When you are producing electricity in a grid-tied system like this one, you are producing two things. First and foremost you are producing electricity that is used by you and the excess sold back to the utility. Second, you are producing another sellable entity sometimes referred to as green tag.
What is a green tag? A green tag is produced when you produce power by not using fossil fuels. Is it a thing that you can touch or see? No, it is simply a desirable attribute of ‘green’ power like solar and wind. Instead of burning our finite fossil fuels which produce CO2 and other harmful gases, you are producing power without any of those side effects to the environment, and it is that which is being purchased.
It was explained to using this analogy which really made sense to me: You can get a glass of tap water or a glass of spring/bottled water. Both are water and both are drinkable, but which do you pay more for? You pay more for the spring/bottled water simply because it clean, and comes from a known natural source. In this case the difference in price between what you would pay for tap water and what you would pay for bottled water is essentially what in terms of power generation is referred to as a green tag.
These green tags can be sold to aggregators who collect an individuals green tags and lumps then together with lots of others from other people to be sold to corporations and utilities. Why would a corporation or utility want to buy green tags? Well, it may be that they are supposed to be producing a certain amount of power using ‘green’ sources, and if for some reason they are unable to do this, then they purchase these green tags to offset what they cannot produce themselves. It is a ‘win-win’ situation because the utilities and corporations get to invest as slowly or quickly as they wish in green power production while still getting to consider themselves ‘green’ businesses.
Are green tags a money making venture? With the size of system that I have, I am hoping to produce enough power this year to sell between $60 and $120 worth of green tags. Ok, it isn’t enough to retire on but it definitely helps to offset some of the cost of a PV system.
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