Action needed to close the green energy loophole

by Juliet Davenport. Published Mon 18 May 2009 23:23
"This can only be a good thing," says Juliet Davenport

One of the UK's leading green energy providers has called for a clearer certification process and greater transparency to avoid “underhand operators” taking advantage of consumer confusion.

Good Energy CEO Juliet Davenport calls for stronger regulations to take out the carbon cowboys and act as a catalyst for an increased demand in green energy.

She believes a greater uptake of eco-tariffs will support the faster expansion of renewable power, explaining: “The more there is, the cheaper it will become and the greater the impact on greenhouse gas emissions”.

Here the founder of Good Energy delivers her vision for a clearer, fairer green energy market:

“Promoting demand for renewable energy is, in my view, one of the four policy pillars necessary to reach the Government’s climate targets; alongside planning, network investment and financial instruments.

“To do this we need a system that closes all the loopholes and allows clear, straightforward communication of what is in these products, and removes the ability for what we see as unscrupulous trading of renewable electricity.

“The publication of new guidelines for green electricity tariffs by Ofgem later this year should go some way to achieving this. The guidelines are designed to encourage greater uptake of ‘green tariffs’ from consumers after many questioned the environmental benefits they could bring.

“Consumer doubts were hardly surprising given that many energy retailers were simply repackaging electricity they were legally obliged to source or produce under the Government’s Renewable Obligation.

“Even amongst the suppliers there seems to be confusion and recently, a close competitor has accused Good Energy of trying to mislead customers through our ROC retirement policy. The only solution is to have a centralised arbiter of what counts and what doesn’t, and how it should be presented.

“For each MW of renewable electricity produced the generator is awarded three certificates: a REGO (renewable energy guarantee of origin), a ROC (renewable obligation certificate), and a LEC (levy exemption certificate).

“Each one of these allows a particular end-user a certificate of ‘proof’ that what they have bought is renewable in origin.

“It also allows the more underhand operators to sell the same unit of electricity several times using each certificate as proof of a green tariff. For example, from one truly renewable unit of electricity, suppliers could sell one green tariff to a domestic customer using the REGO as proof; and the same unit again to a business customer using the LEC as proof.

“Under the proposals in the new guidelines, suppliers offering a ‘green’ tariff will not be allowed to sell the REGOs and LECs separately – they will have to ‘retire’ them, creating greater scarcity in the market, and therefore driving up demand and prices. This in turn should act as an incentive to build more generating output – exactly what the system is supposed to do!

“ROCs will not be eligible as a measure of green supply and will return to being simply a financial support mechanism for those wishing to develop a renewable energy project.

“This should close the market in double-counting in one go. Great for the consumer, but it could cause a problem for those businesses who have developed their business plan under the old regime, and we expect there to be resistance in some quarters to signing up to the new rules.

“Those companies who have nothing to hide and want to see the green market expanded will be the first in the queue to sign on the dotted line. Good Energy has only ever used the REGO as its proof of green tariff. We have never traded LECs, we always retire them, and we even retire ROCs out of the system above and beyond our legal compliance obligation.

“The amount we have ROC retired above compliance levels has recently come under some scrutiny, and we could possibly have communicated our calculations more clearly to customers – but this is why we would welcome the scrutiny of an official green accreditation, because it can only be a good thing for the market.

“The new green guidelines will form the basis for an independent accreditation scheme for green tariffs. Under the accreditation scheme a tariff will only be regarded as green if it brings benefits beyond the suppliers’ existing legal obligations.

“This will also have to be transparent to the public. First, each supplier will have to provide customers with a fuel mix disclosure chart displaying the percentage of each energy source they buy from to give an idea of their environmental credentials.

“Secondly, suppliers will have to give a description of the extra measures they are taking beyond their legal obligations. This could be through support for community-based renewable projects - something Good Energy has always championed - or installing energy efficiency measures.

"Finally, they will have to carry a quality mark that certifies that the extra environmental activity will abate a minimum level of carbon dioxide equivalent emissions.

“The idea behind this is to provide reassurance to the public and encourage greater uptake of green tariffs in order for greater amounts of renewable energy to be developed in the UK. The more there is, the cheaper it will become and the greater the impact on greenhouse gas emissions.

“Customers will be able to see exactly where their fuel comes from with each supplier and make choices accordingly. As each green tariff will have to show evidence of renewable generation beyond legal obligations, we hope it will encourage greater independent generation from individuals, households, landowners and small-scale developers.

“At Good Energy we source the majority of our electricity from over 500 independent renewable generators throughout the country. So while we do own our own wind farm in Cornwall, we also buy our energy from a diverse range of sources across the UK. This approach provides energy, and financial, security on a distributed basis to a variety of entrepreneurial individuals and communities who should be actively supported, particularly during these harsh economic times.

“The new guidelines will be voluntary and only apply to designated green tariffs. However, it is worth asking those who oppose the new guidelines what the fuel mix is in their supply. And for each tariff they offer, what proportion of it is truly renewable, backed by both REGOs and LECs.

“Nothing is ever perfect and I dare say the new guidelines won’t get it completely right - but if they stop what we believe is bad practice in the sector and in so doing, increase the demand for renewable energy, then this can only be a good thing.”

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Comments about Action needed to close the green energy loophole

please can you advise if as a landowner of a turbine site we should be getting a share of rocs and lecs income.advice appreciated.
jen, carmarthen around 5 years, 5 months ago
Nice to see u r against triple-counting. But if Good Energy is selling a ROC and a REGO from the same unit then u r still double counting.
Colin, Cornwall around 6 years, 4 months ago

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