Friday 22 July 2022

Green energy transparency can bring more businesses on the net zero journey

SSE powers change. And we want that change to be lasting, fair and transparent. That’s why, as well as investing £12.5 billion in new renewables sources and other infrastructure by 2026, we’re exploring what the future of green electricity buying could look like.

Green demand is high; but can suppliers go further on transparency?

Today, there’s unprecedented demand for green energy, and around 40% of power in the British grid comes from renewables.¹

Each unit of renewable electricity is tagged with a certificate, called a REGO (Renewable Energy Guarantee of Origin). Electricity suppliers use REGOs to offer green tariffs, and organisations can use these REGO-backed tariffs to lower their carbon emissions for reporting purposes.

Importantly, electricity suppliers just need to own the certificates: they don’t have to buy the associated green electricity. This has led to a certificate market where REGOs can be sold by renewable generators and bought by suppliers.

SSE believes now is the time for the system to evolve. Customers want greater transparency about where their renewable energy comes from and providing this will help increase confidence and trust.

SSE Energy Solutions’ green tariffs are 100% backed by both the electricity and the REGOs purchased from the wind farms and hydro stations that SSE owns and operates. We think this should be the minimum standard for green tariffs so, as a near-term measure, we’ve called for a change to the government’s rules – ensuring suppliers must buy both the green energy as well as the associated certificate before declaring a tariff green.

Moving from yearly reporting to 24/7 tracking

But we can go further.

Renewable generation varies with the weather – some days are windier or sunnier than others. However, carbon emissions are reported based on annual calculations: current reporting requirements mean organisations match their annual electricity usage with an equivalent number of REGOs.

A customer can therefore buy, through their green tariff, enough REGOs to cover their electricity use for a year – but the REGOs might have been generated at a time when the customer wasn’t using electricity. For example, a customer with lots of overnight demand can buy a green tariff backed by solar REGOs.

To put it another way, customers might consume 100% renewable electricity on an annual basis but consume a much smaller percentage on an hourly basis.

[caption id="attachment_238791" align="aligncenter" width="2560"] This can change, and it starts with analysing how customers’ hourly consumption corresponds with the hourly output of renewable assets. The ultimate objective would be to have all customer demand 100% matched to renewable generation on an hourly basis, which could deliver a wide range of benefits to the system and customers.[/caption]

SSE has already started to explore ways in which this can be done and will be providing updates on its progress. We’ve also recently joined the Energy Tag initiative which is leading some of the industry’s work in this area.

We’re not proposing that everyone can achieve 100% hourly matching overnight: it will take time. But it is an exciting next step for both suppliers and customers to consider as we all move towards net zero.