How Much Does Alternative Energy Cost?

Wind, solar and geothermal energy can sometimes be slightly more costly than traditional energy sources.

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In most states, consumers may now purchase wind power, solar energy or other forms of “clean energy” for 5 to 10 percent more than the cost of traditional electricity sources. “We liken the price to the cost of a cappuccino or a pizza per month,” says Eleanor Scott, a spokeswoman for Green Mountain Energy in Austin, Texas, a leading seller of green energy.

Choosing renewable energy lets consumers avoid the use of fossil fuels, the second-leading cause of air pollution in the United States. But green energy—available from both regulated utilities and unregulated energy companies—is offered in a mind-boggling array of pricing schemes, electricity alternatives and energy mixtures. “You have to be a good consumer,” says Eugene Rosalie, director of the Green Power Program for Northwest Environmental Advocates in Portland, Oregon.

Some energy providers offer 100 percent renewable energy in the form of wind, solar or geothermal power, which is drawn from the earth’s heat. Others offer blended products that combine traditional energy sources with renewable power. Some companies let consumers buy all their electricity from renewable sources; others restrict purchases to small blocks of power.

These products represent different levels of “virtue,” says Thomas H. Rawls, chief environmental officer for Green Mountain Energy. “The products are designed differently to suit different pocketbooks. Choose a level of virtue you are comfortable with.”

Begin by asking the power seller if the price premium will lead to the construction of new renewable energy plants. That’s the most environmentally sound—and most expensive—investment. Blends of renewable energy and more traditional power sources are less expensive.

Always find out what that energy blend includes, Scott warns. Be sure that nuclear power is not part of the mix and ask about the hydropower source. “Usually the smaller hydroelectric plants, around thirty megawatts, qualify as renewable resources. The large hydroelectric plants damage the natural wildlife in the area,” says Keri Bolding, a spokeswoman for the Center for Resource Solutions in San Francisco.

Any clean energy purchase will lead to an improvement in the environment, says Peter West, deputy director of the Renewable Northwest Project in Portland, Oregon. “Green energy is really one of those things that is just all-around positive,” he says.