Environmental Engineering Reference
In-Depth Information
mandatory pool prices are less volatile than balancing market prices, as all power must be
traded through it, so the price penalty to intermittent renewable generators is less. However,
if a renewable generator wished to hedge its position in order to receive a fi xed price for
output, it would still be exposed to pool prices for any generation not covered by the hedging
contract. If pool prices suddenly decreased during a period due to a surplus of generating
capacity, the renewable generator would then lose out in this case, particularly if it had
underforecast signifi cantly and thus underhedged.
Marketing Green Electricity
Though government legislation is one way to encourage renewable energy generation, it is
not the only way. The opening up of electricity markets has given the opportunity for new
and existing suppliers to offer green tariffs to consumers. Green electricity is marketed as a
'premium product' for consumers with an environmental conscience. Generally, a premium
is charged for the green tariff. This premium is either paid directly to the renewable energy
generator or used to support new renewable energy generation. The take-up of these tariffs
has varied from country to country. In the UK, for instance, market research suggested 25%
of domestic electricity customers, representing 5.7 million households, would be interested
in a green electricity tariff, even if this means paying a little more than the lowest prices to
ensure their electricity comes from renewable sources. In reality, however, less than 1% of
households in the UK has switched to a green tariff, while the Dutch and American markets
have achieved a fi gure of 2%. It seems that the premium that consumers are willing to pay
may be quite small. In addition, the freedom to change electricity suppliers is a relatively
new concept, as is the idea of buying green electricity, so it may be too early to draw fi rm
conclusions about the success or otherwise of marketing green electricity.
References
[1] Danish Energy Agency, ' Technology data for electricity and heat generating plants ' , 2004 .
[2] International Energy Agency ,
Renewables for Power Generation, Status and Prospects
, OECD , Paris , 2003 .
[3] IEE Power Division ,
Economics of Embedded Generation
, Institution of Electrical Engineers , London , 1998 .
[4] Hohmeyer , O.
Social Costs of Energy Consumption
, Springer - Verlag , Berlin , 1998 .
[5] ' Externalities of energy (ExternE), European Commission , 1995 - 99 ' , EUR 16520 - 25 EN; also ' External costs.
EC summary document on the above', published 2003, EUR 20198. The EU page http://euaropa.eu.int/comm/
research/energy/gp/gp_pubs_en.html has a link to these and other relevant material.
[6]
Power generation and the environment
. Roberts , Liss and Saunders , Oxford University Press , 1990 .
[7] Lockwood , B. ' The social costs of electricity generation ' , CSERGE, University of East Anglia , 1992 .
[8] A full description may be found at http://europa.eu.int/comm/environment/climat/emission.htm and on the
DEFRA site at http://www.defra.gov.uk/environment/climatechange/trading/eu/.
[9] Wenger , H. and Hoff , T. ' The value of PV in the distribution system - the German grid - support project ' , PG & E
R & D Report 007.5 - 94.15.
[10] ' REVALUE - the value of renewable electricity ' , European Commission Project JOR3 - CT96 - 0093.
[11] Laughton , M. ' Implications of renewable energy in electricity supply ' , IMechE Seminar on
Power Generation
by Renewables
, Professional Engineering Publishing, Bury St Edmunds, 2000.
[12] National Grid , ' National grid and distributed generation - facilitating the future ' , 2001 ; www.nationalgrid.
com/uk/social&environment .
[13] The Transmission Issues Working Group Final Report , DTI, 2003 .
[14] ' Charge change prompts green fears ' ,
Power UK
, Issue 119 , January 2004 .
