“Green electricity is much more expensive.” For property portfolios, this blanket assumption is not a reliable basis for procurement. Comparable offers, the quality of guarantees of origin and contractual terms are what matter. A large premium is not a market rule.
What matters in green electricity pricing
Green electricity can be competitive. Whether there is a premium over another electricity product can only be assessed using specific offers. Delivery period, consumption profile, volume flexibility and evidence quality must be comparable.
Guarantees of origin document renewable generation of a corresponding quantity of electricity. Their prices are formed in a separate market. On their own, they say nothing about an additional contribution to expanding renewable generation. These distinctions are explained by the German Environment Agency on green electricity and guarantees of origin.
Why the myth persists
Past experiences of price premiums often influence today's assessment. Owners, asset managers and property managers should test this assumption through a current tender.
Sustainability also belongs in the decision. The requirements of the relevant ESG rating, financing and portfolio strategy must be assessed specifically. A green electricity contract alone guarantees neither a better rating, more favourable financing terms nor a higher property value.
How to compare offers effectively
Create competition: Approach several suppliers using the same data and contractual basis.
Aggregate supply points: Combine suitable volumes while considering contract terms and consumption profiles.
Assess PPAs too: Long-term electricity supply agreements may be an option. Price, generation profile, residual electricity demand and risk allocation must be assessed together.
Clarify the evidence: Define origin, generation period and additional quality requirements. Allocation of guarantees of origin must also be agreed in a PPA.
Assess sustainability objectives: Check the electricity product's demonstrable contribution to your requirements.
The dena Green PPA pricing guide explains the cost and risk components of these agreements. A PPA is therefore not automatically cheaper than a supply contract with guarantees of origin.
NeoBid's perspective
NeoBid organises competitive tenders and aggregates suitable supply points. Price, evidence quality and contractual terms are considered together for the property portfolio. Which green electricity options and evidence are appropriate, and when a PPA for property portfolios may be suitable, depends on the specific requirements.
Conclusion: assess green electricity through actual offers
Green electricity should neither be ruled out because of an assumed premium nor justified through general promises of increased value. A structured comparison shows which solution fits the portfolio's budget, sustainability objectives and risk requirements.
Would you like to assess green electricity offers for your portfolio? NeoBid supports the comparison of procurement models, evidence and contractual terms.
