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Purchasing Renewable Energy

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Farms can purchase renewable energy without installing their own renewable energy projects. Common options include:


  • "Green Tariff" programs: Many utility companies offer voluntary programs that allow farms to purchase renewable electricity or gas from the utility’s portfolio of renewable energy sources.

  • Community renewable energy projects: Farms can participate in community renewable projects, such as shared solar farms, to buy renewable energy without having their own system.

  • Renewable Energy Certificates (RECs): Farms can purchase RECs to offset their carbon footprint or make sustainability claims by investing in renewable energy credits tied to clean energy production elsewhere.


These options allow farms to reduce their environmental impact and support renewable energy efforts without the need to build on-site systems.

When used, in what regions in the U.S. is the practice found: 

Northwest, West, Upper Midwest, Southwest, Northeast, Southeast

FARM SIZE 

When used, typically found on farms of the following sizes:

All Sizes

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Practice Benefits 

Increased profitability: One direct benefit of purchasing renewable energy can be lower energy costs versus the standard offer of utility companies. Saving on energy costs is most common when purchasing renewable electricity, whereas renewable gas and biodiesel tend to be more expensive than fossil fuels. Utility companies that offer green tariff programs or other renewable energy contracting options typically procure renewable electricity from large-scale solar and wind projects that generate electricity at a significantly lower cost than conventional coal- and gas-fired power plants, and this saving can be passed on to their customers. 

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Implementation Insights

Site-specific or Farm-specific requirements 

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  • Local availability: The options available to farms to purchase renewable energy vary by location, mainly due to the differences in offerings provided by electric and gas utility companies and state and local policies toward renewable energy initiatives that drive the availability of community renewable energy projects. 

Required Capital Expenditures (CapEx)

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  • Upfront purchase: Depending on the method used to purchase renewable energy, there may be an up-front cost in addition to the cost of energy. Some community renewable energy projects work by selling shares of a renewable energy project, where an upfront purchase is made in exchange for a guaranteed allotment of the generation proportional to the number of shares owned. Most community energy projects simply require enrolling as a participant and do not require an upfront fee or a penalty to discontinue the subscription. No other purchases or changes are needed unless the farm is off-grid and wants to participate in a utility green energy program, in which case it would be necessary to cover any costs necessary to connect to the electric grid and/or natural gas pipeline.

Required Operational Expenditures (OpEx)

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  • Reporting fees: There are no operating expenses associated with renewable energy purchases, unless the farm is required to report on their renewable energy purchases (e.g., for sustainability reporting or greenhouse gas [GHG] footprint benchmarking). However, this is rare and generally only applies to farms that market their own milk and are required by their buyer to substantiate sustainability claims. Ongoing costs could also be a factor if a farm is purchasing RECs to make sustainability claims, because RECs need to be purchased separately from the energy being consumed and serve to cancel out or offset the carbon footprint of the energy being used. One of the main benefits of a farm purchasing renewable energy versus owning their own on-farm project is that there are no ongoing operation and maintenance expenses associated with the project, and the farm is essentially outsourcing these costs to the renewable energy project owner.

Implementation Considerations

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  • Project goals: When purchasing renewable energy, it is important to start by establishing the goals of the farm, which are usually either to reduce energy costs, do good for the environment, make a sustainability-related claim about using renewable energy, or a combination therein. 

  • Distinction between renewable energy and RECs: There is a key difference between purchasing actual renewable energy and buying Renewable Energy Certificates (RECs) to claim renewable energy use. Farms interested in claiming they use renewable energy need to understand this distinction.

  • Importance of REC ownership for claims: Many renewable energy providers sell RECs separately, which means that even if energy is generated from renewable sources, it may not be considered “renewable” for the buyer if the RECs are sold. Farms should confirm REC ownership with their supplier if they want to claim 100% renewable electricity.

  • RECs and carbon neutrality: Farms can offset their carbon footprint and make claims like “carbon neutral” by purchasing RECs or carbon offsets, regardless of the energy source they use.

  • Cost savings and community energy projects: For farms primarily focused on cost savings, subscribing to community energy projects or enrolling in green tariff programs can help reduce energy costs while supporting renewable energy, even if they do not own the RECs.

  • Alternative options: Another option available to some farms to procure renewable energy is to lease land to solar or wind project developers in exchange for an annual or lump-sum fee for the life of the project (typically 20 to 30 years). This can be a lucrative income stream and can be coupled with a “power purchase agreement” whereby the farm can enter into a contract to purchase renewable energy from the project developer. This allows the farm to realize income and energy cost savings without needing to own and operate the project.

Financial Considerations and Revenue Streams

OTHER CONSERVATION FUNDING

Any incentives and tax rebates associated with purchasing renewable energy are typically already built into the cost of the renewable energy being offered. For farms interested in purchasing renewable energy primarily for cost-savings, it is important to evaluate the offer from the provider, whether it is an electric utility company or a community renewable energy project. 


The price of renewable energy can be a flat rate (e.g., 10 cents per kilowatt-hour), or it can be variable depending on the market rate. Community renewable energy projects often provide a fixed discount for energy (usually ranging from 5% to 20%) versus the standard price offered by the utility company.


FINANCIAL RESOURCES, TOOLS & CASE STUDIES

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Environmental Impacts

REDUCES FARM GHG FOOTPRINT

Purchasing renewable energy reduces a farm’s GHG footprint by replacing the need for fossil fuel-generated electricity with energy produced from renewable sources, such as wind, solar, or hydroelectric power.

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Alignment with FARM Program

This practice is not included in the FARM program.

Contents

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We're always eager to update the website with the latest research, implementation insights, financial case studies, and emerging practices. Use the link above to share your insights. 

We're always eager to update the website with the latest research, implementation insights, financial case studies, and emerging practices. Use the link above to share your insights. 

Contents

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Practice Overview

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Farms can purchase renewable energy without installing their own renewable energy projects. Common options include:


  • "Green Tariff" programs: Many utility companies offer voluntary programs that allow farms to purchase renewable electricity or gas from the utility’s portfolio of renewable energy sources.

  • Community renewable energy projects: Farms can participate in community renewable projects, such as shared solar farms, to buy renewable energy without having their own system.

  • Renewable Energy Certificates (RECs): Farms can purchase RECs to offset their carbon footprint or make sustainability claims by investing in renewable energy credits tied to clean energy production elsewhere.


These options allow farms to reduce their environmental impact and support renewable energy efforts without the need to build on-site systems.

Practices and technologies

Purchasing Renewable Energy

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