Presentation on Green Electricity

1. Presentation on Green Electricity Juliet Davenport Chief Executive of unit[e] a renewable electricity supplier

2. “The purchase of green electricity is a way that consumers can act to minimise the effects on the environment of their energy use. This is consistent with the notion of sustainable consumption, which can result in market led improvements in environmental performance” OFGEM, Guidelines on Green Supply Offerings, April 2002. There are currently two ways to do this switch to a green supplier or install your own

3. Definition of Green Electricity • Customers signing up to a green electricity need to know that by changing suppliers they are changing the environmental balance of the power market • OFGEM guidelines on green supply probably provide the most comprehensive discussion on green electricity and within the definition allow suppliers the flexibility to show environmental additionality • “Consumers need to be able to make informed choices on the basis of reliable and verifiable information if they wish to support the environment through their choice supply” OFGEM green supplier guidelines

4. Delivery • Delivery of renewable electricity is not straightforward • Renewable power cannot easily be balanced in each half hour with matched demand • Signing up to a green supply tariff does not guarantee receipt of electrons powered by renewable energy to the customer • Instead most supply tariffs promise to match customer demand with an equivalent supply of green electricity over 12 months • To guarantee this the supplier should carry out an audit that it can publish and show to customers to demonstrate that it is delivering “it does what it says on the tin”

5. Half Hourly wind power vs. domestic customer profile Shape of a typical wind farm in April Shape of a typical domestic customers in April

6. Audit Procedure • Future Energy accreditation was launched by EST in the UK market in 1999 to “accredit electricity tariffs which support or invest in electricity from the full range of renewable energy sources” • This provided a benchmark for “green” electricity tariffs and allowed customers to feel confident that suppliers were doing what they said they were doing on their literature. • In 2001 after the introduction of the Climate Change Levy, Future Energy decided not to accredit business tariffs any more. It was felt that renewable generation was exempt from the Climate Change Levy and so Future Energy decided to withdraw from the market, as HM Customs and Excise would now perform their role.

7. Future Energy • In September 2002, Future Energy came out with some tough new guidelines for accreditation that fulfilled the Ofgem green guidelines. • Following a consultation with the few suppliers were willing to sign up to the accreditation and as a result Dti refused to provide further funding • Since September 2002 the market has had no accreditation and there is no formal benchmark of auditing in the UK market.

8. Current Green Market • With no formal accreditation system it is a “buyers beware” market • Green Claims Code published by DEFRA in 2000 provided guidelines for customers buying green products and what they should expect in a product: • Transparency • Additionality • Verification This should be in all media that the company promotes a product from the web, through to the statements made by door to door sales people.

9. What should a buyer ask for? • How does the supplier procure renewable power? • How do they verify their claims? • Do they have an audit procedure for verifying their claims? • Do they have an independent audit ? • Does the product help support new capacity? • Does the product have any other environmental benefits? • Are there any other benefits associated with buying this product? • Does it fit in with the criteria of the ISO14000 series?

10. How does a buyer evaluate a green supplier? • What are the criteria for buying green power? • CO2 emission targets • Additional generation targets • Technology choice: • wind power, hydro power, solar power, wave power, tidal power, biomass, waste to energy. • Other fringe benefits – PR and Marketing opportunities appearances, joint promotions • Staff packages

11. Value of buying green electricity Each buyer will need to consider the value that they themselves put on each of the “green” benefits associated with buying different green products The relative benefits of buying green power needs to be evaluated in relation to the price that the buyer is willing to pay, with “brown” as a benchmark with no environmental benefit, up to the greenest supply with the highest level of benefit, ranked in relation to the price. And finally, this needs all to be offset against the length of contract that the supplier is willing to offer and the buyer is willing to accept.

12. Installing your own However, some buyers are willing to put more effort into their wish to go green. Installing your own wind turbine or solar panel is now something any home and business can do, with the only restriction being the local weather! Smaller generators can now expect to be able to sell their output to suppliers and get some kind of income per unit that they produce. In a lot of cases the smallest generators do not really make economic sense, but are more part of a individual or a business wanting to be directly involved in reducing their environmental impact.

13. What do you do? First contact your supplier and find out if they offer a package to take the excess production from small scale generation and ask them to do an evaluation of the savings and the income from such a installation Ask the supplier if there is anyone they recommend or work with already, if not on PV contact Energy Saving Trust and other technologies Dti to find out about installers and any grants available.

14. What do you do? Make sure that if you choose an installer that they have worked with the supplier before and know how to deal with all the associated connection agreements and metering requirements. Evaluate the costs and the benefits and consider the additional environmental benefits that you will accrue due to the installation, and potentially the increase in value of the property.

15. Summary The Green market is quite complex, and in general you get what you pay for It is currently a buyers beware market with no formal accreditation scheme, although European schemes like Eugene could be implemented in the UK in the near future and from 2004 all suppliers will be obligated to disclosure where they buy their power from Key to be a good buyer in Green electricity, whether it is an installation or a green supply product is to know what questions to ask