The green certificates, each representing 1000 kWh and each priced at DEM 30, were bought from Irish company Eirtricity (main story) and stem from wind power generated by Eirtricity's Culliagh wind farm in Donegal, Ireland. The project was developed without state support. The deal was arranged by NatSource, a New York-based broker specialising in the trade of green power derivatives, including greenhouse gas emissions credits as well as the Tradable Green Certificates (TGC) linked to renewable energy.
The TGC trading mechanism is aimed at separating the environmental value of renewables from the physical electricity. In this case, the retail value was DEM 30/1000 kWh, adding DEM 0.03/kWh (EUR 0.015/kWh) to the market price of the physical electricity. The profit margin for HEW, the supplier (retailer) of Eirtricity's TGCs, was very small once it had paid a fee to NatSource, says the utility's Hauke Beeck.
In HEW's first foray into green power derivatives trading in June, it sold greenhouse gas reduction credits from wind instead of buying them. The credits represented 3000 tonnes of saved CO2 a year, between 2000 and 2007, and were sold to Canadian utility TransAlta of Calgary (Windpower Monthly, July 2000). The deal, again brokered by NatSource, made HEW the first German company to trade in emissions. The renewables power on which the trade is based is generated by HEW wind power stations.
The HEW deals are admittedly tiny, but governments have yet to create markets for either emissions or TGC trading. As such, the derivatives have no real monetary value today, though could be worth many times their purchase price in the future. "The purpose of the deals is partly to show governments and industry that they can be done," says Beeck. "There are lessons still to be learned." As yet it is unclear if the deals will be secured through futures trading, or another system of insurance, he points out.