Green energy retailing
Some consumers have been able to make use of the ‘Clean Energy Cashback’ Feed In Tariff scheme to get paid for generating their own renewable electricity , and exporting any excess to the grid. Around 1GW of solar PV has now been installed in the UK as result. But not everyone can afford the large capital outlay for PV solar or other domestic-scale renewables. For those still keen to use green energy, one option is to buy it in via a green retail scheme. There are a lot on offer, but it is sometimes hard to decide how reliable they are- how can consumers be sure they are really getting green power?
To try to help, an independent voluntary Green Energy Supply Certification Scheme was set up for domestic consumers and small businesses, and has been running since Feb. 2011, with 13 UK green electricity tariffs certified by August 2011. The Scheme is bound by Ofgem’s Green Supply Guidelines. It is overseen by an independent panel of experts with the National Energy Foundation as Panel Secretariat.
The Scheme awards a ‘green label’ to electricity tariffs that deliver a real, measurable green gains. Not all tariffs marketed as green in the UK are certified by the voluntary Scheme but evidently all those who have applied has been given certification without the need for major adjustments. However, despite relatively high public awareness of environmental issues, green tariffs still account for only 1% of demand. In part that is because of some confusion- and cynicism- as to what green power really is.
The basic initial idea was that suppliers would contract with consumers to match the electricity they use with electricity from renewable sources, and set green tariff rates, which were likely to be higher than normal rates. So it was voluntary scheme for those who wanted to support renewables more, since they cost more at present.
However it was complicated by the advent of the Renewables Obligation (RO) which requires suppliers to source increasing proportions of the electricity they sell to all consumers from renewable source, with the extra cost passed on to all comsumers. It would be unfair for the same electricity also to be sold under the voluntary scheme- those consumers would then in effect be charged twice. So it was proposed that the electricity had to come from projects that were outside/additional to those operating under the RO scheme. The problem was that there weren’t many of them and they tend to be the higher cost projects, so pushing the voluntary green tariff level even further up.
Some critics also argued that, as far a developing renewables rapidly on a large scale was concerned, it was far better to go for the RO, which passed the extra cost on to all electricity consumers, than the rely on voluntary support from a small minority, who would otherwise be in effect subsidising others not to bother. But then that’s the nature of charity, and if some are willing to pay more, altruistically, then it all helps. A more fundamental issue was that, as a Datamonitor Survey reported, 27% of respondents did not trust their energy company, and did not believe that their energy would actually come from (or be matched by) a renewable source. The Green Energy Supply Certification Scheme aimed to try to resolve that credibility issue.
In terms of the green tariffs on offer now, what has emerged is something of a compromise. Some green suppliers do supply 100% green power at a premium price from fully additional sources, or like Good Energy, ‘retire’ the ROCs they get from RO credited projects. But some don’t charge more and don’t use additional sources- in which case additionality is achieved by offering other, indirect, green benefits- specially established funds fed from a percentage from the sales receipts, for the development of renewable energy projects (e.g. the Juice fund for marine renewables) energy efficiency projects or eco/offset projects e.g. reafforestation.
The Green Energy Supply Certification Scheme requires that these projects must result in the abatement of at least a minimum level of carbon dioxide equivalent (CO2e) emissions- set at 50 kg p.a per tariff for funds/efficiency projects and 1 tonne for offsets. There has recently been a consultation on whether these levels should now be raised, and on other aspects of the scheme. The main concern however for it to be better known and used!
- Next year consumers should be able to get support for installing heat producing renewables, under the proposed Renewable Heat Incentive domestic tariff scheme, but there are already some voluntary green heat retail schemes on offer.
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