The Energy Collective Group

This group brings together the best thinkers on energy and climate. Join us for smart, insightful posts and conversations about where the energy industry is and where it is going.

10,030 Members

Post

Europe Should Look at Consumption of Renewables, Not Just Production

hydropower plant Norway (photo Statkraft)

Hydropower plant, Norway. (Photo: Statkraft)

European consumers actively chose to buy more than 550TWh of renewable electricity last year, 20% of all electricity consumption. Yet EU member states are not required to report on consumption of renewables, only  production. This gives a false picture of what is happening in the market, say business representatives involved in purchasing and producing green electricity. Dual reporting – of consumption and production – would show that some countries are much further ahead in meeting renewables targets than official statistics show, while others are doing less well. It would also stimulate renewable energy production by putting consumers in the driving seat. The upcoming review of the Renewable Energy Directive presents an opportunity to correct this flaw.

Across Europe, consumers are choosing renewable electricity and are doing so on a large scale. Last year consumers actively chose to buy more than 550TWh of renewable electricity, roughly equivalent to 20% of all European electricity consumption. If one includes green electricity that is subsidized with citizens’ taxes, such as in Germany, where such electricity is automatically deemed to be owned by the public, 770 TWh of renewable electricity was consumed in Europe, according to RECS International, an organisation that represents a wide range of market players supporting a standardised tracking system for electricity consumption. [i]

“This is a phenomenal accomplishment by European consumers yet it is not reported in national or European statistics,” says Jared Braslawsky, secretary general of RECS International. “We are always focusing on production, not consumption.” 

“It’s incredible how little information on the corporate and consumer demand-side of electricity use there is. I couldn’t believe it when I started looking”

Every year, as a consequence of the Renewable Energy Directive, adopted in 2009, governments report to Brussels on their progress towards the 2020 renewable energy production targets. They calculate “the gross final consumption” of renewable energy as the quantity of electricity produced from renewable sources.   Yet different pictures emerge about a country’s renewable electricity depending on whether production or consumption is measured, says Braslawsky.

For example, according to 2014 Eurostat figures 8% of all electricity consumed in the Netherlands is renewable. “That statistic is based on how much renewable electricity is produced in the Netherlands”, says Braslawsky. “But actual consumption is much higher at 40%. Why? Because consumers are choosing to buy renewable electricity which is imported from other European countries.”

Consumer-centred

Consumer surveys show that citizens are willing to pay a premium for renewable electricity, according to Jörg Mühlenhoff, renewable energy spokesperson of BEUC, the European Consumer Association. In France and Germany people are willing to pay up to 10% more for 100% renewables-powered electricity, while in the Netherlands a third of consumers surveyed were willing to pay up to €12 more per month for renewables. 

In 2015 German electricity end-users consumed 248.5 TWh of renewable electricity (160.9 TWh supported through feed-in tariffs and 87.6 TWh certified green electricity), roughly a third of which was imported from producers outside Germany.  “In terms of renewable electricity production Germany has roughly achieved its 2020 target but in terms of consumption German consumers have more than surpassed the country’s target of 200 TWh,” says Braslawsky.

With dual-reporting consumers in Norway would see that by exporting much of their renewable electricity to the Netherlands they are in effect now consuming non-renewable electricity

RECS wants these facts – what consumers are choosing – to be mandatorily reported Europe-wide. “We’d like to see a dual reporting obligation in the new renewable energy directive,” says Braslawsky. “Otherwise we are miles away from the European Commission’s so-called consumer-centered energy policy.”

Corporate best practice

Dual reporting, in which both production and consumption data are gathered and communicated, has already become standard practice for corporate renewable energy users, says Braslawsky.

“5,500 companies in one reporting agency alone, CDP (formerly the Carbon Disclosure Project), report electricity usage based on a production mix and a company-specific consumption mix, a method developed by the Greenhouse Gas Protocol, an international tool for greenhouse gas accounting,” he says.

RE100, the global initiative of big businesses such as Google, Microsoft and Ikea, which have committed to sourcing 100% of their electricity from renewables in the future, supports the concept.  “Dual reporting is a really important area and definitely something that we support,” says Emily Farnworth, RE100 campaign director. Most RE100 members have operations in Europe and they have an increasing desire to know more about their electricity options, she says.

“We believe that greater transparency will stimulate renewable energy production because it will become clearer how great the demand really is”

“It’s incredible how little information on the corporate and consumer demand-side of electricity use there is,” Farnworth adds. “I couldn’t believe it when I started looking. We haven’t found any dataset, at least in the public domain, on electricity use. We seem to still be in a very traditional mindset focused on what generation capacity is needed.”

A spokesperson for multinational Philips, a RE100 member that has committed to use 100% renewable electricity by 2020, and has increased its use of renewable energy from 8% to 55% in 6 years, says the company “appreciates the transparency the dual reporting will bring to the market. As a company, we also report in a very transparent way on our use of renewable electricity, for example in our Annual Report 2015.”

Tom Lindberg, managing director of ECOHZ, a Norwegian renewable energy developer, also supports the call for dual reporting. “Let’s show both,” he says. “Yes, let’s recognise a production mix in a country which allows us to reach the 2020 targets, but let’s also recognise that a country has this customer-driven demand. It should be recognised and communicated.”

