Green Tags Ontario, launched in March, is the first retail green power program in the Canadian province's newly opened competitive electricity market and an initiative of the Grey Bruce Renewable Energy Co-operative (GBREC). Best says the program's business plan is to merge the efficiencies and the resources of the private sector with "the accountability and social marketing opportunities of a community based energy initiative."
Blocks of wind
The concept of green tags, also known as green certificates, renewable energy credits and tradable renewable certificates, is catching on in Europe, the US, Australia and Japan. Each tag, sold outside the electricity market, represents the environmental attributes of a measured quantity of green power. The power producer, having stripped the environmental value from its generation, is free to sell the electricity on the wholesale market in competition with regional supply. Ontario's energy mix, traded on a deregulated hourly market that opened May 1, is roughly 37% nuclear, 29% coal, and 26% hydro, with the remainder generated by natural gas.
Green Tags Ontario is offering the environmental attributes from 1 MWh blocks of wind energy for C$75. Essentially, each tag gives an average Ontario family the opportunity to replace 10% of its annual electricity consumption from existing generation with new wind power. "Air quality problems have hit home in Ontario. People hear it every day," says David Thompson, co-owner of Port Albert Wind Farms Inc. The company privately financed and installed its first plant, a Vestas 660 kW wind turbine, as a merchant facility in southern Ontario late last year.
It was only weeks before Port Albert Wind Farms was to put its turbine up on the shores of Lake Huron that Best and Thompson realised the benefits of working together. Thompson says he is confident Green Tags Ontario will be a good vehicle to capture the full value of his production, and Best was able to show potential tag purchasers exactly where the environmental benefits were being generated. "It's important for people to be able to see it, and wind power is quite visible," says Thompson. "Anyone buying green tags can make a direct connection. They can look outside their front door, in some cases, and make the direct connection between wind turbines spinning around and the lights going on."
Making it pay
Thompson's company has a contract for differences with the energy co-op, in which membership is gained by buying a green tag. GBREC pays a contract price for every MWh it buys from the producer, but shoulders the volatile price of the province's electricity market. If the spot price is lower than the contract price, GBREC pays the difference. If the market price rises above the contract price, however, the co-op turns a profit because it receives the difference. If that happens, says Best, GBREC will offer to either rebate the money to members or reinvest in additional green supply.
While Best refines his marketing campaign, which is primarily through community and environmental organisation newsletters, he admits that explaining green tags to consumers is a bit of a challenge. In its first month, the program has sold about 100 tags. While a broad understanding of green tags may be as volatile as the hourly spot market price for electricity, another new Canadian wind producer is banking on the belief that it just won't matter.
"The only people who can benefit from buying green tags are people who breathe," says Glen Estill. His company, Sky Generation Inc, is privately financing the installation of a Vestas 1.8 MW turbine in Ontario this fall and expects to sell the environmental attributes of its output through Green Tags Ontario. He, too, is confident consumers will think with their lungs. "I have a belief in the green tags concept because I have a belief the citizens of Ontario want cleaner air. It's pretty simple."