The principles in Ofgem's guidelines were that:
- All electricity sold was matched by renewable energy.
- The tariff delivered additional environmental benefits.
- Tariffs were overseen by an independent panel which enforced rules on transparency and annual audits.
All tariffs had to be supplied by members of the scheme.
Matching by renewable energy
Matching (also known as the Volume Test by Ofgem) required members to hold sufficient Renewable Energy Guarantees of Origin (REGOs) to cover all the usage of customers on green tariffs, and to have retired any associated Renewable Levy Exemption certificates (LECs). This prevented the same unit of green electricity being sold twice, for example to domestic consumers using REGOs, and in the commercial market using LECs.
Additional environmental benefits
There were four possible forms of additionality:
- Purchase of approved traded offsets, historically under either:
- The Government's Quality Assurance Scheme (QAS) with a required offset of 1.8tCO2/customer (the QAS was closed on 30 June 2011) or
- The Gold Standard with a required offset of 1.0tCO2/customer
- Green Funds, where the member was required to invest in new community renewables schemes (which could include heat as well as electricity) to produce annual savings of at least 50kgCO2/customer. Members were not allowed to retain any benefits of the installation such as ROCs, LECs or REGOs, but could purchase energy from the beneficial owners.
- Energy efficiency schemes, where the member invested in energy efficiency or behavioural measures to produce annual savings of at least 50kgCO2/customer. Measures were allowed to be in customers' premises and included insulation and heating system improvements.
- Any other robust, quantifiable scheme subject to the approval of the panel. No such schemes were introduced, although approval was given in principle to one based around electric vehicle charging points.
Additionality, savings were based on Ofgem average UK electricity consumption of 3,300kWh per customer, equivalent to around 1.8tCO2. Savings had to be scaled up proportionately for non-domestic customers.
Members gained approval through completing a proforma, including "Tier 3" information about the tariff that includes the summary information that was made available to consumers on the Green Energy Scheme website,which permitted prospective customers to choose a tariff based on their preferred sources or energy and method of additionality. Audits were made in arrears for the period to the anniversary of approval of the tariff. All tariffs were found to comply with the main principles of the scheme, although the scheme did require some changes to how tariffs were marketed to avoid misleading consumers.
The independent panel
The panel consisted of a maximum of five members:
- Solitaire Townsend (Chair); co-founder of Futerra Communications Ltd
- Dr Nick Eyre; Programme Leader of the Lower Carbon Futures group in the Environmental Change Institute at the University of Oxford
- Virginia Graham; Chief Executive of Renewable Energy Assurance Ltd
- Dr Stephen Andrews; independent energy consultant
- Dr Sally Uren; Deputy Chief Executive of Forum for the Future
- Simon Retallack; Head of Climate Change at the Institute for Public Policy Research
- Giles Bristow; Director Programmes, Forum for the Future.
Solitaire Townsend, Nick Eyre and Virginia Graham were panel members for the entire duration of the scheme.
The panel was supported by a secretariat, the National Energy Foundation. The panel and secretariat administered the scheme through a rule book, which detailed how Ofgem's rules (which were not mandatory) should be implemented in practice.
Choice of tariffs
At its maximum, there were 11 publicly-certified domestic green tariffs and two non-domestic ones, with all the 'Big Six' suppliers (British Gas, E.On, EDF Energy, npower, Scottish Power and SSE) and Good Energy marketing tariffs. Some companies offered a choice of tariffs to permit either traded carbon offsets or smaller scale community schemes to be selected. There were also a couple of white label tariffs certified, allowing customers to sign up through an affinity partner. Around 100,000 domestic customers benefited from certified green tariffs at any time, although the number of non-domestic customers was lower due to a restriction imposed by Ofgem that such tariffs could only be sold to customers with an annual electricity consumption below 55,000kWh.
Ending of the scheme
Despite its success in providing assurance to customers of the value of their green electricity supplies, the tariffs certified by the scheme failed to attract large numbers of customers. As a result, when Ofgem announced a limit of four domestic tariffs for each supplier, none felt able to retain a permanent certified green tariff in their core offer. Existing customers were able to remain on certified tariffs until 2015, but certification ended on 31 March 2015 when the full force of the 'Retail Market Review' (RMR)came into effect. The panel held its final meeting in July 2015, reviewing any outstanding audits.
Future prospects for green energy in the UK
As part of the RMR, Ofgem introduced mandatory rules around marketing green electricity. Unlike the voluntary rules implemented through the Green Energy Supply Certification Scheme, the new ones were incorporated into a licence condition. While they retained the key concept of matching, the additionality elements were significantly watered down. Coupled with the limitation on the number of core tariffs, the large suppliers withdrew from the green supply market, although several smaller suppliers, including some who were not part of the scheme, continue to market renewable electricity tariffs. Although there is no longer any additional third party certification, it is possible to obtain tariffs that comply with the specific requirements of the European EKOenergy label.
If you would like to discuss further with the National Energy Foundation about ways in which we might support the responsible sale of green electricity, including the EKOenergy label, please contact Ian Byrne.