Where does my power come from?

A question we have frequently been asked since we launched is ‘where does my power come from?’

The short but somewhat unhelpful answer is no one knows!

Engineers and economists alike would love to be able to track the path of electrons around an electricity system. Unfortunately, this is simply not possible; after all they travel at the speed of light!

Instead of tracking where power actually comes from and where it goes to, the electricity industry has a complex web of regulations and contractual structures that, amongst other things, defines ‘ownership’ of energy at various points in the chain.

In simple terms, all generators sell their energy to the Australian electricity market – the wholesale market – (at the point where power stations connect to the national grid). Similarly, all retailers buy the energy they sell to customers from the wholesale market (again at the point that the local lines company connects to the national grid). What this means is that all retailers are selling customers energy that is purchased from the wholesale market, whether or not they also generate power.

So, while generators cannot actually sell the power they make, they sell retail electricity (bought from the wholesale market) directly to customers for two main reasons:

  1. To earn retail margins.
  2. To reduce the financial risks they face on the wholesale market.

Essentially, these ‘generator-retailers’ are re-packaging wholesale energy for on-sale directly to customers.

Now introduce Powershop into the mix and life gets really interesting! Powershop essentially takes over the role of the retailer in terms of packaging up energy bought from the wholesale market and supplying this to customers. However, we have also introduced a ‘marketplace’ that allows both existing electricity retailers and new brands to sell ‘energy credits’ that customers can purchase and redeem against their consumption. The sale of these energy credits allows retailers to earn margin and manage financial risk in exactly the same way as direct retailing does now.

But the real value of the marketplace is what it does for customers. Customers can very simply and easily choose whom they buy their energy credit products from. This is a much smarter way to buy your power. Powershop’s retail brands need to work hard to ‘earn’ custom – rather than by default through the current love-hate relationship most people have with their power company. Our brands must provide products that are either competitively priced, or that genuinely add value to customers – purchases may give customers loyalty rewards, or entry into prize draws or products could involve the purchase of carbon offsets, or come with a commitment from the retailer to generate from renewable only source, it might involve supporting a community cause. This is true retail. Sellers need to work hard to develop products that customers want to buy.

Powershop makes no apology for introducing this competitive dynamic into electricity retailing – Power to the People!

16 thoughts on “Where does my power come from?

  1. Bernie

    Hi folks in our climate group are a bit suss about your company being recommended by GetUp, considering that “you’re just another retailer” with no obvious offer of green power. Do you know about http://www.greenpower.gov.au? Obviously you’re working with other partners but the green power logo confirm s accreditation of all or part of the amount of power you want to buy. Of course, it’s still valid that GetUp are trying to change people from the big three.

    Reply
    1. Daniel Pinne

      We agree that Greenpower is important. Thats why Powershop’s two windfarms (Mt Millar in South Australia and Mt Mercer in Victoria) are both Greenpower accredited. Powershop’s green products are sourced from these greenpower accredited wind farms and we are working with Greenpower to get the greenpower tick on those products. Watch this space!

      Reply
  2. Kim

    Why is the website GetUp prompting your company when they should be prompting GREENPOWER? It’s a bit too suss! You guys are dodgy! How much kick backs are you giving the Greens and to the owners of GetUp? Be transparent and tell us WHERE and who you buy your power from!

    Reply
    1. Powershop

      Hi Kim,

      We do think our customers should buy GreenPower, and it’s a great way to increase the chances of new renewable generation being built in Australia. It’s only one thing you can do to support renewable energy, and GetUp! feel that our strong support of the Renewable Energy Target (in contrast to the attacks on the Renewable Energy Target that AGL, EnergyAustralia and Origin are making) makes switching to Powershop a great way to support renewable energy. Buying GreenPower from a company that is trying to destroy the Renewable Energy Target is not a way to support renewable energy.

      Buying it from a company that is committed to supporting the RET makes much more sense. We offer 100% accredited GreenPower products. We source our power from our own wind farms.

      We do indeed have a commercial arrangement with GetUp!, where we pay a stipulated fee to GetUp! for every customer that signs up to Powershop under this campaign, and this arrangement is explicitly disclosed by us at http://www.powershop.com.au/p/betterpower and by GetUp! at https://www.getup.org.au/campaigns/renewable-energy/switch/victorians-switch-to-save-renewables. Aside from those payments, Powershop isn’t paying anyone commissions in relation to this campaign. Payments made to GetUp! go towards growing the Better Power campaign to save the Renewable Energy Target. The “owners” of GetUp! are the thousands of members who are participating in the campaign, and it’s a not for profit organisation that campaigns to support causes that its members believe in.

