Cairns is at the northern end of the main (transmission grid) which runs from Taamania/Zouth Australia through Victoria, NSW and thence Queensland (see http://www.aemo.com.au/aemo/apps/visualisations/map.html, select Transmission Infrastructure and then Tranmissions lines).
Yes, flows move from generators to consumers, this is the way that the electricity network works.
FNQ does have some limited renewable generation, but it is insufficient to supply the whole of the FNQ region…this is why after some recent cyclones that FNQ lost power when the transmission lines between Townsville and Cairns were damaged. Local generation was insufficient to support the local network.
Generally there is a net flow north on the transmission lines and FNQ relies on generation in the southern part of Queensland to meet its energy demand. During some weather events or generator outages in Queensland, there can be a flow on the interconnector from NSW to Queensland, meaning that FNQ relies on the generation in southern Queensland and potentially NSW to maintain a reliable supply. The generation mix in these areas includes non-renewables (e.g. coal, diesel and gas), hydro, hydro storage and renewables (wind, biomass etc).
Therefore Cairns is heavily reliant on generators outside FNQ.
The electricity market also works like a pool. All generators fill the pool to meet the demand on the network. Retailers buy a unit of energy from this pool to supply their customers.
What Ergon is proposing is that they will only buy renewable ‘green’ energy from this pool to supply those consumers who pay a premium for such energy.
It is also highly likely the renewable energy generated in FNQ and added the pool has been sold to consumers in other parts of the eastern states as renewable energy. This is how the renewable energy and certificate market works.
It is also worth noting that the electrons in the pool don’t known if they result from non-renewable or renewable sources. The only way for this to be known is to isolate networks such that there are separate renewable and non-renewable energy networks that supply different customers based on the supply preferences. Such would be highly inefficient and costly as in effect, the electricity network woukd be duplicated have have significant redundancy.
While on may think it seems strange what Ergon is proposing, it makes sense and follows the principles underlying the eastern state electricity network and markets.