no extra cost
The joint venture coincides with the launch of "ecotricity," the name REC gives to the electricity it sells. REC claims that ecotricity is the only green power offer that does not demand a premium price from customers. It is able to do this by trading local power to local users, which avoids the costs of using the national transmission network and pool trading, it says.
The Thames Water deal effectively doubles the amount of electricity from renewable sources that is available to REC. "We are already looking forward to being able to provide more power, with investment in new plant at other sites across our region," says Gordon Maxwell from Thames Water Utilities. REC's Dale Vince adds: "We are stimulating the market for green power, creating a competitive environment and moving ecotricity into a mass market." For the time being, the company will concentrate its marketing efforts on the commercial sub-100 kW market, which is the last part of the market to be liberalised, from April. By the end of June, all customers in Britain should be able to choose their supplier and REC plans to take advantage of increased deregulation by launching ecotricity to domestic customers in 2000.
Also under the joint venture agreement, REC will supply more than 120 MW of electricity to Thames Water at its 3500 sites -- most of which were previously supplied by London Electricity. Most of this power will come from the electricity pool, with around only 30% coming from renewable sources over the first year. Vince from REC describes this arrangement as an "enabling contract" allowing the renewables deal. "We have found a commercial way of resolving the intermittency of ecotricity," he says. Thames Water's almost flat demand profile spread over a large number of sites near to the sources of green generation gives REC an economic home for its overspill -- the excess electricity generated at times of lower demand, he says. "Spill is one of the big issues we face as a supplier of renewable energy," he explains. The alternative to selling it to a customer like Thames would be off-loading it on to the local distribution system at uneconomic pool prices. Nonetheless, he stresses that REC won the contract in open competitive tender. The joint venture is worth around £60 million a year, of which up to £25 million is expected from the sale of ecotricity.
Vince acknowledges that electricity from waste and sewage -- " light green" renewable sources -- provides nearly all the Renewable Energy Company's output. But he says his goal is to incorporate wind plant into the company's energy portfolio. REC is in negotiations with companies interested in investing in on-site wind generation, and Vince hopes to announce soon REC's first wind project to be built without support from the NFFO system. Meanwhile, the "light green" power provides the means to justify the ends, explains Vince. "It gives us the wherewithal to build non-NFFO deep green projects."