Here’s how to buy renewable energy from your electric utility

As carbon emissions from fossil fuels keep warming the planet, eco-conscious consumers may wonder if there’s a way to buy electricity from renewable sources without installing technology like solar panels or windmills on their property.

In short, the answer is yes.

However, the option isn’t necessarily available to all homeowners and renters. It also often comes with a slight price premium, experts said.

Renewable energy sources — including wind, solar, hydropower, geothermal and biomass — accounted for about 21% of U.S. electricity generation in 2023, according to the U.S. Energy Information Administration.

Most, or 60%, of energy sources came from fossil fuels like coal, natural gas and oil. These energy sources release carbon dioxide, a greenhouse gas that traps heat in the atmosphere and contributes to global warming.

The White House aims for electricity generation to be free of greenhouse gas emissions by 2035.

A growing number of individuals and organizations are opting to shift away from fossil fuels: About 9.6 million customers bought 273 Terawatt hours of renewable energy through voluntary green power markets in 2022, according to the National Renewable Energy Laboratory. That’s up fivefold from 54 TWh in 2012.

In the voluntary market, customers buy renewable energy in amounts that exceed states’ minimum requirements from utility companies. Over half of all U.S. states have policies to raise the share of electricity sourced from renewables, though most targets are years away.

Voluntary purchases accounted for 28% of the renewable energy market, excluding hydropower, as of 2016, according to the Environmental Protection Agency. They help increase overall demand for renewable electricity, thereby driving change in the energy mix, the EPA said.

The bulk of the increase is from corporations, according to NREL estimates. Residential sales have grown, too, but more slowly.

Just one in six U.S. adults know that they may have the option to buy renewable power, either from their electric company or another provider, according to the most recent NREL survey data on the topic, published in 2011.

“The market does continue to grow every year in terms of sales and customers,” said Jenny Sumner, group manager of modeling and analysis at the NREL.

“But very few people are aware” that they can opt into green programs, she said. “It’s just not something that’s top of mind for most people.”

Power companies may offer what’s known as green pricing programs.

Customers in these programs, also known as utility green power programs, pay their utility a “small premium” to get electricity from renewable sources, according to the U.S. Energy Department.

The cost generally exceeds that of a utility’s standard electricity service by about 1 to 2 cents per kilowatt hour, Sumner said.

That may roughly translate to about $5 to $15 more per month, Sumner said. It will ultimately depend on factors like program price and household energy use, she added.

Nearly half of Americans, 47%, said they were willing to pay more to get their electricity from 100% renewable sources, according to a 2019 poll by Yale University’s Program on Climate Change Communication. On average, they said they would be willing to pay $33.72 more per month.

Green power marketing programs

Consumers in some states can also opt into green power marketing programs.

Such states have “competitive” energy markets, meaning consumers can choose from among many different companies to generate their power. But unlike green pricing programs, the company generating the renewable power may not be the customer’s utility, which distributes the power.

According to the U.S. Energy Department and the EPA, residential green power options are available in these states with competitive or deregulated markets: California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas and Virginia.

These also tend to come with a premium, though in some regions they “may be price competitive with default electricity options,” the agencies wrote.

Community choice aggregation

With “community choice aggregation” programs, local governments buy power from an alternative green power supplier on behalf of their residents.

The municipality essentially operates as the supplier for the community’s electricity, Sumner said. These programs are especially prevalent in California, she said.

Unlike the other program types, residents generally don’t have to opt into community choice programs; it’s typically automatic and consumers can opt out if they wish, Sumner said.

Just because a consumer opts for renewable power doesn’t mean the electricity being pumped into their home is coming from those renewable sources.

This may sound strange, but it has to do with the physical nature of electricity and its movement through the shared electric grid.

“Once the electrons have been injected into the grid, there’s no way of tagging that these are ‘green’ electrons and these are not green,” said Joydeep Mitra, head of the power system program at Michigan State University. “Nobody knows which electrons are going where.”

Green energy programs instead rely on “renewable energy certificates,” or RECs.

The certificates are essentially an accounting mechanism for the generation and purchase of renewable energy, Mitra said.

You may not be getting the green power, but someone somewhere is. And RECs keep track of it all.

Any consumer, even one who doesn’t have access to a green power program through their utility, can also purchase a REC as a separate, stand-alone product. It’s a way to provide extra funding to a renewable energy project, typically sold by a broker or marketer rather than a utility, Sumner said.

Buying these certificates separately doesn’t impact a consumer’s existing utility service relationship.

Experts recommend choosing a green power option or REC that has been verified by an independent third party.

That’s because the voluntary sales and purchases of renewable energy aren’t subject to government oversight, according to the EPA and U.S. Energy Department.

One such independent body is the Center for Resource Solutions, a nonprofit that oversees the Green-e certification standard, the agencies said.

For example, Green-e polices the disclosures energy suppliers make to consumers about renewable energy and verifies that the purchase of that energy isn’t being counted toward state energy mandates, among other things.

In this new series, CNBC will examine what climate change means for your money, from retirement savings to insurance costs to career outlook.

Has climate change left you with bigger or new bills? Tell us about your experience by emailing me at gregory.iacurci@nbcuni.com.