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In the advertising for this year's earth hour in Sydney, Australia, it encourages people to switch from conventional electricity to renewable energy. A number of electricity providers offer "100% renewable" plans.

This sounds like a good idea, but does consumers switching to "renewable electricity" plans increase the production of renewable electricity?

What I'm worried about is that the amount of renewable and non-renewable electricity produced remains the same, and that "my" electricity becomes 100% renewable, and that the electricity of those on the "conventional" plan has a higher proportion of non-renewable energy than before.

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Do “100% renewable” electricity plans increase renewable electricity production? Well, it will depend on how the specific scheme is implemented, what the renewable suppliers are, and what timescale you are considering. So, the answer could be yes, no or maybe.

I don't know about your supplier's particular plan, and in order to keep this answer useful to as many readers as possible, I'll talk about the generalities that make a difference.


Generation-specific

Most renewable sources have such low short-run marginal costs that they'll run pretty much any time, regardless of the current price in the market. So an increase in demand from consumers on renewable tariffs is very unlikely to result in immediate increase in renewable supply. There might be corner cases on small grids where the marginal producer is a renewable supplier with non-trivial short-run marginal costs, such as biomass or biogas: in such cases, increased demand from people on 100% renewable tariffs could cause an immediate and equivalent increase in renewable supply.


Scheme-specific

Most 100%-renewable tariffs tend to be based on the trading of certificates-of-origin of renewable electricity. Whether your tariff really makes a difference, will depend on whether or not there is a surplus of such certificates in the market.

Surplus: If there is a surplus, and it is expected that there will continue to be a surplus, (as is the case Britain with the REGOs - Renewable Energy Guarantees of Origin) then no, the tariff makes no difference at all. The situation in this case is exactly as you describe: "your" electricity becomes 100% renewable, and the electricity of those on the "conventional" plan has a higher proportion of non-renewable energy than before.

No surplus: If there is not a surplus of such certificates now, or there is expected not to be one over the next few years, then the price of those certificates will rise, incentivising investment in new renewable generation infrastructure. The increase in renewable generation might be more or less than the amount you have consumed.


Company-specific

Some companies (such as Ecotricity in the UK) choose to invest a large proportion of their revenue into new renewable capacity. So buying from a company such as them, does increase renewable electricity production, over the scale of years, regardless of what's going on with the generation-specific and scheme-specific issues set out above. In such cases, the increase in renewable generation tends to be much more than the amount you have consumed.

  • On the surplus bit, wouldn't buying 100% renewable energy plans tend to decrease the surplus of those certificates and thus at least create at least the possibility of market pressure? – Chris Travers Mar 24 '13 at 12:46
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    (Good explanation, btw) – Chris Travers Mar 24 '13 at 12:55
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    Thanks. Yes, if the surplus goes, there's market pressure. I put in the bit about expectations of future surplus for that reason and others. – EnergyNumbers Mar 24 '13 at 13:49
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Not directly, no. However the hope is that this sends a market signal that more renewable energy is demanded. The hope is that the more people sign on, the more renewable energy will be produced to meet the clear consumer demand.

Additionally what it does do is it ensures that the power company has a commitment to buy at least a floor amount of renewable energy. More people buying the plans means they need to plan to buy more renewable energy in the future. However if the power company couldn't meet this commitment now, they probably wouldn't be selling the plans.

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