Third-Party Energy Suppliers Help New Jersey Businesses Use Renewable Energy
If you live in New Jersey, you know there are lots of reasons to love it. Pristine beaches and busy ports decorate the scenic coastline. The towns and cities buzz with industry and innovation. Quiet mountains and crystal lakes provide a place for residents to retreat from the hubbub of the bustling East coast.
While perhaps not as obvious at first glance, New Jersey residents and business owners have another reason to love their state—its commitment to clean energy. Thanks to the New Jersey Renewable Energy Mandate, the Garden State has almost as ambitious an energy policy as California, Hawaii, New York, and Vermont, making it a leader in renewable energy.
Of course, for a state recently battered by Superstorm Sandy, promoting renewable energy as a way to limit greenhouse gas emissions and curb global climate change is just common sense. One Sandy was bad enough—nobody wants to increase the risk of more. Just like everybody pitched in to help the victims recover after the storm, business owners and citizens can pitch in today to help lower the chances of it happening again.
New Jersey Renewable Energy Mandates Codify Ambitious Clean Energy Goals
So what exactly are the goals set by the renewable energy mandates and how can New Jersey business owners pitch in to help make sure they’re met? Originally adopted in 1999—which shows how forward-thinking the state has been—the law required 6.5% of energy purchased by New Jersey’s utilities to come from renewable sources by 2012. Four percent had to come from “Class 1” sources, “such as solar, wind, wave or tidal, geothermal, landfill gas, anaerobic digestion, fuel cells using renewable fuels, or certain forms of biomass.” The other 2.5% could be supplied by “Class 2” sources, such as 30 MW or less hydropower facilities and resource recovery facilities located in the state.
The law has been updated numerous times since originally enacted. The most current plan, adopted in 2011 and amended in 2015, sets the goal at 22.5% renewable energy generation by 2021, and 70% by 2050. Since the plans were originally put in place, New Jersey has remained consistently on target.
The goals established by the Renewable Energy Mandate are specifically binding to the utility companies in New Jersey. The utilities are the companies that purchase energy from power plants via energy markets, then deliver it to homes and businesses across the state. In order to meet the clean energy requirements established by law, utilities must purchase Renewable Energy Credits (RECs) when they buy electricity from the energy market. Each credit is equal to one megawatt-hour of energy produced by a renewable source. By using this system, power plants can have a clear record of how much clean energy they have produced; likewise, utilities can have a record of how much clean energy they have purchased.
New Jersey Business Owners Can Purchase Clean Energy with REC Systems
So what does all that mean to everyday business owners? First, it means that although the state has mandated that an increasing amount of New Jersey energy is produced by renewable sources every year, there is no law requiring ordinary businesses to use clean energy. But at the very least, business owners will be using clean energy as a happy byproduct of the state’s systemic energy engineering.
Of course, many businesses want to do more. Some, such as branches or franchises of larger companies operating in New Jersey, are required by their parent corporations to demonstrably use renewable energy at their locations. Others are motivated by a simple desire to contribute to a greener future. Fortunately, the REC system doesn’t stop at the utilities. Businesses also can purchase Renewable Energy Credits from utilities and third-party energy suppliers.
By purchasing RECs, businesses aid the development of renewable energy in New Jersey in a number of ways. First, it shows an active interest in renewable energy within the business community. This demonstrates support for renewable initiatives to the state government, power plants, and energy companies, which can inspire deeper commitment and further investment in clean power.
It also rewards utilities and third-party energy suppliers for their compliance with the Renewable Energy Mandate. Energy suppliers who purchase RECs will know they have customers in the business community to sell them to. This is important, as it makes a sustainable business case for renewable energy. Although the price is going down, renewable energy generation is still slightly more expensive than electricity produced by natural gas or coal. When businesses purchase RECs from their energy suppliers, it shows their suppliers that a customer base exists for upmarket electricity, spurring further investment. In turn, this investment increases future capacity, improves future technology, and potentially lowers future prices.
Third-Party Energy Suppliers Provide RECs for Business Owners
In many states, companies have no choice in who they buy their power from. They must purchase from their local utility, who operate legal monopolies in their territories. That’s not the case in New Jersey. In another example of forward thinking, New Jersey has restructured its energy market to allow third-party energy suppliers to operate within the state.
Like utilities, these parties purchase energy—and RECs—from power plants via the wholesale energy markets. Unlike utilities, they aren’t bound to a specific area and aren’t responsible for delivery and the costly maintenance of the physical energy grid. Furthermore, the existence of third-party energy suppliers forces utilities to compete on price, customer service, and energy plan options for customers, making the system more efficient as a whole. Like working to combat climate change, it’s common sense.
At Liberty Power, we believe in the power of RECs to promote the development of renewable energy in New Jersey and across the country. We’re always eager to expand our renewable energy portfolio because we believe investing in clean energy is investing in our future, as a business and as a country. Contact us to learn more about how you can invest in the future of the country by purchasing Renewable Energy Credits.