Green tariffs: The new normal for corporate procurement of clean energy?

Published onMarch 29, 2018

Service Co. of New Mexico (PNM) to purchase 267 megawatts (MW) of wind, solar and storage to supply clean power to a $1-billion Facebook data center under construction in the state. All the power under the approved contracts — which lock in prices for 20-25 years — will likewise come from new projects either in development or under construction. Beyond the megawatts and companies involved, what’s important here is that the contracts involved are based on a “green rider” — basically a contract template. PMN had developed the template, and regulators had pre-approved it as part of the utility’s green tariff for corporate customers. The template could then be customized for individual projects, allowing for a faster and more streamlined approval process.

The PNM example reflects a potentially critical development in utilities’ response to U.S. corporations’ ever-more voracious demand for clean energy. Companies, from Facebook to Budweiser, are now demanding green power programs with “additionality” — that is, which add new clean energy projects to the grid and provide ownership of renewable energy certificates, or RECs. The result is a growing number of utilities are beginning to offer green tariffs that ensure additionality, long-term price stability and RECs.