Sunday, 13 October 2019

Where does your renewable energy come from?

Did you know that the renewable energy you are paying for with your green energy tariff does not actually have to be generated in this country - or even supplied to this country? For example it is quite possible your green electricity usage has been matched with generation in Italy. In the year to April 2019, 16 TWh of renewable energy certificates were imported into this country, almost half from Italy. This only adds around 15% to the green energy generated in the UK - but it does make you wonder if it is worth getting a green energy tariff at all. Fortunately some electricity companies either generate their own or buy direct from UK generators.

Every 1000 kWh of renewable energy generated in the EU gets a 'Renewable Energy Guarantee of Origin certificate (REGO). This is normally given to the company that buys the electricity i.e. our suppliers so that they can prove the proportion of renewable energy they have used in their annual declaration to OFGEM. However, if a supplier has more certificates than they need, because they have customers who have not been promised renewable energy, then they can sell the certificates on separately from the energy in a secondary market.

According to Which magazine[1], only Ecotricity and Good Energy offer 100% green tariffs where all the energy is bought direct from generators (including their own) and have a full year of REGO accounts to prove it. Some others claim to be doing this but started since April 2018 (the REGO accounting year is April through March).

REGO certificates equivalent to one household's annual energy can be traded for £1.
Companies using the secondary market to buy REGO certificates can do so very cheaply. Each certificate cost around 35p in 2018/2019 [2]. That means they can buy certificates equivalent to an average household electricity use for a year for about £1. No wonder green tariffs are so competitive on price!

The register of certificates is maintained by OFGEM and it does not seem to be available to the public. However there are public files containing details of the certificates that have been imported or exported [3]. I have used these to determine where the energy is coming from. The following tables show the main countries that we import from, and the companies that do it.

CountryPercent of imported REGOs 2018/2019
Other (no more than 3% each)25%

CompanyPercent of imported REGOs 2018/2019
British Gas Trading Ltd32%
Haven Power Ltd25%
SmartestEnergy Limited12%
Other (no more than 7% each)31%

Of the top two companies,  British Gas Trading Ltd. imports certificates for biomass energy from Italy biomass and also wind power from Sweden and Finland. Haven Power Ltd. has mainly non-domestic customers and they concentrate on Italian certificates, especially solar photovoltaic (PV).
REGOs imported by British Gas Trading Ltd 2018/2019. Data from [3]

REGOs imported by Haven Power Ltd. 2018/2019. Data from [3]

Brexit is unlikely to change things very much. EU REGO certificates will continue to be recognised in this country even if there is no deal [4].

There has been some fraud reported in the REGOs market to do with VAT. There is a scam where companies sell REGOs and charge VAT, but then disappear before they have paid the VAT to HMRC. However this scam has been used on other goods as well as  REGOs [5].

As it happens, I get my energy from Ecotricity at the moment. I was thinking of switching to Octopus to get their flexible tariff based on wholesale prices - but based on the Which report I have changed my mind.

[1] How green is your Energy Tariff (Which) September 2019

[2] Stop trading renewable energy supply certificates, speed up the transition ( April 2019
[3] Recognised Guarantees of Origin 2019 (OFGEM) September 2019

[4] Generating low-carbon electricity if there’s no Brexit deal ( April 2018

[5] HMRC cracks down on gangs over renewable energy VAT fraud (Guardian) June 2019

1 comment:

  1. Fascinating. I've always wondered to what degree green tarrifs actually made any difference to the generation supply (outside good Energy and Ecotricity). I guess this is an indicator that there is now more demand than the suppliers just had anyway (but not in Italy).
    I've not seen anyone else mention or dicsuss this data.


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