Greenpower – what exactly am I paying for?

It may appear obvious what you receive for your Greenpower dollar, but I quickly found it wasn’t. I buy Greenpower and recommend it, but I now have a much better understanding of what I am getting for my money.

I buy my Greenpower from Origin Energy as 100% Wind in Queensland Australia. I do this so that the electricity I use comes from a renewable carbon neutral source. The thought that occurs to me is to ask where this “green” power is sourced from and  how that relates to the photovoltaic (PV) panels on my roof.

The answer it turns out is a little confusing, but consistent.

Power producers generate power and sell that power to the grid retailers at electricity market prices. It doesn’t matter about the source, the market price is the same. If you have a home PV system, you are just a power producer, and get to sell into the grid at some agreed rate.

Registered GreenPower producers also get to sell REC’s into the REC market. These REC’s represent every MW-Hr of power they sell. When you pay extra for Greenpower, you are buying these RECS. This link means that for every KW-Hr you buy, a KW-Hr of GreenPower is generated by a registered generator. The requirements for registered generators are fairly strict to ensure they are carbon neutral sources.

Under the Greenpower Program Rules REC’s can be obtained from a number of sources. These are large registered generators, and also from pooled REC’s from home PV systems that are grid connected. If you sell (wreck) your REC’s, then they may be included in the Greenpower scheme.

Home PV systems are treated a little differently to large scale generators, where the REC’s are issued for the "deemed" life of the system (15 year deeming period), rather than created yearly. This means that the Greenpower you are buying now may not be generated yet – obviously not ideal, but these systems make up less than 5% of the total REC’s sourced, so it’s not a critical issue.

Solar Hot Water system REC’s are not eligible to be used in the Greenpower scheme, so you are actually paying for real power produced, not power saved.

The electricity your home PV system exports out to the grid is just electricity. It’s not classed as Greenpower, despite the premium you are paid for it. (The premium is paid by Energex, with Origin only paying $0.07 of the $0.50 paid). The Greenpower relates to any REC’s you sell for the deemed life of the system, not to the actual amount of power going out the meter in that period.

If you sell your REC’s, this means that you have sold all the carbon savings from your system to someone else. Any power you use from the system on your roof is no longer “green” (yes – that’s a little confusing). When you pay for Greenpower, you are buying some of the REC’s back. If anything, this is where the “hole” in the scheme lies. When you buy Greenpower (REC’s) from most generators, every one of the units is exported to the grid. If the REC’s you are buying are sourced from home PV systems, then that power may never actually be exported onto the grid. I think it’s a flaw, but it’s a small enough percentage to not bother me too much.

How all this fits into the MRET (Mandatory Renewable Energy Target) and the Australian Governments new Solar Credits Scheme is yet to be legislated.

Simple hey, clear as mud. No wonder people get confused with this stuff. It is a consistent system though, and does ensure that when I leave the lights on, it’s coming from a carbon neutral source and audited to prove it.

What I pay for Electricity with Origin

Power 100% Wind Buy Green Total
15.455 4.999 20.455

What Origin pays me for Electricity

Sell State Govt Sell Total
6.1 44.0 50.1

I was given some more info by the guys at www.localpower.net.au about why Energex who runs the grid benefits from the distributed power solution.

Power Costs
43% energy (generation) cost
47% network (grid) cost
10% retail cost

http://www.qca.org.au/files/ER-NEP910-QCA-DraftDecBRCI-Report-1208.PDF

4 Responses to “Greenpower – what exactly am I paying for?”

  1. Monty says:

    Interesting post! I think one of the key determinants on the value of green power is whether the retailer counts the green energy toward his obligations under the MRET or not. On this web page http://www.energy.com.au/energy/ea.nsf/Content/NSW+Green+energy I believe that Energy Australia advise that when they sell Green Power they do not count the RECs purchased to provide this Green Power toward their MRET total. This makes sense to me as it truely represents additional Green Power over their target (which it should if you have to pay extra for it!). I’m not sure if all Green Power merchants tally their RECs in the same way.
    Incidently – where did you read that solar hot water RECs aren’t elligible under Green Power schemes? I was under the impression that all RECs were equal?

  2. Rob says:

    A small nit. the PV deeming for RECs is 15 years. The 6c/kWh premium Origin pays above the 44c/kWh (which is paid by distributors like Energex to Origin to pass on) is around the wholesale cost of electricity.

  3. GJOESQ says:

    I’ve got absolutely NO IDEA what this means and I think I’m informed!! Can someone please explain this with definitions in plain English?

  4. Cam says:

    Paul
    what a complex life we live!
    I put it to you that wind is not a viable baseload power source, and can never match the power density of a thermodynamic plant (coal, nuclear), or a (hydrocarbon) gas turbine. That is, they take up a hell of a lot of (prime coastal) space per kWh.
    The energy required to manufacture wind turbines is significant (and comes primarily from nuclear or coal power stations).
    Even a nuclear power station requires significant energy to construct, due to the large amount of concrete (people talk about multi-year energy payback with nuclear power).
    I will email you a table on various parameters for a number of energy sources (and would be interested in any refinements you have to the table).
    Regards cam.

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