As fossil fuel reserves worldwide begin to get dangerously low, a huge emphasis is being placed on progression within renewable energy. A large majority of the electricity supply mix throughout the US is still being sourced from non-renewable methods; however, huge progress has been made over recent years, seeing noticeable pushes in hydropower and wind. It is unrealistic to think that a total switch is on the cards within the next few years, but the United States, along with many other UN nations have pledged to attain the status of 100% renewable mix by 2050. This, however, could be slowed by President Donald Trump’s less than favourable attitude towards climate change and renewable investment. That said, over the last few years, electricity providers across countries such as the United Kingdom and United States, have begun offering 100% green electricity tariffs, but how do they work?
How does it work?
How is it possible to receive 100% renewable electricity through the same distribution network as my neighbor, when they have a standard tariff? Well, technically the electricity that you are receiving is not 100% renewable: it is the same electricity as your neighbor is receiving. However, you are paying for your usage amount to be sourced from a renewable source.
The way electricity supply works is that, depending on the size of your supplier, electricity is both generated in a plant owned by your supplier and bought from the wholesale market, which is then sent into the national grid and transported around the country to be distributed to our homes and businesses. If you choose to opt for a 100% renewable electricity tariff and use 5000 kWh per year, you are reducing the amount of electricity your supplier needs from non-renewable generation by 5000 kWh in favor of green sources. That means that although you are not directly receiving 100% green electricity, 5000 kWh of renewable electricity has entered the national grid, which further supports renewable generation methods and increases the national energy mix statistics.
Put simply, If a street of 20 houses needs 100,000 kWh of electricity per year (5,000 kWh each), and 10 of them choose a 100% green electricity tariff, then that’s 50,000 kWh of non-renewable electricity that is no longer needed to power the street. Although you are actually receiving an average of 50% renewable energy in this small example, due to the other 10 houses not opting for green tariffs, your impact is still the same, with no dip in end product.
Green tariffs in the United States
Due to the sheer number of suppliers and supply areas in the United States it is extremely difficult to pin down exactly who supplies what, where. But what we can do is pick a couple of examples to show the difference in pricing between a standard tariff and a renewable one. As you would perhaps expect, an all-green supply is often a little more expensive than a regular offer, generally due to current price of generation. There is not, however, much of a difference. Here’s a couple of examples:
Example #1 – 6 month fix
Supply area: Connecticut 06226
Renewable tariff: Clearview Energy’s ‘ClearGreenGuarantee6’ = 7.09¢ per kWh
Standard tariff: Constellation’s ‘6 Month Web Only’ = 6.99¢ per kWh
Between these two tariffs there is a mere 10¢ difference, meaning that given a 5000 kWh usage over the year, you’d see a total difference of 5$, or 41¢ per month.
Example #2 – 12 month fix
Supply area: New York 13323 (New York State Electric & Gas)
Renewable tariff: Clearview Energy’s ClearGreenGuarantee12’ = 5.99¢ per kWh
Standard tariff: Public Power’s ‘12 Month Fixed’ = 5.99¢ per kWh
Here we can see that the two tariffs are actually exactly the same price per kWh, meaning that choosing the renewable energy tariff for the same duration will not cost you any more.
Green tariffs in the United Kingdom
Energy markets in Great Britain have been deregulated since 1990, meaning given the sheer amount of providers and tariffs that have become available across the country, it is similar to the US in the fact that it is difficult to pin down each individual tariff. What makes the consumer experience different from those in the US, however, is that there is quite a bit more price disparity between regular and 100% green tariffs in the UK. For the same reasons as in the US: under-investment; profit-focused companies, having all-renewable electricity in your home can cost you quite a bit more than your regular tariff. Here are a couple of examples from the most popular suppliers:
Example #1 – Fixed tariff
Supply area: Manchester M6 7RE
Renewable tariff: Co-operative Energy’s ‘Co-op Price Protect July 2019’ = 17.32p per kWh (TCR)
Standard tariff: EDF Energy’s ‘Blue+Price Protection Jun18 v2’ = 15.26p kWh (TCR)
As you can see, electricity prices in the UK are much higher than in the United States. Here, between the all-green tariff and the standard tariff there is quite a considerable difference. Assuming the national average consumption of 3,100 kWh per year, there would be a £64 (83$) difference, which is pretty large.
Example #2 – Variable tariff
Supply area: London SW6 3TG
Renewable tariff: Co-operative Energy’s ‘Green Pioneer – DD’ = 17.84p per kWh (TCR)
Standard tariff: British Gas’s ‘Standard’ = 15.38p per kWh (TCR)
Once again the disparity between the standard and renewable tariff is pretty huge: a 3,100 kWh usage would see a massive £76 (99$) difference.
Author bio: This guest post was written by Elliot Waterhouse, the Web Content Manager for Selectra . Elliot is from the UK, currently living in Madrid, Spain. He’s a digital marketing professional and expert on British energy markets.