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Summer 2007 Newsletter

In this issue:

Understanding NC GreenPower - Where does your $4 go?

Are you a current or prospective NC GreenPower participant and are wondering what exactly happens to those $4 contributions you make? Ever wonder where the whole $4 concept actually came from? Well if you find yourself asking these questions, don’t worry. Many people ask the very same questions and understanding the answers can help you better appreciate the impact that your participation has on renewable energy in North Carolina. In order to better explain these concepts, it is important to start at the beginning.

NC GreenPower was launched in 2003 to encourage the development of renewable energy resources in North Carolina through voluntary tax-deductible contributions that individuals can make through their electric bills or directly to the program. For residential and small business customers, the minimum contribution level was established at $4 per 100 kWh block of renewable energy generated and added to North Carolina’s power grid. Contributions can be greater than $4, up to any amount in increments of $4. So what is the significance of choosing $4 as the basis for contributions to the program? The answer lies in the renewable energy resources that NC GreenPower supports.

Why four dollars?

The intent of NC GreenPower is to provide economic assistance to generators of renewable energy, helping to bridge the gap between what their electric utility pays for their electricity and what it actually costs to generate this cleaner, though more expensive energy. The amount paid to each producer varies depending on the type of renewable energy they are generating. For resources like landfill methane gas, the producer may only need a payment of around one cent per kilowatt-hour (kWh) above what their utility pays them in order to make their project economically viable. For others, such as solar photovoltaic (PV) energy, the project may require as much as 18 cents per kWh from NC GreenPower to make it economically feasible. By establishing a resource mix that combines lower-cost resources with higher, premium resources, NC GreenPower created an average per-kWh cost of four cents. Multiply that four cents per kWh by 100 kWh, which is the established block unit that NC GreenPower uses, and the result is $4 per 100 kWh block. In other words:

$.04 per kWh x 100 kWh = $4.00 per 100 kWh block of renewable energy

But how exactly does the $4 block help encourage the use of renewable energy on the power grid? It might help to first establish what it does not do. Contributions to NC GreenPower are not used for renewable energy research and development, nor are they used to pay for generation equipment. NC GreenPower neither owns nor finances renewable energy projects. What NC GreenPower does do is provide payments to renewable energy producers on a per-kWh basis for the energy they provide to the power grid. 

Where the money goes

The contribution cycle works like this. Every $4 that an individual contributes to NC GreenPower pays for 100 kWh of electricity to be generated from a renewable energy resource and added to the power grid. That $4 is typically collected via the individual’s electric utility bill. The electric utility does not keep any of the funds, but passes them in their entirety to NC GreenPower. The program retains $1 out of each $4 contribution in order to pay for marketing the program statewide and for the maintenance of contracts with producers. The remaining $3 goes directly to renewable energy producers across the state, who in turn add renewable energy to the power grid for everyone to use.

How much each individual producer receives per kWh added to the grid varies depending on the type of resource generating the electricity. But as a group, producers receive 75% of every contribution to aid in making their projects economically viable. The projects benefited by the $4 block contribution provide cleaner energy generated by solar photovoltaic (PV), wind and methane gas sources.

All producers contracted with NC GreenPower are located in the state and add their generated electricity to the state’s power grid. That means that cleaner energy is benefiting North Carolina’s environment, as well as its economy by keeping energy dollars in the state.  

A contribution that makes a difference

By adding more renewable energy to the grid, less electricity has to be generated from fossil fuel resources such as coal. That translates into better air and water quality and a reduced dependence on other states to provide the raw materials for electrical generation. Every $4 that you contribute monthly to the program will add 100 kWh of electricity (about 1/10th of the average home’s monthly power usage) to the grid from a renewable energy resource. That 100 kWh of renewable energy will offset an equivalent amount that would have come from a coal plant to meet the same electrical demands.

And while it doesn’t seem like much, that $4 contribution made monthly over the course of a year will help to offset the consumption of more than 900 pounds of coal and an equivalent of 2,500 pounds of carbon dioxide. That offset is the approximate environmental equivalent of more than 190 trees planted or 3,000 miles not driven in your car.

So the next time you see your NC GreenPower contribution appear on your power bill, you will know that the funds you contribute each month are truly making a difference. You are helping to make renewable energy projects possible in North Carolina. Your contributions are putting actual electrons on the grid from green power sources. And those electrons are helping to diversify our energy mix and provide cleaner energy alternatives. Your participation in NC GreenPower is helping to build a brighter future, one kWh at a time.