green power plans vs. utility power
Let’s say you live in an area with a few or all of these electricity options – how do you decide which is right for you? It largely depends on your preferences and environmental goals.
Pros and cons of electricity alternatives, summarized
|Type of energy||Community solar||CCAs||Green power from REPs||Standard utility offering|
|Generates savings||Typically yes||Sometimes||Typically no||No|
|Supports local renewable energy advancement||Yes||Sometimes||Typically no||No|
|Has consolidated billing||Typically no||Typically yes||Sometimes||Yes|
|Is available nationally||No||No||No||Yes|
|Includes environmental claim/”green” benefit||Typically no||Typically yes||Yes||No|
- Will I save money on my electricity bills, or will this cost more than what my utility charges?
- Does this support renewable energy advancement in my area? In general?
- Will I have to pay two separate bills after signing up?
- Am I buying RECs through this plan, and where do the RECs I’m buying come from?
Now, let’s go over these consideration factors in a bit more detail:
Best for your wallet: community solar
Many people hope to save money when changing their electricity provider. If you want to maximize savings, community solar is likely your best bet: because community solar companies typically sell electricity from the solar projects at a discounted rate, most subscribers save anywhere from 5-15 percent off their annual electricity bills.
Electricity customers can also save with a CCA plan, though savings are less certain and harder to predict than with community solar. Because of the collective buying power of a community, governments can secure electricity prices up to 20 percent lower than retail rates, but this is heavily reliant on who your community chooses to procure power from, the source of that electricity, the size of your community, and electricity rate trends. Savings with CCAs are far from guaranteed!
And where green power plans are concerned, expect to pay a price premium for the environmental benefit. In fact, a study from the National Renewable Energy Laboratory (NREL) found that residential customers participating in a green power plan paid “about $0.018/kWh, or about $195/year based on average home electricity use.”
Support of local renewable energy projects
Best for supporting local renewable energy: community solar, sometimes CCAs
If you want your electricity purchase to support local renewable projects, try to subscribe to a local community solar project first. Your subscription can provide the buy-in developers need to create additional projects throughout your region that will help further decarbonize your electricity grid. Plus, you’ll know exactly where your purchased energy comes from – and you may even have friends or neighbors who work for companies that build or maintain the project!
CCAs often have a local renewable energy aspect, but that’s not always the case – it depends entirely on how your government procures electricity. They may purchase renewable electricity from a local offshore wind project that creates clean energy jobs in your state, or buy the electricity from wind turbines on the opposite coast.
Lastly, green power plans: REPs and ESCOs source RECs from various energy projects that could be hundreds or thousands of miles away from your home. While opting into a green power plan has environmental benefits, it doesn’t necessarily contribute to local clean energy efforts. Additionally, most companies build green power plans off of RECs from existing projects, meaning your support doesn’t result in additive clean energy, or new renewable energy projects being developed.
Easiest billing process: CCAs (and utility electricity, of course)
Before signing up for any electricity alternative, you’ll want to understand how it will impact your billing process: will you still receive a bill from your utility company, and will you receive two bills?
Whether you sign up for community solar, CCA, or a green energy plan, you’ll still receive a bill from your utility company: this is because they own and maintain responsibility for the infrastructure that distributes and delivers electricity to your home. Of all the options above, you’re most likely to experience two separate bills through a community solar subscription.
After subscribing to a community solar project, you typically receive a bill from your community solar company charging you for your share of the energy from the solar project, and your usual bill from your utility company. However, your utility bill will be lower (and potentially even have negative charges) because it will include credits for the energy you bought through your community solar subscription.
Likewise, green power plans can sometimes involve two separate bills: one from your REP or ESCO charging you for the “supply” portion of your bill (i.e. the green energy), and another from your utility company with the delivery and distribution charges – in some instances, however, utility companies and REPs will work together to consolidate these charges into a single bill.
The billing mechanisms with CCAs work very similarly to green power plans in the sense that CCAs cover the supply portion of your electricity bill, but you’ll still pay your utility company distribution and delivery costs. However, governments and utility companies usually roll up these charges and include both in your utility electric bill.
Most widely available: utility electricity, then green power plans
There’s a clear winner in this category; of all the options available above, the only one that’s available nationally is (unsurprisingly) traditional utility electricity.
Green power plans from REPs or ESCOs get the silver medal for availability, though they’re only an option for you if you live in a state with a deregulated or partially-regulated electricity market. As of 2021, this comes out to roughly 20 states.
Community solar and CCAs are even harder to come by at the moment, but don’t expect this trend to continue: both are primed for market growth in the coming years, and many states are actively considering legislation that would allow for these alternatives (we see you, New Mexico!)
Environmental claim, or “green” benefit
Best for environmental claims: green power plans
Remember when we mentioned RECs above? There’s a reason we began this article with that explanation, as it determines whether or not you’re buying any “green benefit” with these energy options.
First, green power: with these plans, you buy RECs, meaning that you can claim to run your home on renewable electricity even though electricity from the renewable power plants isn’t flowing directly into your outlets.
The same goes for CCAs, but only if your CCA offers a renewable energy option – remember, this isn’t a guarantee! While many communities use CCAs to procure green electricity for their residents, some rely on electricity from non-renewable resources. Additionally, many CCAs over varying levels of environmental attributes, and ask customers to opt-into–and pay more–for 100 percent renewable energy plans.
Community solar is…a tricky beast. It’s natural to assume that, when you purchase energy from a community solar farm, you buy solar–or green–electricity. But in most cases, this isn’t actually true; while your subscription generally supports local renewable energy development, the owner of the project typically retains the rights to keep or sell the RECs. Unless your community solar contract specifically states that you have ownership rights of RECs from the project, it’s safe to say you can’t claim to be using clean energy through your subscription.
Yes! Regardless of whether or not you live in a deregulated electricity market, you can voluntarily buy RECs separate from an electricity purchase – these are known as unbundled RECs. You can read more about that and what to consider before buying in our article about the benefits of renewable energy credits.
Explore local community solar options today
Want to compare community solar options in your area? Check out our Community Solar Marketplace, where you can see a list of open community projects near you and get a quick estimate of potential savings. If there aren’t community solar projects available in your region just yet, sign up to receive updates as new projects go live on the Marketplace.