The Green Electricity Market Past, Present

1
The Green Electricity MarketPast, Present
Future

• Juliet Davenport
• CEO- Good Energy Group

2
Background

• Accreditation and certification systems generally
  used to verify products meet certain standards
• In the case of Green electricity, used to verify
  the standard, but also the fundamentals of the
  product green electricity doesnt look any
  different from Brown.
• A Green electricity accreditation has two
  functions verification of the product claims and
  the standards that this product attains.

3
Green Electricity what is it?

• Two types green source or green fund
• Generic term for green source electricity is that
  it is generated from clean generation processes
• Traditionally these have been renewable energy
  sources wind, solar, hydro
• Green Fund electricity tends to be generated from
  brown sources, but with money put towards a
  renewable fund.

4
The Past Future Energy

• In 1999 the UK government launched the Future
  Energy scheme.
• Run by EST the scheme verified the claims of the
  key electricity supply businesses
• The scheme was discontinued in 2002
• The scheme was abandoned for two key reasons a)
  it was felt that the Levy Exemption Certificate
  market would be effectively verified by HMCustoms
  and Excise b) the proposal for the new scheme
  increased the required greenness of all tariffs
  and excluded all schemes but one, Good Energy.

5
The Past OFGEM green guidelines

• With no formal process in place OFGEM issued
  Green supplier guidelines in 2002
• These proposed best practice for the market, but
  no formal requirements
• The key body that oversaw claims made by
  electricity companies were the ASA (advertising
  standards agency), which has remit over all types
  of advertising, but does not include claims made
  in statements and on website.
• This has caused various issues, as ASA does not
  have specialist knowledge of this area
• ASA has also been used as a favourite tool of the
  anti-wind farm campaigners

6
Friends of the Earth League Table

• Following the demise of the EST scheme FOE
  stepped into the breach and launched their own
  scheme
• This listed all the green electricity companies
  tariffs and made a value judgement on their view
  of the greenness products.
• The issue for FOE was the amount of time they
  spent managing this, and the quality of the
  information
• We understand from speaking to FOE that various
  supply companies would make up new tariffs to
  appear at the top of the table, but when
  customers came to sign up to those tariffs, they
  would not be available and their cheaper less
  green products would be the only one available.
  
• As a result in 2004 FOE discontinued the listing
  calling for government to support an
  accreditation scheme.
• However at this point, Climate Change was still
  not politically hot enough to move things forward.

7
Significant Growth in the Green electricity market

• Over the past 5 years we have seen a significant
  growth in the demand for green electricity, both
  from the domestic and the business sectors.
• Large business customers are looking to see how
  they reduce their carbon footprints, and green
  electricity purchase is one of the ways forward.

8
Other issues

• Possible Double Counting in the market place
• Some market commentators suggest that this market
  might be being triple sold as green
• ASA finding continually inconsistent and
  difficulty for supply companies to know what they
  can really say.

9
The Present Market

• Climate change on the agenda Stern and Gore
• Growth in green markets generally
• Customer confusion
• Claims of double counting
• Market falling into disrepute

10
Green Accreditation

• Good Energy, FOE and most of the other main
  stream environmental Ngos campaign to have an
  accreditation scheme taken up by regulator
  OFGEM..eventually!
• Key questions
• What is Green?
• How can it be verified?

11
What is Green?

• Green means nothing this is the general
  consensus
• Tariffs are either renewable or Low Carbon
• Renewable Tariffs
• Renewable Energy creates 3 different certificates
  ROCs, LECs REGOs
• Focus on REGOs
• Therefore 100 renewable tariff must be backed by
  100 REGOs - verifiable
• Both the domestic and the commercial market for
  green electricity needs to be under the same
  scheme or double counting can ensue

12
What is Green? (cont)

• Low Carbon Tariffs
• Gas CHP
• Include Nuclear
• Generation with Carbon storage
• Banding of tariffs by kg/MWh of Carbon
• How do renewable energy tariffs and low carbon
  tariffs affect the rest of the fuel mix for
  supply businesses
• Do you verify the Tariff or the Company

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Low Carbon Banding

• Proposed banding of Low Carbon tariffs

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Verification

• Needs to be quantifiable
• Needs to be independent
• Needs to be transparent
• Needs to be low cost
• Need to be one scheme?
• Enforcement?

15
The Future?

• All tariffs have a carbon rating
• Renewable tariffs clearly identifiable
• UK carbon from electricity production driven down
  by customer demand
• Demand for renewable tariffs potentially to
  increase significantly

16
Additionality

• The principal of additionality is that the
  product is providing a market pull above and
  beyond that of government legislation
• For renewable tariffs with ROCs issues this is
  key
• Currently additionality for renewable tariffs is
  provided by
• Retiring ROCs
• Putting money into a renewables fund
• This may be restrictive in the future and
  companies should be able to propose any form of
  additionality

17
Good Energy

• 100 Renewable
• Zero Carbon
• www.good-energy.co.uk
• Publications
• reality of rhetoric green tariffs for domestic
  consumers by NCC
• Green Electricity Code of Practice A Scoping
  Study, ECI, Oxford.