100% renewable energy contracts. How real are they?

100% renewable energy contracts. How real are they?

Energy contracts.

It’s common to find deals from electricity companies that offer you 100% renewable energy contracts, but what exactly does this mean?

For practical purposes, the electricity you consume in your home will be the same as that consumed by your neighbour, even if they do not have one of these “100% renewable” contracts. Because of a simple physical principle, electricity cannot be directed. Also the energy provider is the one who sells you the electricity, but the one who is in charge of making sure it arrives to your home is the distributor.

In short, these contracts are a marketing tool that marketers use to attract clients.

Electricity distributors in Spain constitute a state-controlled oligopoly (we will give more information about this in another blog post).

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Since the provider does not have the capacity to distribute electricity. It is impossible for them to send you renewable electricity instead of that generated by conventional sources. For example,  (nuclear, coal, cogeneration, etc.).

As an example: The neighbour of 3B of a building in Cartagena has a 100% renewable energy contract, however the neighbour of 4A has a normal energy contract. Both share the same connection to the distribution grid, therefore the electricity they use in both homes is exactly the same.

How do 100% renewable energy contracts work then?

Marketers buy electricity from renewable power plants. It is a money flow that occurs in the energy market, between the provider company and the production centre. Subsequently, the marketer sells this «electricity» to its customers, but the electricity that reaches their homes is not really that renewable energy. The electricity we consume comes from the closest generation sources, that is, if there is a nuclear power station next to the city, the electricity consumed by its inhabitants will be fundamentally nuclear.

It should be mentioned that buying energy from renewable production plants does not imply that a system is viable without conventional sources. Energy generation in Spain is regulated by different organizations (CECRE, CECOEL, CECORE) that are in charge of measuring energy demand and controlling production, since electricity cannot be stored or directed. At all times it is a matter of generation being equal to consumption. Renewable energies are unstable and difficult to control, since they depend on weather conditions. These control agencies try to integrate the largest possible contribution of these energies, but maintains an important base of conventional sources to control production and service demand.

In conclusion, the only way to consume 100% renewable energy is to self-produce it yourself. Make sure you don’t pay more for the same kind of product, if you are informed, you can’t be scammed!

If you are interested in receiving energy advisory services, do not hesitate to contact us.

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