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ENTER THE GREEN POWER BROKER

A new type of company is finding its feet in the renewable energy business -- the green power broker. Though it is early days yet, at least one company has found that it can make a living from buying and selling electricity exclusively generated from renewables (page 30.) In practice, here's how it works. The power broker makes contact with a number of small consumers in a given area who would rather buy electricity from renewable sources of energy than from any other. To meet this demand, the power broker buys in electricity from a mix of renewable energy power plant and organises its transmission to the end users. The key to success is to meet local demand with local supplies, according to the small British company now testing these uncharted waters. Already it has customers for 8 MW of green power on its books. What's more, the electricity it sells does not have a "green" price premium.

If this sounds too good to be true, then you're right. Trade in green electricity demands a number of prerequisites not available in most electricity supply structures around the world. But given a free and open market, given a tacit acceptance of external costs as an element of electricity pricing, and given a helping hand from government, green power brokerage is feasible. And there is a company in the UK proving just that, even before it has access to the millions of customers requiring less than 100 kW, a market restriction due to be lifted in 1988.

Interestingly, Sweden, the venue of this month's European Union Wind Energy Conference, could be the next country where trade in green power emerges as a viable business. Like Britain, its market has been freed from state control, though here even lowly household customers may pick and choose their electricity supplier. For renewable energy, one immediate consequence of Swedish deregulation has been to create more demand for green electricity than suppliers can meet (page 29). Huge industrial conglomerates have already cottoned on to the marketing advantages of endowing their products with an environmentally friendly image. Part of that image is to boast that the electricity used for making the product comes from a renewable resource. So far, demand for clean power in Sweden has forced up its price. Green pricing, it seems, can indeed come about by sheer market force as well as by regulation.

The opening for the power broker in Sweden lies in the millions of ordinary household consumers. Without the enormous buying clout of big companies, deregulation for them has meant higher electricity prices. Yet already they are striking back. The Swedish householders association is busy grouping domestic consumers into one or several huge customers, with all the negotiating power that would provide (page 37). Should this association -- or just parts of it -- demand electricity from renewables sources, local power brokers would be ideally placed to offer consumers electricity from local renewables plant. The beauty of a resource such as wind is its availability close to customers, making local power brokerage preferable to a system of centralised supply of green power.

None of these grand schemes can get off the ground, though, until third parties are allowed to access power transmission lines. This requires at least a partial opening of electricity markets everywhere. Europe has so far dragged its feet on the issue, but as our brief survey in this issue reveals (pages 38-40), several members of the EU are individually making progress. And in Ireland, the idea of giving consumers direct access to purchases of wind power is even to be included in forthcoming legislation (page 21).

Another vital prerequisite is to allow fair competition. If the hidden subsidies to fossil fuels and nuclear remain in place -- and no account is taken of the cost to society of pollution and accidents from the use of these sources -- the relative price of clean electricity will be too high. In the old days, fair play would have been attempted through government regulation. But regulated markets have proved to be inefficient and tended to leave renewables wide open to attack, as the German power market continually reveals. The recent utility onslaught on Germany's renewable energy law is yet another fine example (page 22). Free markets, on the other hand, promote efficiency and -- if correctly structured -- should encourage a sensible mix of technologies. A sensible mix requires a market to be structured with long term economics in mind for achieving a sustainable and secure supply. Yet inclusion of all the costs of generating electricity when setting its market price, the "internalisation" of "external costs," is a concept still being fiercely debated in the world of energy politics. Nevertheless, many countries have already tacitly accepted the existence of external costs in their electricity pricing (pages 34-37).

For the prospective broker of green power, this is all good news. But that is not to say that the ideal electricity supply system is one where dozens of power brokers are allowed to run riot, demanding and selling electricity at will. Resource planning is still paramount for security of supply. But that should not stop the existence of an electricity supply system in which the McDonalds fast food chain could buy all its electricity from wind power. That is the expressed desire of McDonalds in Sweden. Just think what it would mean for a wind power broker -- let alone the wind industry -- if McDonalds in the United States got the same bright idea.

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