Credit: Phil Roeder / Creative Commons

An Iowa electric co-op that has set its sights on going carbon-free will begin this year by investing in enough renewable energy credits to fully offset its use of carbon-based fuels.

Many corporations purchase the credits as a way to support renewable energy when they are not yet in a position to purchase or generate the renewable energy itself.

“We want to support renewable energy, and we want to act in a responsible way,” said Jim Bagley, the chief executive officer of the Raccoon Valley Electric Cooperative. He said that many of the co-op’s roughly 2,700 customers in west-central Iowa have expressed a desire to shrink their carbon footprint. “This gives us an avenue to act that way while we’re still getting power on demand.”

Bagley said that Raccoon Valley, which currently obtains about 10 percent of its power from carbon-free nuclear and hydropower, plans to purchase enough renewable credits to equal the other 90 percent of its power supply that comes from coal, gas and wind power. Bagley is not counting the wind energy toward the total because the RECs it generates are already being sold.

Although the co-op is now developing five 150-kilowatt solar arrays that should be operating by 2018, and currently offers net metering to its customers, it was looking for a way to make some carbon-reducing inroads sooner and seized on the idea of purchasing renewable energy credits.

Renewable generation facilities produce two marketable products: the energy itself, and the renewable attributes of that energy. The renewable energy credits, often are bought and sold separately from the energy.

Bagley said he plans to purchase credits from his three wholesale suppliers. One of them, Corn Belt Power Cooperative, has sold renewable credits for years, but this is probably the first time it will be selling them to one of its member utilities, said Mike Thatcher, Corn Belt’s vice president of generation. He said the revenue from selling the credits adds modestly to the overall financial picture of renewable generation.

Bagley said he’s making a point of purchasing credits from his suppliers because doing so “supports a co-op we’re a member of, and puts more renewables back in our generation mix.”

The price of renewable credits varies quite a bit, and at present is relatively low. Bagley expects the credits to add just under half a percent to Raccoon Valley’s total cost of power.

In theory, purchasing credits does enhance the economics of renewable energy, and would therefore make that investment at least somewhat more attractive, said Noah Long, a senior attorney for the Natural Resources Defense Council and the director of their western energy project.

However, he added, “The devil is in the details. The REC market does make a meaningful difference in terms of supporting the renewables market. But I don’t want to paint it as panacea for renewables. It depends on the kinds of renewables a company is seeking, and the kind of RECs they’ve purchased.”

One key, he said, is to buy credits from projects that are being financed now, “not projects that were built 10 or 20 years ago. Also, look for REC contracts that are long-term buys.”

The income from selling renewable credits “is an additional revenue stream and makes these projects more financeable – if it’s coming from a new project and is a long-term contract. Those kinds of commitments can make a real difference. If you buy credits for one or two years, you’re probably buying in the market for completed projects.”

Bagley said that at the end of the year, Raccoon Valley will assess its strategy for going greener, and then decide whether to pursue the policy again next year.


Karen spent most of her career reporting for the Kansas City Star, focusing at various times on local and regional news, and features. More recently, she was employed as a researcher and writer for a bioethics center at a children’s hospital in Kansas City. Karen covers Iowa, Missouri, Kansas, Nebraska, North Dakota and South Dakota.