      We know GetUp! undertook extensive due diligence to find companies that support the RET. A similar exercise has now been undertaken by Greenpeace and the Total Environment Centre – you can find the index at http://www.greenpeace.org/australia/en/what-we-do/climate/The-Green-Electricity-Guide/, which profiles Powershop and other retailers.

      Where do we buy our power from? We have over 200MW of renewable generation assets here in Australia, and they generate enough electricity to meet the needs of more than 100,000 homes. So for right now, we are generating much more than our customers are consuming.

      As your IP address indicates that you are working at one of the Big Three retailers, you should be well aware of how the Australian electricity market works. Under the National Electricity Rules, found at http://www.aemc.gov.au/getattachment/fcc29968-85b6-4b97-8fd8-30da1b4c7856/National-Electricity-Rules-Version-64.aspx, all electricity retailers in the National Electricity Market buy their electricity from the spot market, but Powershop still has the benefit of Meridian’s own generation assets. And remember, because Powershop and Meridian are 100% renewable and carbon neutral, unlike the Big Three (like your employer) you can be sure that every dollar you spend with Powershop helps investment in renewable energy and not old outdated coal and gas generators.

      Thanks,

      Powershop.

      Reply
      1. Oscar

        Thanks Powershop that clears up a lot of uncertainties.
        Just a suggestion but as I was looking around for a ‘better’ power retailer (I have switched to powershop now, as I have founds it to be the best in terms of sustainability) it would be really helpful if you had put the things you said to Kim on your website, perhaps under greenpower, as they really clear up things and make it easier to see the sustainability of powershop as a company.

        Reply
        1. Paul

          Yeah, have to agree with Oscar. A few things are a little unclear. While they are obvious to a degree if you’re reading between the lines, it certainly can’t hurt to have them explicitly spelled out.

          Reply
      2. Toby

        Haha Kim …

        Playing the big dirty business game of mud slinging just got you owned! How about spending more time understanding what consumers really want and the realities of the future electricity market and get with the world program. Shut down you coal plants and put up turbines and you might find yourself relevant in 10-20 years time.

        There is a a big L on your forehead Kim.

        Well done Powershop, and also love the advertising campaign you have going right now.

        Reply
      3. Joss

        Well done Powershop for calling out the underhanded tactics of the fossil fuel generators with a well written and considered response. Schooled!!

        You just got yourself another customer…

        Reply
      4. Di

        I find this whole subject cloudy and grey, they all make it that way for marketing , yes even powershop., In Northern New South Wales it is not obvious who to align with, however the Green peace and Total Environment Centre state it very clearly and quickly. Ive been round and round your website several times now and the marketing is powerful. Just want some fact straight up and Green Peace Total Environment Centre are direct speakers Hooray!

        Reply
      5. vUvu

        “As your IP address indicates that you are working at one of the Big Three retailers, you should be well aware of how the Australian electricity market works.”

        OMG Wrecked! Kim you just got schooled by powershop..
        Probably should pick up some reading texts before coming to the next class….”Electricity.. where does it come from?” & “Computer networking for dummies”

        Love the new way of doing business btw powershop… even though you’re a billion dollar company .. its really nice to see you get behind green energy and hope you continue on this path no matter how big you become.

        Reply
  3. Nat

    I agree with Oscar.
    Powershop was recommended to me but it took a while to find information on the actual GreenPower 🙂

    Thanks,
    Nat

    Reply
  4. Pauline

    Must admit had the same concerns, I basically buy “green energy” as way of forcing companies to support new renewable energy initiatives to meet the % demand of supply required to meet people need who buy “green”. I know the electrons come from wherever, it’s the percentage of those electrons created by green energy I’m trying to increase. So I look at places like Tas Hydro and thin we’ll it’s 100% renewable but it’s not 100% new renewable 😉

    What are your plans if you get more Customers? Is it to increase energy generation yourself or ???

    Reply
    1. Paul

      Not sure who you’re asking. I hate coal seam gas because the method of extraction threatens our natural water storage and food production land.
      CSG also forceably invade farmers and rural properties .

      Reply
  5. Paul

    I think CSG is coming to Victoria as soon as the temporary ban expires. Does anyone know when exactly? It’s really stupid that clean water resources might be destroyed, considering that water is in such high demand.
    . As all resources are stretched by population growth, there needs to be more world wide discussion and education on population self-control.

    Reply

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