Renew On Line (UK) 29

Extracts from the Nov-Dec 2000 edition of Renew
These extracts only represent about 25% of it

UK Green Power Market

Coalfield town goes green

With only around 13,500 consumers having subscribed by the spring of this year, the UK green power retail market may not have expanded as fast as some early predictions suggested, but there are still some hopeful signs, especially from the corporate and organisational sector, with local authorities taking the lead.

For example, Rotherham Council in S.Yorkshire has decided to sign up to Yorkshire Electricity's green power scheme to provide electricity for the council buidlings. This was seen as a significant step since the area is steeped in coal mining traditions. The Council, braving objections from the Coalfields Communities Campaign, is switching to 100% green power- most other local councils who have signed up with green power schemes have only done so partly, up to 60% at most. A Labour member of the council told the Guardian (23 Aug.2000) that 'we are taking the lead for future generations. The council has a responsibility to set an example'. But it was clearly aware of the significance with which the shift might be viewed. However, although it would no longer be using coal for its boilers or buying in conventional power, some of which was generated with UK coal, it was pointed out that in fact many UK power stations actually used imported coal these days. The Council says it is still fighting to protect coal mining communities with regeneration programmes.

The bottom line however seems to have been economics. The Council would have faced a £204,000 p.a. surcharge from the Climate Change Levy on fossil fuel use, if it hadn’t switched. The switch will actually therefore lead to a £67,000 p.a. saving. And, as and when green power gets cheaper, the savings will increase.

The prospects for price reduction are looking a little better now that a few new renewable projects have got going outside the NFFO/SRO. For example, Scottish Power is building a 20 turbine wind farm in Ayreshire to feed directly in to the green power market. Evidently generation costs and sales potential mean that they no longer need NFFO/SRO support.

Green pricing- a cop out?

For the moment, however, most green power schemes still have a premium charge. Some say that it is unfair that those altruists who choose green power are surcharged, while those who don’t get cheaper but dirty power. And that green power does nothing for those suffering energy poverty. Equally though, you could say that this is really a tax on those who can afford to choose green power, which, as the markets grows and new capacity is introduced, will ultimately lead to price reductions. Then everyone else, including, crucially, the energy poor, will be able to afford to switch to green power.

Being even more positive, it’s worth noting that the Climate Change Levy and Renewable Oblifgation may lead to price increases for all consumers, as energy supply companies and business generally pass on the extra cost of renewables to consumers- and some of this income (although sadly not much in the case of the Climate Change Levy) will go to support new renewables. In this case then, everyone will be contributing to the development of renewables and reductions in price- not just altruists. However, this is a fairly indirect link, and in any case the government is keen to limit any price increases from the Renewable Obligation - and has suggested a 2% limit (by 2010!). It also seems possible that energy supply companies, keen to get green customers, will absorb some or all of any price increase, and not pass them on to consumers. That’s fine- it means in effect that shareholders will pay at least some of the extra cost. However, this means that, if you want to support renwables through your electricity bill, the most effective way may still be by subscribing to a green power scheme, whether a supply or donation type scheme. The latter may have the advantage that you can see some specific project get supported. The other option is of course to get directly involved with a local energy co-op or to invest direct in theWind Fund or some such scheme.

See Feature for an analysis of the state of play in the UK green power market