UK green electricity tariffs: what’s the point in energy efficiency and on/near-site renewables?
A possible view of those purchasing renewable electricity in the UK is that they no longer need to be so concerned by how much electricity they use. Some may think that using more is even a good thing, as they are supporting something that they value and putting money in the renewables industry.
Most sustainability professionals would disagree, but struggle to explain it to decision-makers when making the case for energy efficiency investment or setting strategy.
Here are four good reasons why we should still prioritise electricity consumption reduction projects and on-site/near-site renewables, where potential exists:
Can you afford to waste renewable electricity? (££)
Electricity in the UK is already expensive and new renewable tariffs linked to UK generation are now considerably more expensive than they were. In late 2023 REGO prices exceed £20/MWh resulting in a +10-20% premium on ‘standard’ tariffs, whereas a few years ago there was little or no premium at all. So if you are procuring renewable electricity, the payback period of electricity consumption reduction measures can now be significantly shorter than under a standard tariff. On-site/near-site generation can further reduce exposure to market price variations.
Green tariffs are not ‘carbon-free’
The majority of renewable tariffs and claims are based on the purchase of electricity attribute certificates (REGOs, EU GOOs, RECs). Some procurement options are better than others, but most have no influence on the amount of renewable generation on the grid[1]. This is described as having little or no ‘additionality’ i.e. the renewable energy would have been generated and consumed anyway. There are also embodied carbon emissions and wider environmental impacts to consider. The emissions associated with the construction of renewable generation and associated infrastructure is often overlooked in ‘carbon-free’ statements. The UK Government has announced its intention to reform the REGO market to make consumer choices more transparent and impactful. The move to more granular power accounting is touted as a part of the solution – i.e. matching renewable production and demand on an hourly basis, rather than annual reconciliation[2].
Tariffs promoting load shifting to periods of abundant renewable generation are already emerging as niche products, but the market needs reforming to make the mainstream price signals to work, and for the carbon accounting to match physical reality. Until the market mechanisms and associated carbon accounting methodologies are reformed, believing that a regular green tariff makes electricity consumption ‘emissions-free’ is wishful thinking.
Using more renewable electricity forces others to use more dirty power.
Even if you have a strong additionality claim, for example through having on-site generation or procuring via a long-term PPA that brought on new generation, ‘wasting’ renewable energy delays how far and fast the grid can decarbonise as a whole. The marginal kWh in most electricity systems is still generated by fossil fuel. Until grids are fully decarbonised, fossil generation will be deployed more frequently to provide for other consumers.
Reducing reliance on grid infrastructure.
Grid capacity is a common constraint for electricity consumers and producers of all scales, limiting options for sites e.g. future expansion. Energy efficiency and on/near site renewables can ease these pain points and add resilience to an organisation. Grid constraints are likely to be exacerbated as companies get further into their decarbonisation journeys, with electrification often being part of the solution and adding more loads. More broadly, grid capacity is already a major bottleneck for decarbonising the UK energy system, requiring huge investment. Making best use of every kWh means that less infrastructure is needed to deliver the energy services that we need, reducing costs for all.
In short, renewable electricity is still a precious resource in most power grids
Despite massive investment in alternative energy sources, the share of fossil fuels in World’s energy mix is much the same as 50 years ago. New generating capacity is being soaked up by growing demand. To start actually displacing fossil fuels we need to make each kWh of renewable electricity go as far possible and generate more where we can.
Please do get in touch if you would like to discuss any of the topics raised in this article or Verco’s services in greater detail:
