How to choose a Greenpower provider for your business
You considered options for your business to go 100% renewables and you landed on buying GreenPower. Way to go! Most Australian retailers offer a 100% GreenPower product. Whichever retailer you decide to contract with, you will get the same power delivered, and the ability to claim a zero emissions attribute for your electricity in your carbon accounting.
However, not all retailers are equal when it comes to their climate commitments and overall environmental stance. This resource contains guidance on criterias to consider when choosing a retailer. Our aim is to provide you with information on how to interpret sustainability-related claims and make an informed decision.
Please note, this is independent from other contractual and commercial considerations, which obviously also apply.
What is GreenPower?
GreenPower is an accredited government scheme designed to encourage the development of renewables in Australia. Through this voluntary program, households and businesses pay a premium which goes to support the generation of electricity from renewable sources.
When a retailer sells a GreenPower product, they commit to buying and retiring (so they cannot be traded on the market by someone else) the equivalent of the customer’s electricity use in Renewable Energy Certificates (RECs)
Those RECs are additional to the certificates retailers - and any wholesale buyer - have to buy to meet their obligations under Australia’s Renewable Energy Target.
When businesses buy GreenPower, they are able to claim that their electricity came from renewable sources, which reduces the emissions associated with their electricity use in their carbon footprint. GreenPower is approved as a credible claim for 100% renewable energy by RE100.
Buying GreenPower helps send a strong signal that there’s demand for more renewables, which supports the development of the sector.
The list of GreenPower providers is available on their website here.
Here are some of the main questions you need to consider when reviewing retailers on their environmental stance.
Consideration #1 - What type of retailer is it?
Generally retailers fall into one of those 3 broad categories:
1 - “Gen-tailers”
These companies own and operate power generators, which can be either from fossil fuels (ex a coal or gas-fired plant) or renewables (ex a solar or wind farm). They sell the energy they generate on the wholesale market, and also contract directly with households and / or business customers to provide them with electricity.
2 - Retailers who buy electricity directly from generators
These companies do not own power generators, but they buy some or all of their electricity directly from the generators - as opposed to buying it on the wholesale market. Usually, those direct relationships take the form of “Power Purchase Agreements” which is a long-term contract to purchase electricity at a fixed price, and those agreements are signed with renewable generators. This is a way for retailers to directly support the development of new renewables in the grid.
3 - Pure retailers
These companies are pure retail companies, so they buy electricity from the wholesale market and sell it to their customers - households or businesses.
Considerations: If you buy your electricity from a “gen-tailer”, you may want to consider the portion of fossil fuels in their current generation capacity, as well as their plans to phase out their fossil activities (short and long term) in line with what science tells us we need to do to have the best chance of hitting the goals of the Paris agreement, and how their investments in renewables compare with their investments in fossil fuels.
In Australia, the 3 largest power suppliers are “gen-tailers” and primarily generate their power from fossil fuels:
- AGL
- Origin
- Energy Australia
Here are companies that are both retailers and generators, and primarily generate their power from renewables in Australia:
Update December 2021: Italian-based Enel group announced the upcoming launch of a retail product in Australia. More information here.
Example of retail companies that do not own generators (or have few owned assets), but buy power directly from renewable generators:
- Flow Power
- CleanCo (QLD, large customers only)
Consideration #2 - Who owns them?
You may want to check who is the parent company that owns this retailer; if it’s a renewable energy company, it can be an added benefit, though it doesn’t mean that the electricity they sell directly comes from renewables. Claiming this would be considered greenwashing, and lead to fines.
Example of retailers owned by (mostly) renewable energy companies:
- Red Energy is owned by Snowy Hydro, which owns and operates the Snowy Scheme, which is the largest hydro-electric scheme in Australia. However, note that the company operating Snowy also owns fossil gas stations in Australia.
Example of retailers owned by fossil fuel companies:
- Shell Energy is the retail arm of Shell Australia, itself a subsidiary of Shell.
When it becomes tricky: The Shell’s Powershop acquisition
On 22 November 2021it was announced that global oil and gas giant Shell had come to an agreement with Powershop’s parent company, New-Zealand based Meridian Energy, to take over Powershop and their 185,000 customers.
