Green Electricity

Green electricity refers to electricity the consumer purchases that originates from renewable energy generation.

This is not generally a direct physical link, given that the electricity the consumer receives is the vibration of electrons in their local network, which is ultimately connected to a wide range of different types of generation.  The link is more commercial in that the electricity produced by renewable energy generation is allocated to the green electricity consumer. 

If consumers were not offered green electricity as a product then everyone would be consumers of standard electricity, which would have a renewable energy component based on the renewable energy generation feeding into the electrical network.  This renewable electricity would be largely driven by the support mechanisms available to it (in the form of the Renewables Obligation (RO) and the Feed-in Tariff (FiT) in the UK).  The existence of the green electricity market to a large extent results in the renewable energy generation that is happening anyway being allocated to green consumers, thereby reducing everyone else’s allocation of green electricity.  This in itself would not result in an increase in renewable energy generation.  However to be able to call the electricity supplied ‘green’, its purchase must result in new renewable energy being installed.  Therefore a proportion of the premium paid for green electricity must be directed towards new renewable electricity generation.  The extent to which suppliers do this varies. The other argument for green electricity is that it creates a market for renewable energy and with increased consumer demand there will be additional pressure on the delivery of new renewable energy, rather than just depending on Government support mechanisms.

Frequently asked green electricity questions

What is green electricity?

It’s renewable energy isn’t it?

But isn’t that renewable energy happening anyway, driven by the Renewables Obligation (Government imposed economicmechanism linked to targets)?

Most of it is, but some of it may drive new renewable energy through the retiring of renewables obligation certificates (ROCs) i.e. a proportion of the renewable energy supplied does not count towards the Government targets.

Do all green electricity suppliers retire ROCs?

No, and the extent of ROC retirement varies for those who do.

So the premium on the electricity in part goes towards stimulating new renewable energy, and the rest to make the green electricity consumer greener at the expense of everyone else becoming less green?

Yes, but there is also the argument that by consolidating green electricity a market demand is being cultivated that will justify further expenditure on renewable energy projects.

Isn’t most renewable energy wind energy and isn’t that heavily constrained by planning independently of the green electricity market?

This may be true to a large extent but with increasing offshore wind energy, smaller distributed wind energy projects and also forthcoming developments in wave and tidal power, amongst others, there are various avenues for investment in new renewable energy.  Furthermore changes in the planning system should allow more onshore wind energy development.

What if we all bought standard (predominantly) brown electricity and waited for the Government to set higher targets?

Support for higher targets may filter less effectively through the voting system than voting with custom, and in the end consumers collectively will have to pay for any premium on green electricity whatever the mechanism.

Isn’t it better to install renewable energy on-site and retire all the ROCs in the knowledge that all the money will be invested in new renewable energy?

There are cases when on-site generation may be an attractive proposition, but the advantages of green electricity can be that larger more efficient projects are supported and there is no capital outlay for the consumer along with the risk that that may entail.

With renewable energy being largely intermittent, won’t we soon get to the stage where we are unable to balance supply and demand effectively?

We are still a fair way off this point in the UK but, in conjunction with increased renewable energy generation, we need to introduce further measures to balance supply and demand – these may include energy storage, increased continental interconnection and demand side management helped by greater electrification of demands that do not need instantaneous response such as electric vehicles and heat pumps.

Is it a good idea to switch to electric vehicles now to support renewable energy increase, or do they currently result in higher emissions due to the electricity mix being predominantly brown?

Even now electric vehicles can result in the emission of less CO2 per passenger kilometre than internal combustion engine vehicles running off fossil fuel.

Won’t I be better off spending my extra money on energy efficiency measures than spending it on green electricity?

In line with the energy hierarchy priority should be given to energy demand reduction over renewable energy supply.  In economic terms there are energy efficiency measures such as certain levels of insulation that may result in lower cost, but with increased measures there comes a point where the marginal cost of CO2/fossil fuel reduction through renewable energy is less that that that from additional energy efficiency measures.

Why is green electricity generally more expensive than brown electricity and will renewable energy eventually become cheaper than fossil fuel energy?

Whilst renewable energy generation may currently be more expensive than fossil fuel energy, it should be remembered that fossil fuel generation has had decades of investment that renewable energy has not had.  Furthermore the true costs of the damage caused by fossil fuel generation are not paid for by the consumer, and if this were the case then the economic comparison would be very different.  There are likely to be further advances in renewable energy generation that will bring down the costs of manufacture and with increased pressure on the environment and security of supply, its value should be bolstered in other ways.

Given the criticality of the environmental situation and security of supply, shouldn’t we be investing our money in cheaper more conventional options such as ‘clean’ coal (with carbon capture and storage) and nuclear power?

Fossil fuel power with carbon capture and storage (CCS) is not yet established and accelerates the consumption of fossil fuel and neither is nuclear technology that can operate reliably without significant depletion of known stocks of uranium. Advances may be made with these technologies, but the question is how much investment should be directed towards generation from finite resources at the expense of that from renewable resources.

If we assume the Government target of 80% reduction in CO2 from 1990 levels by 2050, what is the best way of getting there and what can we do to drive it?

It is hard to predict a path exactly, but with appropriate policy and market interventions encouraging the most effective energy systems to thrive combined with consumer demand for green energy we may converge on the target.  Selection of energy suppliers with particular energy generation portfolios will influence the course towards the target.

What do you think?  What should our energy future should look like?*  What balance of generation will you go for?  Take your pick

*You can build your own future energy scenario using the DECC 2050 Pathways tool (