Choosing greener electricity suppliers

Singapore is planning to introduce the Electricity Vending System for households and small businesses. Today reported that smart meters installed will track the consumer’s electricity usage, and make it possible for consumers to “choose which supplier they want to buy their electricity from, and pay for supply upfront via the Internet, ATMs or convenience stores.” Suppliers would offer electricity packages at different prices and consumers could choose a cheaper package. This is in contrast to the current system where a flat price rate is charged by Singapore Power’s SP Services.

While we welcome the good news that consumers can choose their electricity supplier, we would prefer instead to read about consumers and companies having the ability to choose a greener electricity supplier.

In Singapore, the “power generation sector is the single largest primary source of carbon dioxide emissions” according to the National Climate Change Strategy. Consumers and companies are increasingly aware of environmental issues, especially climate change and the urgent need to reduce carbon emissions. Therefore, they may not look at price as the only factor in deciding their supplier. They would prefer a greener supplier that emits less carbon dioxide for the same unit of electricity generated (a smaller carbon footprint) as compared to other suppliers.

The electricity suppliers can give consumers and companies the ability to choose greener electricity by disclosing their carbon footprints, either voluntarily or by legislation. They would no longer compete on price alone but also on their environmental performance. This creates market incentives for suppliers to reduce carbon emissions and be seen as a greener electricity supplier. They would find ways to be more efficient and generate electricity using cleaner fuel source or renewable energy sources.

In addition, the carbon footprint disclosure by suppliers would help companies calculate their own carbon footprints as the carbon emissions from electricity supplied is required in the calculations. They can then decide to switch to a greener supplier or take actions to reduce carbon emissions in light of global climate change concerns and stricter restrictions on carbon emissions in the future. Companies that know their own carbon footprints are also in a better position to tap on carbon trading schemes.

The carbon footprint disclosure by electricity suppliers would give consumers and companies more choices, and is a step towards reducing Singapore’s carbon emissions.

Source: Energy Market Authority; Today; Ministry of the Environment and Water Resources. Image attribution: Energy Market Authority.

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