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dizietceb and I are members of the Derril Water Solar Park cooperative.
We were recently invited to vote on whether the coop should bid for a Contract for Difference, in a government green electricity auction.
We’ve voted No.
- “Green electricity” from your mainstream supplier is a lie
- Ripple
- Contracts for Difference
- Ripple and CfD
- Voting No
“Green electricity” from your mainstream supplier is a lie
For a while ceb and I have wanted to contribute directly to green energy provision. This isn’t really possible in the mainstream consumer electricy market.
Mainstream electricity suppliers’ “100% green energy” tariffs are pure greenwashing. In a capitalist boondoogle, they basically “divvy up” the electricity so that customers on the (typically more expensive) “green” tariff “get” the green electricity, and the other customers “get” whatever is left. (Of course the electricity is actually all mixed up by the National Grid.) There are fewer people signed up for these tariffs than there is green power generated, so this basically means signing up for a “green” tariff has no effect whatsoever, other than giving evil people more money.
Ripple
About a year ago we heard about Ripple. The structure is a little complicated, but the basic upshot is:
Ripple promote and manage renewable energy schemes. The schemes themselves are each an individual company; the company is largely owned by a co-operative. The co-op is owned by consumers of electricity in the UK., To stop the co-operative being an purely financial investment scheme, shares ownership is limited according to your electricity usage. The electricity is be sold on the open market, and the profits are used to offset members’ electricity bills. (One gotcha from all of this is that for this to work your electricity billing provider has to be signed up with Ripple, but ours, Octopus, is.)
It seemed to us that this was a way for us to directly cause (and pay for!) the actual generation of green electricity.
So, we bought shares in one these co-operatives: we are co-owners of the Derril Water Solar Farm. We signed up for the maximum: funding generating capacity corresponding to 120% of our current electricity usage. We paid a little over £5000 for our shares.
Contracts for Difference
The UK has a renewable energy subsidy scheme, which goes by the name of Contracts for Difference. The idea is that a renewable energy generation company bids in advance, saying that they’ll sell their electricity at Y price, for the duration of the contract (15 years in the current round). The lowest bids win. All the electricity from the participating infrastructure is sold on the open market, but if the market price is low the government makes up the difference, and if the price is high, the government takes the winnings.
This is supposedly good for giving a stable investment environment, since the price the developer is going to get now doesn’t depends on the electricity market over the next 15 years. The CfD system is supposed to encourage development, so you can only apply before you’ve commissioned your generation infrastructure.
Ripple and CfD
Ripple recently invited us to agree that the Derril Water co-operative should bid in the current round of CfDs.
If this goes ahead, and we are one of the auction’s winners, the result would be that, instead of selling our electricity at the market price, we’ll sell it at the fixed CfD price.
This would mean that our return on our investment (which show up as savings on our electricity bills) would be decoupled from market electricity prices, and be much more predictable.
They can’t tell us the price they’d want to bid at, and future electricity prices are rather hard to predict, but it’s clear from the accompanying projections that they think we’d be better off on average with a CfD.
The documentation is very full of financial projections and graphs; other factors aren’t really discussed in any detail.
The rules of the co-op didn’t require them to hold a vote, but very sensibly, for such a fundamental change in the model, they decided to treat it roughly the same way as for a rules change: they’re hoping to get 75% Yes votes.
Voting No
The reason we’re in this co-op at all is because we want to directly fund renewable electricity.
Participating in the CfD auction would involve us competing with capitalist energy companies for government subsidies. Subsidies which are supposed to encourage the provision of green electricity.
It seems to us that participating in this auction would remove most of the difference between what we hoped to do by investing in Derril Water, and just participating in the normal consumer electricity market.
In particular, if we do win in the auction, that’s probably directly removing the funding and investment support model for other, market-investor-funded, projects.
In other words, our buying into Derril Water ceases to be an additional green energy project, changing (in its minor way) the UK’s electricity mix. It becomes a financial transaction much more tenously connected (if connected at all) to helping mitigate the climate emergency.
So our conclusion was that we must vote against.