Don’t Forget, Money Also Is Green

Earth-friendly power has not proven exempt to the conventional rules of supply and demand. The prices of generic renewable energy credits, or RECs, has risen about 35 percent this year, while the cost of certifiable credits has nearly doubled, according the Cadence Networks.

The promise of state mandates that will require corporate purchase of RECs, intense media coverage and nationwide interest in green initiatives are driving the demand, and hence the higher prices, says Christian Blattenberger a certified sustainable development professional for Cadence Networks.

The thing is, we’d expect REC prices to decline as volumes ramp up. After all, moving markets according to the rules of demand and pricing elasticity tend to come into play when profit margin is the prime desire, not a healthier planet.

Consider for example green power pricing in the earlier part of this decade, before all the mainstream attention. According to the National Renewable Energy Laboratory, the average price premium charged for green power through green pricing programs continued to decline through 2006, falling to 2.12¢/kWh from 2.36¢/kWh in 2005, and 2.45¢/kWh in 2004. Since 2000, the premium has declined at an annual average rate of more than 8 percent, until this year, that is.

Through 2006, prices were driven down by higher fossil fuel costs or because providers were able to enter into more favorable contracts for renewable energy supplies. So how has that changed now?

Maybe we’re missing something here, and we intend to find out, but something smells fishy nonetheless.