A Primer on Solar Marketing Claims

Last week our Get Some Sun webinar featured the Center for Resource Solutions’ Robin Quarrier covering proposed “Green Guides” updates from the Federal Trade Commission. Robin’s presentation was a real eye-opener for our team and should be required viewing for anyone involved in marketing solar and other renewable generation here in the U.S. So read on . . .

For those who are new to the Green Guides, they’re the FTC rules that help marketers avoid making (and being sued for making) misleading environmental claims. They’ve been revised twice since they were first issued in 1992, and the FTC just issued its proposed updates for a new edition that is expected to be final in early 2012. For the first time, this latest set of guidelines explicitly covers renewable energy generation and carbon offsets. And although they may still change before they’re considered final, these proposed guidelines give us all a good indication of what the FTC is likely to require when talking about solar power production and consumption.

Central to the Green Guides’ provisions for renewables are the concept of RECs, the commodity that signifies the added environmental value that consumers place upon renewable energy. The FTC joins many other regulators and policymakers in following the golden rule that RECs + electrons = renewable electricity. Both components are absolutely necessary to be able to fairly make renewable power claims.

The need to exercise care when talking about renewably derived power without the RECs is nothing new. However, the FTC’s strict new guidelines for who and how gets to talk about ANY environmental benefit most definitely signals a change – and one with tremendous implications for describing the host role in the renewable energy industry.

Consider a scenario that will no doubt sound familiar to many solar developers and PPA providers out there. Business X decides to have a PV system installed on its roof and sell the RECs to the local utility to improve the system’s payback. Those RECs are then used by the utility to comply with its RPS requirements. By now, most marketers know that Business X can’t claim to be solar powered. Only the utility now gets to make that claim or else it would be double counting.

Instead, we’ve all gotten used to finding other creative ways to talk about the business’s solar efforts, typically by discretely calling the business a “solar system host” or “solar generator” and then moving on with the glorious details of the array and its many environmental benefits.

No longer. The FTC’s consumer perception research suggests that these kinds of claims can be misleading to consumers. Consequently, the new guides advise marketers against making any hosting claims whatsoever if the entity in question does not own the RECs. Even generator claims are highly suspect, although there’s some grey area in the existing proposed rules. Something like “the company generates solar electricity to be sold to others” falls onto this blurry legal ground. However, Robin warns, manufacturers in particular can assume that they’ll have little wiggle room as the FTC places “made with renewable power” claims under especially tough scrutiny.

So how navigate the new FTC policy? First, review the contract carefully to determine who exactly owns the RECs generated by the solar energy system. If the solar customer maintains the RECs, go ahead and spread the word about their solar commitment. But if those RECs are being sold elsewhere, proceed with extreme caution or risk facing the wrath of the FTC. Because the guidelines are intended to prevent deceptive marketing practices, the best path forward is to make the renewable marketing language specific and transparent. Be able to thoroughly support all of your claims, and if possible make that documentation readily available to the public.

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.