The initiative is being pushed by Northern Ireland's Electricity Regulator Douglas McIldoon. Outlining the plans in his report "Consumer Choice, Competition and Prices: The Next Steps," he says a green tariff would increase consumers' freedom to make decisions about what they buy and to influence how the energy is produced. Customers who opt for the green tariff will be able to take as much or as little electricity from renewable sources as they feel their budget can allow. They will specify annually what proportion of their consumption will be green. NIE will then contract with renewable generators for the number of units it needs to meet the demand.
McIldoon does not, however, foresee a massive swing in favour of clean electricity. Renewable electricity will cost more than electricity from fossil fuels in the short run, he warns. "It is therefore extremely unlikely that there would be a large demand (É) since for the vast majority of customers the overriding concern about energy is the cost."
The regulator is providing NIE with a clear incentive for developing a market for renewable electricity: for every unit of electricity sold under the green tariff, the electricity supplier will receive an extra administrative allowance of 0.35205 pence. He expects demand for green electricity to begin at 5 GWh a year, rising by a further 5 GWh each year thereafter.
customers to benefit
McIldoon claims his move to create a green tariff is in line with government policy to stimulate the market for renewables. He points out that as well as increasing customer choice it benefits consumers as a whole. Not only will it help the electricity industry reduce its environmental impact, but also -- if the renewable sector grows -- it will postpone the need for new investment in fossil fuel generation. Moreover, if demand for electricity from renewables grows by as much as 25 GWh each year, it would avoid altogether the need for a third round of Non-Fossil Fuel Obligation (NI NFFO) subsidies, he says.
He first mooted his plans for creating a market for renewable energy in a consultation paper in early 1996 (Windpower Monthly, May 1996). The paper said a green tariff could both lighten the burden on electricity consumers from existing NFFO renewables subsidies and allow the customer to choose an environmentally friendly source of energy.
Renewable developers welcomed McIldoon's initiative. "The Regulator has put forward some imaginative ideas. We are encouraged by his far-sightedness," says Michael Harper of Northern Ireland's largest wind farm developer, B9 Energy. He is optimistic that there will be a good consumer uptake for the green tariff. But he is concerned NIE will offer only short term contracts for the renewable electricity it needs to fulfil its customers' demand. "NIE may want to contract annually with renewable generators. We would fight the introduction of that."
Among the electricity regulator's other proposals are plans for a "negawatt" market. NIE or another electricity supplier would sell energy efficiency measures or goods and recoup costs in instalments through electricity bills. This market in energy efficiency could bring about a revolution in the way Northern Ireland consumes energy, claims McIldoon. Consumers who take full advantage of the negawatt scheme could reduce their energy consumption by up to 20%. The initial modest target is for negawatts to displace some 50 GWh in the first year