This news was greeted with cynicism and anger by many climate groups who had been advocating for Powershop and directing their supporters to switch over to them. Those groups quickly broke their partnership with Powershop and are encouraging their customers to move to other retailers that are not tied to fossil fuels. On the other hand, one might argue that it’s a good thing when the big fossil fuel players are investing in renewable energy and cleaning up their act, and that the transition to a low-carbon economy cannot happen without these acquisitions. Regardless of how one feels about the acquisition, it shows that the electricity retail market is complex and constantly changing, so it’s important to keep track of what is happening and review your organisation retailer to assess whether it aligns with the organisation’s values.
Consideration #3 - Do they offer additional climate benefits?
Some retailers are including additional climate benefits to their offering, such as:
- Carbon Neutrality: Some retailers have met the requirements to be certified carbon neutral under Climate Active, and their products are certified too, which means that the carbon emissions associated with the electricity use of their customers are offsets. Note, carbon offsets are separate from GreenPower.
Business retailers who offer carbon neutral products at no extra cost:
Caveat: AGL, which is Australia's biggest domestic contributor to climate change, is Climate Active certified for their electricity products. Energy Australia, the second largest emitter, and Origin Energy ranking fourth, are also Climate Active certified. We think it says something about the standard for this certification.
Limitations of the GreenPower scheme
GreenPower is a popular option for Australian businesses to green their electricity supplies. For some small and medium businesses, it may be the only option that makes sense - because they do not have access to rooftop solar, or because they are not eligible to sign power purchase agreements. However, we must note that GreenPower is not a silver lining solution, and there are limitations to the scheme.
Limitation #1 - GreenPower does not physically lead to a reduction in emissions
From a carbon accounting stand-point, GreenPower means zero-emissions electricity. When a company purchases GreenPower, they are only buying the attributes of renewable electricity, but not the electricity itself. However, this does not reflect the physical reality of electricity emissions. GreenPower does not lead to actual CO2 emissions being lowered.
Limitation #2 - The additionality of GreenPower is debatable
When it comes to the energy transition, additionality is a key concept. To decarbonize the grid, we must add new renewable capacity. And one way companies can contribute to this goal is by financing those new generators. In the case of GreenPower, there is little ground to say that the premium companies pay for the product can be directly linked to the addition of renewable capacity to the grid.
When a company buys GreenPower, they buy certificates from an existing renewables generator. So, by definition, the generator already exists. Instead, GreenPower helps existing renewable generators earn more revenue and be more profitable. In itself, it’s not a bad thing, but again it does not mean that the purchase created new renewable energy.
Limitation #3 - GreenPower creates a distraction from more effective measures
The GreenPower scheme is based on voluntary contributions from businesses and individuals. Some argue that it creates a distraction from other, more effective ways of reducing emissions associated to electricity ; a more ambitious federal policy, for example.
To conclude, we think that GreenPower is not a perfect solution, and it should be used only when other, more ambitious pathways to 100% renewables, such as power purchase agreements - are not available.
Ultimately, your choice of retailer should depend on the objective you want to achieve. Greenpower helps you achieve a 100% renewables claim, and indirectly support the generation of renewables. What it doesn't achieve in is current form, is a direct impact on additional generation of renewables.
Further reading :Conversio Blog
GreenPower Part 1: Are you getting what you pay for? and GreenPower Part 2: An inconvenient truth – The risks of using GreenPower
How much does GreenPower cost?
The premium you pay for GreenPower varies from one retailer to another. Our research shows prices starting at 2.42 c / kWh inc GST, up to 6.22 c/ kWh, including GST. Say your business consumes 20,000 kWh of electricity per annum, and your standing rate is $25 c/KWh. So your annual electricity bill is $5,000. Based on the low GreenPower rate mentioned above, adding GreenPower would add $484 to your annual bill, or a premium of just under 10%.
Whattever published this guide to GreenPower rates. You will need to get accurate quotes directly from retailers.
Conclusion
In today’s electricity market, the reality is that no retailer is 100% renewable, as every retailer has to buy some of their electricity from the wholesale market, which includes a mix of coal, gas and renewable electricity. If a long-term fixed-price contract such as a Power Purchase agreement is not a viable option for your business, then the next best thing is to purchase 100% GreenPower for the electricity that you cannot produce yourself onsite from renewables.
Some retailers offer additional benefits, such as purchasing offsets on behalf of their customers, and there are also other criteria to consider, such as the company’s fossil fuel policies and their public stances on decarbonisation.
To conclude, here’s how to apply a climate lens on choosing a GreenPower provider:
Best : Buy GreenPower electricity from a supplier that generates its own renewable electricity or sources it directly from renewable generators.
Better : Buy GreenPower electricity from a renewables-friendly supplier, which does not have direct strong ties with fossil fuels. Bonus points if they offset the electricity usage of their customers.
Good : Buy GreenPower electricity.
Some retailers to look into
Please note, we are not affiliated with nor are we recommending any of these retailers. This is not designed to be a comprehensive list, please conduct your own research and apply your organisation’s own criteria to make a decision.
The electricity and renewables landscape is changing very quickly, so we encourage electricity buyers keep an eye on the market as retailers plans to decarbonise emerge.
Small & Medium customers (< 160 MWh per annum)
Diamond Energy is a “gen-tailer” which is committed to supporting renewable energy in Australia and aims to supply more renewable energy to the grid than energy consumed by their customers. Their 8-year average energy generation mix is 100% renewable, with 64% coming from solar and the remaining coming from biogas, wind and rooftop PV. They are committed to achieve emission reductions targets under the Science-based initiative, with a commitment to reduce absolute scope 1 and scope 2 GHG emissions 30% by 2030.
In addition to voluntary GreenPower, they also provide retail Power Purchase Agreements to their corporate customers. They were rated #1 on Greenpeace latest Green Electricity Guide.
Availability: NSW, QLD, SA, VIC
Energy Locals is an Australian retailer, with plans for residential and business customers. They operate with a different business model ; they pass on wholesale electricity rates to their customers with no margin, and charge a monthly membership fee for their service. The electricity they provide is 100% carbon offset at no extra cost. They were rated #3 on Greenpeace latest Green Electricity Guide.
Availability: ACT, NSW, QLD, SA, TAS, VIC.
Indigo Power is a community energy company and a certified social enterprise, supporting local renewable energy projects. They are affiliated with Energy Locals. They provide residential and business plans to customers in NSW & Victoria. They were rated #4 on Greenpeace latest Green Electricity Guide
Availability: NSW, VIC
Large Customers (> 160 MWh per annum)
Flow Power is an Australian business electricity retailer. In addition to traditional B2B electricity contracts, they are one of the main providers of retail Power Purchase Agreements in Australia. In July 2020, City of Sydney announced a Power Purchase Agreement with Flow Power to source 100% of their power from renewable sources, making it the biggest standalone renewables deal for an Australian council.
Availability: ACT, NSW, QLD, SA, TAS, VIC
With a strong public position on climate change that earned their parents company a spot on Influence Map’s A-List of climate policy engagement 2021, 95% renewable generation assets in Australia, Iberdrola Australia is a power company with a strong focus on sustainability. In addition to standard electricity contracts, Iberdrola provides Power Purchase Agreements to large commercial and industrial customers. In July 2020, Swinburne University signed an agreement with Iberdrola to procure 100% of their electricity from renewable sources, more specifically the Cherry Tree Wind farm in Victoria.
Availability: ACT, NSW, QLD, SA, VIC
Alternative option: Decoupled GreenPower providers
So far in this guide, we’ve only talked about entering a contract with a retailer to provide you with both the electricity and the associated renewable energy certificates. There is also an option to “decouple” the GreenPower certificates from the actual power. With this option, a business can choose to buy only the GreenPower certificates, and maintain a separate contract with an electricity retailer.
ACX Argyle is a provider of decoupled GreenPower.
Further resources:
- Greenpeace Green Electricity Guide - Early 2022, Greenpeace published the updated version of their Green Electricity Guide, assessing the green credentials of Australia’s electricity retailers. The report focuses on B2C offering and does not include business-focused retailers, but it is still a valuable source of information.
If you have any questions, or need some support to advocate for 100% renewable energy at your workplace, you can email us at info@workforclimate.org or schedule a 30 min consultation with us.