BEUC’s Mühlenhoff is less convinced about the need for dual reporting. “I honestly don’t see the point in it,” he says. “Most member states are complaining about the high level of statistics they are required to send to Brussels. There is already enough transparency in terms of what member states are doing.”

What consumption data?

Would national governments need to do a lot to report their renewable electricity consumption data?

“The good news,” says Braslawsky, “is that governments wouldn’t have to do a huge amount as much of the consumption information is already available. It just isn’t being looked at and reported in the right way.”

For example, research by green infrastructure advisers, Grexel, published this August, uses publically available data from a number of sources to monitor renewable electricity consumption in Austria, Belgium, Germany and the Netherlands.

The data includes:

  • monthly statistics from ENTSO-E, the European Network of Transmission System Operators for Electricity
  • data from the Association of Issuing Bodies (AIB), whose members oversee the certification of renewable electricity to the European Energy Certificate System (EECS) standard
  • non-EECS national certified renewable electricity market reports
  • local energy authorities’ reports of renewable volumes non-eligible for certification
  • electricity targets reported in National Renewable Energy Action Plans

The most accessible data, according to Braslawsky, comes from EECS standard certified electricity that has been issued with a Guarantee of Origin (GO). (See box.)

In some countries, notably Germany, a high share of renewable production is not issued with a GO due to legislation that prevents feed-in tariff supported electricity from receiving GOs. Nevertheless, data concerning this electricity, which Grexel calls supported electricity – and which grew in volume Europe-wide by 12.5% to 216 TWH between 2014-2015 – can be easily included in national dual reporting requirements.

Benefit to consumers

Why is the reporting of green electricity consumption so important, according to RECS? After all if you look at the whole European picture, all the renewable electricity that is produced is consumed. But according to Braslawsky this misses the point. Dual reporting, he says, would greatly improve transparency for consumers. It’s about putting customers in the driving seat, which is one of the official goals of the Energy Union.

Current regulations around the disclosure of the fuel-mix used to generate electricity are complex and confusing for consumers, he notes. “There is no standard format for fuel-mix reporting and limited coordination on this between countries.”

How do we know when energy users have consumed renewable electricity? 

There are different ways but one system relies on the issuing of electronic attribute tracking certificates known as Guarantees of Origin (GOs). These are issued to energy producers for every 1 MWh of renewable electricity generated. 

GOs can be issued for all types of electricity generation – as is the case in Austria, Switzerland and Sweden – but are only required for renewables under Article 15 of the Renewable Energy Directive. 

Renewable electricity GOs fall into two categories – those within the European Energy Certificate System (EECS) subscribed to by members of the Association of Issuing Bodies (AIB), and those certified by national bodies outside of this standard. 

EECS GOs are tradable across national borders among countries that have joined the AIB and that are connected to its electronic hub. 

Once certified electricity is consumed, its GOs are cancelled in order to avoid double counting. “You can only prove that renewable electricity has been consumed when the GOs have been cancelled,” says Braslawsky. “Cancellation volumes give the best indication of a country’s GO market as they demonstrate actual demand.”

In 2015 the increase in cancellations of GOs together with the decrease in volumes of issued GOs, created a shortage of supply for the first time, according to a report by Grexel published this year entitled ‘Development of the Guarantees of Origin market, 2009-2015’.

In 2015, according to data from the AIB, 34% of all renewable electricity production in the EU and the EEA as a whole was certified EECS. This percentage is set to increase. 

Twenty-one countries are fully signed up to the EECS standard. Spain, which has 70 TWh of available GOs, recently joined. Lithuania’s regulator is awaiting government approval to join; Greece is actively applying; and the Portuguese and British competent bodies are presently in discussion with the AIB about joining, according to Dirk Van Evercooren, president of the AIB. 

In total the consumption of half of Europe’s renewable electricity production is accounted for by cancelled EECS and non-EECS GOs, according to Grexel. 

Showing the collective consumption of all renewables in a country – through dual reporting – would help counterbalance this lack of clear information. “For example there is a potential problem of dual-perception: consumers in two countries, say Norway and the Netherlands, thinking that they are both consuming renewable electricity.” With dual-reporting consumers in Norway would see that by exporting much of their renewable electricity to the Netherlands they are in effect now consuming non-renewable electricity.

If applied Europe-wide dual reporting would bring much greater clarity to the information available to those consumers – both household and corporate – who are actively choosing green in ever greater numbers, as well as to policy makers. This would motivate suppliers to source more renewable energy. “We believe that greater transparency will stimulate renewable energy production because it will become clearer how great the demand really is,” says Braslawsky.

Braslawsky says a dual reporting obligation should be included in the new Renewable Energy Directive. “It’s a relatively small action that is completely in line with EU ambitions to empower the consumer. Most importantly it would acknowledge the businesses and citizens who are really in the driver’s seat.”

by

Iva Pocock (@iva_pocock) is a freelance journalist based in Ireland.

