What is green electricity? March 2, 2009

Ofgem has recently released its final guidelines on what constitutes “Green” electricity.

This has been an issue for several years now as there is much confusion of the validity of what green electricity actually constitutes.

Current regulations require all electricity suppliers to provide a proportion of their electricity via renewable sources, such as hydropower, wind or biomass. Every unit of renewable electricity that is produced has a Renewable Obligation Certificate (ROC) attached to it and all electricity suppliers are required to meet their quota.

If a provider doesn’t meet their target (currently 9.1%) then they have to pay a penalty charge for their shortfall or buy ROCs of other providers. This pot of money is then redistributed amongst those suppliers that have exceeded their annual target.

In theory, this is meant to encourage the amount of renewable electricity that is generated, however, there are currently some flaws in the system.

Some electricity companies are packaging all of their renewable electricity into single tariffs claiming that all of the electricity is green. In fact, all they are doing are placing all of the ROCs that they have accrued into the one “green” tariff, leaving them to market the electricity as 100% renewable. As a consequence, the amount of renewable generation has not increased.

The current system also means that companies, such as Ecotricity and Good Energy, who seek to provide a large proportion of their electricity from renewable sources, can sell their ROCs to the more polluting providers who have not attempted to increase the proportion of renewable electricity that they supply. Once again, it can be argued that this does not result in a lower carbon electricity network.

As a result of this mess, Ofgem have decided to introduce an independent accreditation scheme that will ensure that electricity is only assumed “green” if the electricity providers can show evidence that they are contributing an additional environmental benefit beyond their existing renewable obligations.

The new scheme hopes to be up and running in the summer of this year.