The city of Burlington, Vermont, has been experimenting with green energy since the early 1980s, when it replaced an old-fashioned coal-burning electric plant with one that burned wood chips—something the state’s forestry industry could provide cheaply and reliably. It wasn’t until 2004, however, when the state agreed to join a market for renewable-energy credits recently established in the Northeast that going fully green became the goal.

“That was the first time we had an inkling that this might be the right thing to do”—not just for the environment, but for the Burlington Electric Department and its customers, says Ken Nolan, who was a resource planner there at the time. The city’s long-term contract with a nearby nuclear plant had recently expired, a short-term natural-gas contract was set to expire soon, and rapid technological advances were making solar and wind power cheaper every day. Finally, says Nolan, “We actually saw a path where we could make this work.”

Last fall, Burlington became the first U.S. city to run on 100% renewable electricity. Nolan, who is now the city’s manager of power resources, acknowledges that it has benefited from some unique circumstances, including proximity to bountiful natural resources—rivers to generate hydropower, vast open spaces for wind farms—and a population of die-hard liberals who passed bond initiatives to pay for everything. A few smaller communities beat Burlington to 100% green status, including Greensburg, Kansas, population 785, which was forced to rebuild after a tornado destroyed the town in 2007. But Burlington, population 42,384, is by far the largest municipality to sever ties with traditional power.

Green energy is still more expensive than coal, but Burlington has managed to keep costs stable by selling credits to utilities in states such as Massachusetts, which requires energy producers to meet certain renewable-energy benchmarks. When utilities fall short of those mandated goals, they must buy certificates through the regional market from a place like Burlington, and Burlington then passes along that revenue to its power customers as savings, like an energy subsidy doled out via the open market.

It’s a somewhat messy process that some environmentalists criticize: If a utility can buy credit for green energy it didn’t actually produce, it isn’t making progress toward producing more green energy. But with the cost of renewables continuing to fall, Nolan says, “there are years when the prices have been low enough that we’ve considered retiring the credit.”

Meanwhile, Burlington is continuing to beef up its green-energy infrastructure. A new solar array at the city’s airport came online early this year, part of a mayoral initiative to use any available city land for solar power. And thanks to a program that offers free energy audits, technical support, and discounts on energy-efficient products, the city actually uses less power today than it did in 1989.