How To Shop For The Most Sustainable Electricity

I had never put any thought into who my power provider was until 2021. Our provider was simply the one my husband chose when he moved into our current house before me.

Time to investigate.

To be honest, I stopped after five minutes due to boredom and confusion. I swiftly employed an energy economist to do the job for me.

Enter: Isaac Gumbrell (who is rumoured to be either my older brother or twin).

Isaac & I at my wedding.

Isaac has a Master of Commerce in Electricity Market Modelling and is an Energy Analyst for RBP, an Energy Market Consulting Firm. Thankfully he was up for the job. Isaac has done the research (and many years of studying), and I’ve trawled through everything to make it palatable for the average person who isn’t an expert/nerd.

Together, we’ve concluded the best ways to shop for and consume electricity while lowering your carbon footprint and doing the right thing for people and the planet.

Before you start scrolling to find a list of the most sustainable power companies in Aotearoa New Zealand...  stop. You won’t find that here.

Instead you’ll learn...

Consuming electricity more sustainably is achieved by being conscious of HOW you use electricity. There are a bunch of electricity providers in Aotearoa New Zealand who make conscious electricity consumption easier and cheaper.

We’re going to take you through a mini crash course in how electricity works, how it’s produced and sold in Aotearoa New Zealand, the cost of different types of electricity, and what it means to consume electricity more sustainably.

This may sound a little complex right now, but I promise everything will start to make a lot of sense as you read on.

You’ll leave this blog post with knowledge that empowers you to save money (consuming mainly renewable energy through strategic electricity consumption is the most cost effective option too!) and do the right thing for the planet.

Before we kick into it, there are some important things to know:

• When we talk about electricity, we are talking about the movement of electrons through wires.

• When electricity is generated, it isn’t created out of nothing. Instead, other types of energy such as chemical energy, kinetic energy (movement), and heat energy are converted into electrical energy to charge our phones or boil our kettles.

• Electricity is a complex commodity to buy and sell as it must get used at the same time it is created. This means that the power you take from your wall socket is being created by a generator somewhere at almost the exact same time you are using it!

• There are two types of companies who sell electricity: Wholesalers who produce power in generators, and retailers who buy power from wholesalers and sell it to homes and businesses. In Aotearoa New Zealand the five biggest electricity companies are both wholesalers and retailers.

How does Aotearoa New Zealand create electricity?

Our country produces around 83% renewable energy. Here’s a rundown of the exact types of renewable and non-renewable energy sources, including how much is produced and where each type is generated.

*percent of total electricity generated MBIE 2016-2020. Note: no source of energy is 100% ‘clean’.

*percent of total electricity generated MBIE 2016-2020. Note: no source of energy is 100% ‘clean’.

Shouldn’t I just choose the power company with the most renewable sources?

Nope, it’s not that simple.

While many companies will tout the fact that they only generate or buy renewable electricity, this doesn’t capture the bigger picture of our actions.

When purchasing electricity and thinking more sustainably, it’s important to ask yourself the question: Do my choices reduce Aotearoa New Zealand’s emissions as a whole? To answer this question, consider this analogy:

Train: Renewable electricity

Tractor: Fossil fuel electricity

There are 100 kiwis who need to get to the park. A train is heading there, but sadly this train only has 80 seats. All kiwis that don’t fit in the train will have to drive tractors to get to the park. Most kiwis don’t care if they take the train or the tractor, but since the train is slightly cheaper they opt for the train if there is room. It’s your turn to choose your method of transport; do you get on the train and reduce your emissions, or do you take a tractor?

Does it even matter?

If you get on the train in order to lower your emissions, another kiwi will have to ride on a tractor. At the end of the day there is a limited number of train seats and by choosing to take the train, you have achieved nothing except numbing your own guilt.

If you choose to emit less, someone else emits more. Therefore, there is no effect of your actions. Renewable electricity in the short term is scarce, so paying extra to use renewable electricity doesn’t mean you are lowering Aotearoa New Zealand’s emissions; you have simply pushed someone else to use fossil-fuel electricity.

Greenwashing

Like most industries, the electricity industry is full of green-washing.

Be skeptical when a company claims they are selling you renewable electricity, as there is no way in our current system to ensure that the electricity you are getting is actually renewable. For example, Meridian often advertises that they provide 100% renewable electricity to their customers because they only generate energy from hydro and wind. However, several complaints against this advertising caused Meridian’s ads to be taken off TV in 2020 due to their misleading nature. Experts agree that if you’re a Meridian customer and all the renewable electricity our country can provide is already being used, the additional demand you will create from turning on a heater will be met with fossil fuel electricity. Telling customers they’re consuming 100% renewable energy with no way of ensuring this the case sure isn’t cool.

Some providers will claim that choosing them will result in more renewable electricity generation being built, yet the evidence isn’t enough for this claim to hold any weight. Due to emissions reduction targets, almost all new generators in Aotearoa New Zealand will be renewable regardless. (yay).

The cost of renewable electricity versus fossil-fuel electricity.

You may be surprised to hear that renewable electricity is cheaper than fossil-fuel electricity to produce, but it doesn’t always come when you want it. Fossil-fuel electricity produced by coal and gas is expensive, but it can be produced on demand. When Aotearoa New Zealand isn't producing enough renewable electricity to meet demand, we are forced to use fossil-fuel electricity because we can control when it comes on.

