On-Site Distributed Energy Procurement Options

FEMP also supports federal agencies with on-site distributed energy procurement options.

Federal agencies can pursue many types of off-site clean electricity procurement options, which vary in availability and their product characteristics across the country. Clean energy as described on this webpage may include either renewable or carbon pollution-free electricity (CFE), as defined in the Energy Policy Act of 2005 and Executive Order (E.O.) 14057 Sec. 603, respectively. Different options are available depending on the type of electricity market. While the serving utility is responsible for generation, transmission, and distribution in a vertically integrated market, in retail electric choice markets, most consumers can choose their electricity supplier.

Determining sites' electricity market type is an important first step to identifying the available off-site purchasing options. Below is a brief description of the two electricity market types. For further assistance in identifying a site’s electricity market type and evaluating off-site purchasing options, submit a request through the FEMP Assistance Request Portal.

CFE Program Availability Map

See a list of clean energy purchasing programs offered by vertically integrated utilities. 

Learn how to leverage this tool to meet decarbonization goals.

Vertically Integrated Markets: In vertically integrated markets, the General Services Administration (GSA) has established areawide contracts (AWC) with utility service suppliers to cover utility service needs of Federal agencies within the franchise territory of the supplier. GSA is authorized by 40 U.S.C. 501 (FAR Part 41) to prescribe policies and methods governing the acquisition and supply of utility services for Federal agencies. GSA has delegated this authority to the Department of Defense (DOD), including DLA Energy, and Department of Energy (DOE), as well as the Department of Veteran Affairs (VA) for connection charges only. If GSA has not established an AWC in the utility service territory of an agency site, then the agency must request a delegation of authority from GSA. Initiating a request for a delegation of authority can be sent to energy@gsa.gov, per FAR 41.301 Requirements. After GSA grants a delegation of authority to the agency for a particular site, the agency may enter into a separate contract or interagency agreements directly with the utility in accordance with FAR 41.205 Separate Contracts; FAR Part 41.206 Interagency Agreements, but in all cases will be no longer than 10 years in accordance with 40 USC 501 and FAR Part 41.

Retail Electric Choice Markets: In retail electric choice markets, customers can choose their electricity supplier. The following states have either complete or partial retail electric choice: California*, Connecticut, Delaware, Illinois*, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas*, Virginia*, and Washington, D.C. (*Note: Electric choice may not be available in all parts of the state or for all customers.)

As in the vertically integrated markets, GSA is authorized by 40 U.S.C. 501 (FAR Part 41) to prescribe policies and methods governing the acquisition and supply of utility services for Federal agencies. GSA has delegated this authority to the DOD, including DLA Energy, and DOE. Due to multiple available electric suppliers, the procurement of utility services is conducted through a competitive process.

Email both DLA Energy and GSA for assistance in retail electric choice markets, as they can coordinate opportunities to aggregate federal requirements and obtain competitive pricing.

General Considerations

For all planned clean energy purchases, regardless of market, the agency Contracting Officer should be consulted early in the process. Agencies are not allowed to use FAR Part 41 (except under the GSA AWC) unless the agency has received a delegation of authority from GSA to acquire utility services. GSA and DOD's authority may vary for each of these purchases.

Agencies should pursue energy efficiency as the first step in decarbonizing a site, as it reduces the amount of clean electricity required. For all purchases, it is important to understand the location of the clean energy project and the ownership of energy attribute certificates (EACs). EACs represent the environmental attributes of 1 MWh of power produced from clean energy projects and can be sold separately from electricity (renewable energy certificates (RECs) are a type of EAC). Other important considerations include:

  • Agency clean electricity targets
  • Cost savings potential
  • Ease of participation
  • Price stability
  • Contract length
  • Choice of resource
  • Contracting Officer availability

There are multiple options for the procurement of clean energy in the vertically integrated and retail electric choice markets. However, not all options are available in both market types. This page provides an overview of each of the options below, including information about the applicable market type, cost savings potential, contract length, choice of generating technology, and EAC ownership.

Flow chart illustrating off-site energy purchases for utility markets and procurement options.

 

Utility Green Pricing

These products are usually month-to-month renewable options offered at a price premium on existing electricity bills, with the utility sourcing these products from either a utility-owned clean energy asset or a third-party-owned clean energy project in the local grid. In some cases, the utility may buy unbundled RECs or EACs from a project outside their regional grid.

Market Type: These products are offered by utilities in vertically integrated markets. They may also be offered by public utilities such as cooperatives and municipal utilities in states with retail electric choice markets.

Cost Savings Potential: None, average premium is 1.5 cents/kWh

Contract Length: Shorter contract terms (e.g., month-to-month)

Choice of Generating Technology: None, utility determines technology mix

EAC Ownership: The EACs are typically conveyed to the buyer or retired on their behalf

Additional Resources:  Visit NREL’s utility green pricing program list for available green pricing programs.

Utility green pricing programs begin with a renewable energy generator. The utility either owns the generator and retains RECs or purchases RECs from a third-party owned generator. The utility retires the RECs on behalf of green pricing customers, who pay for RECs through an additional line item on their utility bill.

For more information on utility green tariffs, visit the EPA website.

