Austin Energy, Austin’s municipal power utility, was the first in the nation to give consumers the option of buying green-powered electricity. And as recently as last year the city’s green power program, called GreenChoice, was number one in the nation, in terms of sales.
This year, 99% of the city’s allotment of green power remains unsold, even after seven months on the market, according to the Austin Statesman. The reasons for the abrupt failure of the GreenChoice program serves as a warning to other green power programs nationwide, as well as a case study in how, with renewable energy, sometimes when you win, you still lose.
How GreenChoice Works
Starting in 2000, with the purchase of a block of electricity from a wind farm, Austin Energy gave customers the option of buying green power, and 3,500 chose to do so. In subsequent years, the program expanded.
But going green was not the only motivator, or even the primary one. Austin Energy fixed the cost of electricity purchased under the GreenChoice program for ten years, insulating customers from fluctuations in the cost of electricity.
Cost Cost Cost
“Customers got a 10-year fixed cost – that’s why it sold out,” Ed Clark, Austin Energy spokesman, told the Statesman. “It was designed to be a value proposition to customers, instead of just asking them to pay more to be environmentally friendly.”
In fact, in the fall of 2005, the rising price of natural gas pushed the cost of conventional electricity above that paid by GreenChoice customers – - a first in the United States.
The same factors came back to bite the program, however. This year, the price of green power tripled. For the average household, this added up to an additional $58 a month. For businesses, which make up 83% of GreenChoice customers, the bill could be much higher. The utility found itself with a whole lot of green power unsold.
A Silver Lining?
Austin Energy blames forces outside its control for the price hikes, including the price of materials used to build wind farms. Some local advocates argue Austin Energy is inflating the cost of green power, in part to stem competition with its main source of income: coal and gas.
But another reason for the increase — one that should put a smile on the face of any environmentalist — is that demand is up. “Wind demand has been growing so fast that the supply hasn’t been able to keep up,” said Revis James, an energy technology expert with the California-based Electric Power Research Institute.