[i] This excludes 359 TWh of renewable electricity production that was neither certified nor supported, therefore not actively chosen by consumers either through their purchase of green energy or subsidization through taxes.

Original Post

Energy Post's picture

Thank Energy for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.

Discussions

Jarmo Mikkonen's picture
Jarmo Mikkonen on October 7, 2016

Benefits to consumers?
Why is the reporting of green electricity consumption so important, according to RECS?


Consumer surveys show that citizens are willing to pay a premium for renewable electricity, according to Jörg Mühlenhoff, renewable energy spokesperson of BEUC, the European Consumer Association. In France and Germany people are willing to pay up to 10% more for 100% renewables-powered electricity, while in the Netherlands a third of consumers surveyed were willing to pay up to €12 more per month for renewables.

RECS members include Fortum in Finland. Fortum electricity generation in Finland is nuclear & hydro, with a bit of coal and biomass on the side. However, all the electricity they sell to private customers is branded “Renewable”, hydro and windpower, although they have almost zero wind generation capacity. They sell all their electricity to Nord Pool and buy it back with suitable labels of origin. Of course it’s all very much virtual trading and it is probable that the environmentally concerned private customers who buy Fortum Tuulisähkö (Wind Electricity) in the Helsinki area actually get their juice from the two nuclear reactors owned and operated by Fortum 100 km away. And coal electricity actually disappears…beautiful.

https://www.fortum.fi/en/sustainability/environmental-responsibility/sus...

Mirte Geenen's picture
Mirte Geenen on October 10, 2016

RECS International understands your issues but has a concern that the core message is being missed. RECS International does not approve or disapprove of the type of electricity that is being produced by a generator, rather it is important to report and monitor the factual production. This production – unless there is a physical cable directly between the generator and the electricity user – cannot be tracked in a physical way from the generator to the user. This is done on the basis of contracts, which are based on instruments (the GO), a 1-for-1 representation of the factual generation that took place from a specific generation device. If we wish to make the electricity market a consumer-driven market we have to give consumers a choice. Your solution says that consumers have no choice and where except to move, for us this is unacceptable in a market where electricity can and is distributed across the single European market. The GO is the way to give consumers this choice. I

Coal electricity does not disappear as you mention. All non-certified electricity is captured in the residual mix (http://www.reliable-disclosure.org/) RE-DISS reports suggest that Finland is more than 50% coal and nuclear (http://www.reliable-disclosure.org/upload/234-D7.2_RMCalculation.pdf) and this is consumed by almost 75% of the population. This is because only 25% makes the choice to consume electricity from a specific origin (via the GO). A better system, and one we are lobbying for, is that all consumers are informed with the GO of the origin of their electricity – regardless of renewable or non-renewable. This way consumers can be held responsible for their choices and the where electricity is eventually consumed is more transparent.

Online forums are often a difficult method to discuss these topics in more detail. Please feel free to reach out to the secretariat with your further questions or concerns! Thanks secretariat@recs.org

Jarmo Mikkonen's picture
Jarmo Mikkonen on October 10, 2016

Your solution says that consumers have no choice and where except to move, for us this is unacceptable in a market where electricity can and is distributed across the single European market.

I have no “solution”, I make observations. One of which is that there is no single European electricity market. There are several.

RE-DISS reports suggest that Finland is more than 50% coal and nuclear (http://www.reliable-disclosure.org/upload/234-D7.2_RMCalculation.pdf) and this is consumed by almost 75% of the population. This is because only 25% makes the choice to consume electricity from a specific origin (via the GO). A better system, and one we are lobbying for, is that all consumers are informed with the GO of the origin of their electricity – regardless of renewable or non-renewable. This way consumers can be held responsible for their choices and the where electricity is eventually consumed is more transparent.

I have no problem with GOs. Very clever branding of a commodity. Although, as I pointed out, your “wind electricity” may in reality come from a nuke reactor. If people want to pay more for wind or solar, fine.

However, Finnish electricity generation in 2015 was 79% carbon-free. It will be close to 90% in 2020. I see no need to hold Finnish consumers “responsible for their choices” climatewise. The juice they get from the grid is among the cleanest carbonwise in the world – branding or no branding.

Jarmo Mikkonen's picture
Jarmo Mikkonen on October 10, 2016

RE-DISS reports suggest that Finland is more than 50% coal and nuclear and this is consumed by almost 75% of the population. This is because only 25% makes the choice to consume electricity from a specific origin (via the GO). A better system, and one we are lobbying for, is that all consumers are informed with the GO of the origin of their electricity – regardless of renewable or non-renewable.

In Finland, the law requires generators and vendors to tell where the electricity comes from:

Act on Verification and Notification of
Origin of Electricity

(1129/2003)
Chapter 1 – General provisions
Section 1 – Objectives
This Act provides procedures by which a power plant operator can verify the origin of the electricity he has generated with production methods expressly provided for and from energy sources expressly defined, as well as an electricity vendor’s minimum obligations concerning notification of origin of electricity.

http://www.finlex.fi/en/laki/kaannokset/2003/en20031129.pdf

So, Finnish people alrealy know how the electricity they buy is generated. No need for GOs.

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »