How does Bulb actualy drive the usage of green energy/ creation of new green generators?

Hi Bulb,

I was wondering - does the existence of Bulb and the number of your customers (including me) increase the capacity of green energy or are we just redirecting pre-existing electricity to certain households? I mean the generators you buy electricity from existed before, just sold their output to someone else, right? Are you guys paying them more than they had before perhaps?

How does Bulb actualy drive the usage of green energy/ creation of new green generators?

Thank you

Hi @bnk - that is a good question indeed!

Every supplier makes sure that they buy enough energy to cover the usage of all of their customers. This means that when customers switch to Bulb, other suppliers will need to buy less energy (often from non-renewable sources) and we will need to buy more green energy.

The energy “pool” for the country will then have an increasing proportion of green energy if more people switch to renewable suppliers.

As demand grows for renewable energy this will mean that there will need to be more green generators. We really do hope that more consumers will go green and help us get on a path to a more renewable future :slight_smile:

Thank you for your answer. So in theory, you will need to exhaust (buy) all the currently available renewable generators’ output in order to really drive more being created? (If we’re not counting other positive efects like spreading the word about renewables etc)

In theory, if renewable generators could run at full capacity all the time then we might be able to buy all the output and create demand for new generators. However, as renewable generators are an intermittent source, to buy a consistent amount of renewable energy there would still be a demand to have more generators even if we’re not buying all the possible amount of energy.

This is very interesting to me. Do you have a sense of what proportion of customers would need to move onto 100% renewable tariffs for this demand/supply dynamic to really have an impact i.e. big investment decisions and new renewable generation getting built?

@alex that is a very good question! At the moment, there’s still a lot of under utilised renewable generation which means that to really push demand we’d need customers in the number of millions to cause a significant change. Simultaneously, there needs to be strong government support (optimistic, I know :wink: ) to drive investment decisions for more renewable capacity and help renewable tariffs be super competitive.

At Bulb, we’re doing our best to spark and ignite a shift to renewable energy suppliers and also showing it’s possible with a competitive tariff. Recent articles have shown really high numbers of consumers switching their energy supplier so we’re remaining hopeful :)!

I wonder what you mean by “under utilised renewable generation”.

If the generation is out there (existing green energy pool), surely someone is already buying it? My understanding is that renewable generation has no operational costs and tends to enter the wholesale market at 0 price, hence they are always dispatched or bought by someone. So, if you are not triggering the construction of new renewable energy, aren’t you somehow effectively displacing that supplier that is already buying it and making it buy non-green energy?

Hey @dolmosm actually there is some operational cost of renewable energy, such as the upkeep of the turbines and employing engineers and mechanics. Although the running costs tend to be much less than a non-renewable generation as you don’t need to buy any fuel :joy:

The cost to us as your supplier to buy energy is the same for renewable and non-renewable as they are pooled together, so in fact, it ends up that greater renewable generation drives down the overall cost of wholesale prices.

What @sj_han meant by “underutilized renewable generation” is that a lot of renewable generation, being so quick to start up, is stopped from producing any energy into the grid if the grid is already at full capacity. It’s much easier to switch wind turbines and solar panels on and off that a coal-fired power plant that takes 14 hours and A LOT of fuel just to warm up and get going.

This is why sometimes on really windy days you’ll see turbines that aren’t even moving. Here’s a link that explains a bit more detail http://www.telegraph.co.uk/news/earth/energy/windpower/7840035/Firms-paid-to-shut-down-wind-farms-when-the-wind-is-blowing.html

So it all really comes down to the development of more dependable and predictable sources of energy or battery storage to help increase our capacity for renewables

@dolmosm you’re on fire with interesting questions this week. We’ve been talking about your question a bit, and I want to add one thing to what @evie wrote.

By increasing demand for renewable energy, Bulb’s customers increase demand for Renewable Energy Guarantees of Origin (REGOs). REGOs are a subsidy paid by energy suppliers like Bulb to renewable energy generators like wind farms. REGOs are also what suppliers use to prove the renewable-ness of their energy. (Bulb buys a REGO for every MWh of electricity we supply.)

Right now, REGOs are cheap. By pushing out demand for REGOs, Bulb’s customers push up the prices of REGOs, making renewable generation more financially attractive for generators.

I have just started asking myself questions on this topic so here seems the reasonable place to ask - does this mean that the supplier pays for the “pooled” energy that goes through their books (therefore potentially the same price for all suppliers) AND pays for the corresponding number of REGOs? Do generators get paid the “going rate” for a GW? Therefore if renewable is now cheaper to produce they get a good price for their energy plus the REGOs they can sell. Win/win for them and a good use of my money.

Discussion above also raises questions about the argument that we have to have non-renewable sources to cover for the times we have no wind etc. If renewable energy is 25% cheaper than other sources (I did read something a while ago about renewable vs nuclear and I think 25% is conservative) and is easy to turn on and off then this means that we could build 20% over-capacity and still be better off economically, and it sounds as though it would be easier to manage. Again a win/win situation.

does this mean that the supplier pays for the "pooled" energy that goes through their books (therefore potentially the same price for all suppliers) AND pays for the corresponding number of REGOs? Do generators get paid the "going rate" for a GW? Therefore if renewable is now cheaper to produce they get a good price for their energy plus the REGOs they can sell. Win/win for them and a good use of my money.

The answer is yes to both questions. There is only one price for energy, regardless of the source. Like you say, a win-win for renewable generators :slight_smile:

It’s disappointing that this means that (at least how things are at present) renewables will never be less expensive to purchase wholesale than dirty energy.

If the price of renewables drops right down, it’s nice that the generators are getting a good price, but direct demand for clean electricity would be better than generators realising renewables are better value and deciding to build more.

Can REGOs be negative? So if renewable supply started to outstrip demand and the price got really good for the generators they could start dropping the wholesale prices themselves by giving money back to suppliers?

It's disappointing that this means that (at least how things are at present) renewables will never be less expensive to purchase wholesale than dirty energy.

I think this is a good thing actually. If renewable prices drop so far that fossil fuels cannot compete, then we’ll starve them out of the market and no one will buy dirty energy :slight_smile:

I think this is a good thing actually. If renewable prices drop so far that fossil fuels cannot compete, then we'll starve them out of the market and no one will buy dirty energy :)
But surely due to REGOs, renewables can never be cheaper wholesale than dirty energy...?
I think this is a good thing actually. If renewable prices drop so far that fossil fuels cannot compete, then we'll starve them out of the market and no one will buy dirty energy :)
But surely due to REGOs, renewables can never be cheaper wholesale than dirty energy...?

Ah, I see. I believe that REGOs are traded at market value, i.e. whatever suppliers are prepared to pay for them. So as renewables become more ubiquitous, the cost of a REGO will trend to zero. I’m not 100% sure, so I’ll check when I can collar someone who can declare that with confidence.

Edit: Yep, confirmed. They’re market value.

Years ago it was impossible to source products in supermarkets made from recyled paper. A relatively small group of purchasers caused a big change when they started to purchase these items through co-op groups. I suspect a small number of people purchasing green energy could have a big impact on planning at local and governmental level.

@Richardysgol - that’s definitely the idea here! Let’s see how much momentum we can build