What is Self Supply?

Self supply refers to green power use by a consumer whereby the consumer owns the renewable electricity generator and is responsible for its maintenance and operation. In this way the consumer is generating and supplying their own green power.

How does Self Supply work?

Self supply arrangements can be structured in a number of ways. The renewable electricity generator may be directly connected at or near the point of use by the consumer, be off-site with the electricity being grid-delivered to the consumer, or be off-site with the power sold to others but the renewable energy certificates (RECs) retained by the consumer. In all arrangements the consumer must retain ownership of the RECs associated with their renewable electricity generator in order for it to be considered self supply of green power. Self supply is often referred to as distributed generation, as electricity production is geographically distributed and located near the point of use, often on a consumers’ property.

Because renewable electricity systems used by consumers to self supply green power require upfront capital investment, consumers often use tax benefits and incentives at the local, state, and federal levels to help reduce the cost of purchasing the system. In evaluating long-terms costs, consumers also need to account for ongoing maintenance and operation costs and the duties of owning a renewable electricity system.

Advantages and Challenges of Self Supply

Advantages:

• Direct control over systems operations
• System owner chooses structure, generation resource, size of system, etc.
• Visible contribution to renewable electricity generation, which can enhance brand image
• Potential costs savings and price hedging over traditional power sources
• Avoids transmission and distribution losses associated with grid-delivered supply options
• Potential reliability benefits
• Some forms of self supply harness energy that might otherwise be wasted (e.g. combined heat and power system)

Challenges:

• Requires upfront capital investment, which can be prohibitive
• Consumer may lack the necessary technical knowledge for maintenance duties
• Generally less feasible for non-profit organizations, as they cannot take advantage of enabling tax benefits and incentives
• Site constraints can limit choice of renewable resource and size of system
• Relatively smaller system sizes make economies of scale harder to achieve

What are some organizations that are using Self Supply?

Many Green Power Partners use self supply, including on-site owned solar arrays, wastewater methane plants, landfill gas facilities, and wind turbines. Partners as diverse as the University of Missouri, H-E-B Grocery Company, IKEA, and the City of San Diego are using this procurement option to supply their green power.

Partner Case Study

Swedish retail giant and Green Power Partner IKEA relies heavily on self-supplied renewable energy for its green power and utilizes several different self supply pathways. Many stores have on-site solar array installations or on-site biogas powered fuel cells. The company also owns several large-scale off-site wind farms, such as the 165-MW farm in Cameron County, Texas and the 98-MW farm in Hoopeston, Illinois. IKEA sells the power generated by these wind farms into the regional wholesale electricity market, but retains the RECs associated with the wind farms’ output and uses them to match a portion of IKEA’s national electricity use.

In 2014, after IKEA bought their second wind farm, US Acting President and CFO Rob Olson said, "IKEA believes that the climate challenge requires bold commitment and action. We invest in renewable energy to become more sustainable as a business and also because it makes good business sense."¹ In 2017, after several California IKEA locations installed self supply biogas fuel cells, Monica Varela, store manager at the East Palo Alto location, said, "Plugging-in this fuel cell system is an exciting milestone that complements our existing rooftop solar array. Utilizing fuel cells will reduce our carbon footprint and help create an even more sustainable community here in the Bay Area."² With these self supply systems and others like them, IKEA is showing admirable and business-savvy environmental leadership.

Additional Resources:

• EPA’s Toolbox for Renewable Energy Project Development: https://19january2021snapshot.epa.gov/repowertoolbox
• EPA’s Renewable Energy Project Development Resource Directory: https://19january2021snapshot.epa.gov/repowertoolbox/renewable-energy-project-development-resource-directory
• EPA’s Distributed Generation of Electricity and its Environmental Impacts webpage: https://19january2021snapshot.epa.gov/energy/distributed-generation-electricity-and-its-environmental-impacts
• DOE’s Renewable Energy: Distributed Generation Policies and Programs: https://www.energy.gov/eere/slsc/renewable-energy-distributed-generation-policies-and-programs Exit

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