Utility Green Tariff

Under a utility green tariff, the customer enters into a contract with the utility to procure both electricity and EACs from a clean energy project. The project may be utility- or third-party-owned. The contracts are usually longer-term and offer the ability to save money over time. DOE’s Federal Energy Management Program (FEMP) can assist federal agencies in understanding the details of specific products, especially since the payment structure for these products varies.

  • Market Type:These products are offered by utilities in vertically integrated markets. They may also be offered by public utilities such as cooperatives and municipal utilities in states with retail electric choice markets.
  • Cost Savings Potential: Possible, depending on the structure and term
  • Contract Length: Longer agreements often required (10-20 years)
  • Choice of Generating Technology: Customers may have input
  • EAC Ownership: The EACs are typically provided to the customer
  • Additional Resources: The Clean Energy Buyers Association provides a report with a map of green tariff availability, a report on green tariff details, and summary of contracts signed over time. View a FEMP on-demand training to learn more about utility green tariffs.
In a utility renewable contract, the customer enters into a contract with the utility to procure power and RECs from a renewable energy provider. Unlike green pricing programs, the customer may be able to specify the resource for the product.

Additional Resources

Email both GSA and DLA Energy to find out whether they already purchase electricity for your site and if not, information regarding how to join their aggregated procurements.

Competitive Supplier

GSA and DLA Energy purchase electricity on behalf of federal agencies in the majority of these markets. The distribution utility remains responsible for transmission and distribution service.

  • Market Type: Retail electric choice markets
  • EACs bundled with Electric Supply: Yes, if requested
  • Cost Savings Potential: Yes
  • Contract Length: 2-5 years

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Community Choice Aggregation (CCA)

Community Choice Aggregators (CCAs) are suppliers that buy electricity for their local community; with some offering a unique grid-supplied CFE mix and discrete off-site purchased CFE options. Under a CCA, customers obtain their electricity supply from the CCA, and their investor-owned utility maintains responsibility for transmission and distribution service to their site. In some cases, the CCA may buy unbundled environmental attribute credits (EACs) from a project outside their regional grid.

  • Market Type: Both vertically integrated and retail electric choice. As of April 2022, eight states (California, Illinois, Massachusetts, New Jersey, New York, Virginia, Ohio, and Rhode Island) have established community choice aggregation programs, although their program specifics vary considerably.
  • Cost Savings Potential: Yes
  • Contract Length: Shorter contract terms (e.g., month-to-month)
  • Choice of generating technology: No. Determined by the CCA.
  • EAC Ownership: Environmental attribute credits (EACs), also known as renewable energy certificates (RECs), are often retired by the CCA in states with renewable standards on behalf of customers. Off-site purchased CFE options in CCA states like California can offer EAC retirements for subscribers.
  • Additional Resources: For information on CCA development, check LEAN Energy US. Confirm with your utility that a CCA is available in your area and that your site is eligible to participate.
A CCA effectively "aggregates" the electricity demand of many customers (residential and non-residential) in order to procure electricity from an alternative supplier.

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Community Solar

Under a community solar program, a subscriber pays for a share of the electricity from a large solar array, then receives a bill credit for the electricity production from their share. In many cases, a third-party owns the solar array and manages the subscription rather than the utility or electric supplier. The utility usually provides the bill credit on the customer’s utility bill.

  • Market Type: Both vertically integrated and retail electric choice markets
  • Cost Savings Potential: Possible
  • Contract Length: Typically, longer agreements (10-20 years)
  • Choice of generating technology: Solar only
  • EAC ownership: Subscribers do not typically receive the associated EACs
  • Additional Resources: Check NREL’s community solar project listings and your local utility and state community solar listings. States with established community solar markets may provide lists of community solar projects.
A typical community solar program structure begins with a shared solar array generating and feeding solar power into the grid. Most community solar arrays are owned by utilities or third-party project developers.

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Off-Site Clean Electricity Purchase

Under these contracts, the buyer typically agrees to purchase clean electricity from a clean energy provider that is not the utility. The buyer must work with the utility for ensuring the delivery of the clean electricity.

  • Market Type: Retail electric choice markets
  • Cost Savings Potential: Yes
  • Contract Length: Longer agreement (10-20 years)
  • Choice of generating technology: Yes
  • EAC Ownership: Negotiable in contract
  • Additional Resources: Agencies should contact FEMP for additional information on the different procurement vehicles available to the Federal government. Agencies should contact GSA at energy@gsa.gov and/or DLA Energy at dlaenergy.eteam@dla.mil to find out whether there are opportunities to join an aggregated procurement.
Off-site clean electricity purchase contracts are generally long-term contracts to purchase electricity between a non-residential customer and a renewable energy provider.

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Unbundled Energy Attribute Certificates (EACs)

Agencies purchase EACs from projects, typically through a third-party EAC marketer. The EACs are "unbundled" from the electricity, and may not be generated in the agency’s utility service territory.

  • Market Type: Both traditionally-regulated and competitive markets
  • Cost Savings Potential: No
  • Contract Length: Shorter contracts (typically 1-3 years)
  • Choice of generating technology: Yes
  • EAC Ownership: Yes
  • Additional Resources: DLA Energy and GSA execute EAC aggregations for federal agencies. Additional EAC information, including historical prices, is available on the EPA website
Unbundled REC customers purchase RECs from renewable energy providers, typically through a third-party REC marketer. The unbundled REC customer does not receive power in the transaction.