Since fossil-fuel electricity is expensive to produce, the cost of electricity increases as soon as we require fossil-fuel generators to keep the lights on. This means the companies that sell you electricity pay a different price for electricity every half hour. This price is based on the most expensive type of electricity required to meet demand.

How to actually make your electricity consumption more sustainable

By now I hope you’re feeling like an energy expert and you’re so prepared to ‘woo’ your family with all your fancy knowledge when you next have dinner.

I know you know it; the answer to consuming electricity sustainably lies in changing the way that you use electricity. Simply put, shifting your electricity usage to times when there is surplus renewable electricity, will mean that you’re consuming the clean renewable stuff, and preventing those fossil-fuel generators from being turned on.

If you refer back to the train/tractor analogy… if kiwis travel to the park at different times of the day no one will need to use tractors!

As mentioned, the benefit to this approach, beyond doing the right thing for the environment, is that it can save you money too.

Simple habits to adopt:

• Think about the main ways you use electricity: these are usually washing your clothes, showering and heating.

• Try to push energy intensive tasks to off peak times such as from 9pm to 6am.

• Utilise the Flick Electric app or Transpower’s EM6 website to see how much NZ is emitting by the hour and lower your use if emissions are high.

• If your electricity provider has an app - use it regularly to monitor your usage.

• Turn off all appliances when you leave to go on holiday.

• Change your lights from halogens to LEDs. Turn them off when you leave the room.

• Only wash your clothes when they need washing (none of this 1 wear, straight in the basket without a sniff business).

• Talk to your family about your energy consumption and get everyone on board.

• Automate the way your home consumes electricity (e.g. set timers on appliances where possible or purchase smart home power points to turn devices on and off at certain times).

Off peak = less people using electricity (9pm - 5am)

On peak = lots of people using electricity at the same time (5am - 9pm)

We’re all human. So in order to stick to these habits, we believe that giving yourself the right incentives increases the chance that you’ll actually commit to these simple habits. Even if you have strong environmental values, a financial incentive for these better habits will help keep you on track.

Some power plans provide financial incentives to push us toward better habits (like Powershop, Ecotricity, and Flick to name a few). Other power companies are less focused on these incentives and instead prioritise making sure that all of their daily operations are as clean and green as possible.

We recommend power companies that do a bit of both. But at the end of the day, due to the train and tractor analogy, we believe that incentivising better habits is going to make a bigger difference in light of our global climate crisis.

Practical recommendations

First off, let's talk about criteria. We need a power plan that:

• Is as cheap as possible (there's no point paying more than you have to)

• Incentivises behavioural change in its pricing

• Allows us to be more aware of our usage (a good app goes a long way)

Here’s a three step plan for you.

Step 1

• Enter your address at powerswitch.org.nz. As electricity retailers offer different prices based on location, the best option for you is dependent on where you live. PowerSwitch makes comparing different plans much easier.

Step 2

From the options listed in PowerSwitch find yourself an electricity plan that offers time of use pricing. Here’s a list of retailers offering these types of plans:

• Electric Kiwi (I shop here)

• Contact

• Ecotricity

• Flick

• Genesis

• Powershop

As many of these companies offer fixed rates as well as on/off-peak plans make sure you’re signing up for one where the price you pay changes depending on the time of day.

For 99% of people, a time of use pricing plan offers a great balance between risk and cost savings from changing your use patterns. We recommend most people stop here. However, there’s theoretically an option that provides even greater incentive to change your patterns of use. This isn’t for the faint of heart!

Wholesale electricity plans will charge you a different rate each half hour, depending on what the actual cost of producing electricity is. This means that sometimes you’ll pay almost nothing for your power (when there is surplus renewable electricity), and other times you’ll pay significantly more (when we are burning fossil fuels). In the long run, your bank account will be happier than all other options, but you have to be ready for big bills once in a while.

Ask yourself: Am I able to pay 5 times my regular power bill in the middle of winter and 10 times less in summer? Would it be too much of a shock if my monthly energy bill was $2000 when it was usually $300?

More companies used to offer these types of plans, but many of these plans have been canceled after customers were outraged over monthly bills of several thousand dollars. By signing up to one of these plans you’re giving yourself the strongest incentive to change your habits and you’ll theoretically save money in the long run. But we can’t confidently recommend wholesale electricity plans for most people as it requires the ability to pay large amounts of money in some months. Currently, the only provider of these types of plans is Our Energy. They offer plans which are spot price exposed, alongside offering cheap energy sourced from local solar producers.

Be honest with yourself about your ability to pay a lot extra for some bills. It's easy to sign up to one of these plans with optimism and feel like you’re cheating the system by paying so little in the summer, only to be smacked with an eye-wateringly high bill when winter months roll around.

Step 3

Make a plan about how you’re going to change your electricity usage. Commit to setting timers on your dishwasher or washing machine so that they aren’t running at peak times. Try to shower late at night. Set your electric vehicle to charge after you’ve gone to bed. Electric Kiwi have a great list of habits to change that help you load shift in order to save money and use greener energy.

To conclude...

I went into this piece of research thinking I needed to assess the sustainability of every power company. But instead I have realised the conversation around eco-friendly electricity isn’t about ‘who is the most sustainable power company’. It is about how different habits fit with different power company plans and incentives, to ensure you’re consuming electricity in the most sustainable way.

I am going to do my best to adopt off-peak electricity usage habits to save me money and ensure I am using as much renewable electricity as possible.

Now that I’m turning into an electricity nerd like my brother, stay tuned for a piece on energy efficiency too.