Green Electrical Power

As we are about to become homeowners here in Ontario, I have been thinking about our electrical service. Like many jurisdictions we have a deregulated electrical market. I generally don’t think these are a good idea (especially at the consumer end of things) and now need to figure out whether to buy power at the market rate (which can go up and down) or lock in with a contract at a particular rate.

One positive option is to try to support environmentally friendly generation of power. You’d think that with a deregulated market you could just buy green power, but it is actually a good deal more complicated than that.

Here’s my understanding of the process: In Ontario the guys who make the power just jam it into the wires and it comes straight to me; I don’t pay these power-making guys, however, I pay some middle man who bought it from them in what I call Big Power Deals™. The middle man also keeps a bunch of my money for the privilege of making these Big Power Deals™.

Because I don’t make Big Power Deals™ I can’t choose to buy from green power making guys. The green guys just jam their power into the wires along with everyone else. There’s one price that power producers get paid, and the green guys make the same as everybody else. This would seem to preclude buying and supporting green power.

There is a way to buy green power though. Some clever people have determined that green power is worth more than non-green power because it has clear benefits (like lower health costs due to a cleaner environment, etc.). To steal a sentence from one outfit: The value of Clean Power has been divided into two components, the energy value and the environmental value. So, you can’t just buy green power, but you can buy the environmental value of the green power.

So, if you want to buy green power you want to buy two separate things:

First, you want to buy the energy part of the power. That’s easy… the green power guys already sell that into the standard energy system and get paid for doing so at the normal rate. So just go buy a regular electrical contract from one of the middle-men and you’ll be hooked up (pardon the pun).

Second, you want to buy the greenness of the power. So totally independently of your electrical metering and service contract, go to Green Tags Ontario. You buy from them a ‘tag’. In exchange for this, they go to a green power producer and get them to actually send a big whack (1 megawatt-hour, or 1 MWh) of green power through the grid and the middle-men. In so doing they will displace some crummy old dirty power which would otherwise have been put onto the grid. In other words, the tag is essentially a coupon for the environmental value of that green power.

Where does the money you pay for the tag go? Basically, if you want to set up a windmill or other clean power source, you are going to be paid by the normal electrical system for selling your power, but not compensated for the fact that the power is more expensive to generate. The green tags are sold by a non-profit co-op which basically invests in clean power generation, and ensures that green power produced here is delivered to the Ontario market (thus allowing us to shut down our polluting coal stations). The co-op helps with the increased costs associated with green generation. As green power gets cheaper to produce over time (and governments are starting to reward it), the co-op’s contracts state that it will share in increased profits from clean power over time; the co-op can use the revenue to stimulate even more green power in a snowball effect (or give power rebates to green power users or whatever it wants to do with the profits).

The other cool thing about decoupling the energy and environmental value is that homeowners can start small. You can buy as many tags as you want, meaning that you can source anywhere from 0% - 100% or more of your personal electrical usage from green power. The average home of four uses around 10 MWh of power each year. One tag represents 1 MWh, so if an average household buys one tag a year, then 10% of the power it uses will be green. One tag currently costs $75 per year. You don’t even need to own your house to buy a tag — anyone can buy them and they are totally separate from your power contract and how much you actually consume.

We won’t buy 10 tags, because the cost is prohibitive, but think about this: The Ontario power mix is 30% coal, 30% hydro and 40% nuclear. The coal is very bad, right? But if you were to buy 3 tags then you’d be getting your personal power mix from 30% wind, 30% hydro and 40% nuclear… now that is a satisfying change!

More info: Overview. There are three producers listed there, but I think the best (and incidentally cheapest) is the non-profit green tags guys listed above.

Also interesting is the idea of generating your own power. Ontario now supports Net Metering where you generate some of your own power with no need for separate circuits or batteries. And here is some information on home-based Wind Power Generation.

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