It’s time to acknowledge rising consumer demand for renewable energy

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of PLC.

Consumers across the EU are turning to renewable energy tariffs. [steve p2008/Flickr]

Across Europe, consumers are choosing renewable electricity and are doing so on a large scale. It’s time to recognise this demand for renewable energy by reporting on national consumption, and not only production, of renewables, writes Jared Braslawsky.

Jared Braslawsky is secretary-general of Renewable Energy Certificate System (RECS) International. He is a leading expert in the market for guarantees of origin and other electricity tracking instruments. He recently launched the International REC Standard Foundation, which implements and standardises attribute tracking systems around the globe.

Dual reporting of renewable electricity can support consumer choice, showing the impact of collective action – and is in line with EU ambitions to empower consumers.

According to the European Commission, citizens are at the core of the EU’s most ambitious energy strategy to date, the Energy Union. Today, there is legislation in place that requires national governments to report national figures of renewable energy production. Mandatory reporting of national consumption figures would ensure consumers are also part of the national statistics.

This is the first step towards placing the energy consumer in the driver’s seat. If we expect the consumer to play a larger role in the energy transition we must also acknowledge their decision to purchase renewable electricity, and not only measure the production of renewables as we do now.

Historically, electricity producers have been centralised, state-owned, top-down entities. The consumer had no choice of supplier, or of the source of their household electricity supply. The legacy of this traditional mode of energy production means that the energy sector is today the only sector where we are measuring the production – and not the consumption – of a commodity. Take electric vehicles for example: to measure real progress on the ground, we count how many electric vehicles are on the road in Norway, not how many are being produced in Germany.

Across Europe, consumers are actively choosing renewable electricity and are doing so on a large scale. Last year European consumers made the conscious effort to purchase renewables for more than 550 TWh of electricity, equivalent to roughly 20% of all electricity consumption in Europe. If we include electricity that is not eligible for private consumption – such as German production that receives the feed-in tariff and is consumed equally by all German electricity end-users – nearly 770 TWh of citizen-led renewables was consumed in Europe.

Many businesses are already voluntarily reporting their CO2 emissions from electricity usage as part of calculating their annual carbon footprint. One reporting agency alone, CDP (formerly the Carbon Disclosure Project), had more than 5,500 companies voluntarily reporting their emissions in 2015 – accounting for nearly 17% of global emissions. Linked initiative RE100 supports companies in achieving a public goal to procure 100% of their electricity from renewable sources of energy, and includes global players such as Google, IKEA, Philips, Microsoft, Johnson & Johnson and Procter & Gamble.

The demand for renewable energy from these companies and millions of households around Europe is not currently recognised in any European statistics. Shouldn’t we recognise this positive choice for renewable energy in national reporting?

CDP companies report CO2 emissions from electricity usage based upon a national/regional production mix (location-based accounting) and a company-specific consumption mix (market-based accounting), a method developed by the Greenhouse Gas Protocol. This voluntary dual reporting ensures companies are responsible – for both where they consume electricity, but also, what market choices they make for their company’s electricity consumption. Dual reporting would be similar for national governments: report the national production of renewables and report the national consumption of renewables.

Already member states measure national renewables production through the guarantee of origin (GO) instrument defined in the Renewable Energy Directive (Article 15). GOs are electronic certificates issued to renewable energy producers for every 1 MWh of energy produced. The electronic document is used to guarantee to the consumer that the energy delivered is produced from renewable sources. Once the energy is sold, the GO is then cancelled to avoid double counting. Collaboration over the last fifteen years between national regulators, market players, stakeholders and consumers has resulted in a robust and reliable GO system.

The European market for renewable energy, documented with GOs, increased by 26.5% in 2014 compared to 2013. In 2014, the demand surpassed 300 TWh for certificates adherent to the European Energy Certificate System (EECS) standard, held by the Association of Issuing Bodies (AIB). This is nearly one tenth of all electricity demand in Europe (approximately 3,300 TWh) and one third of all electricity from renewable sources in Europe (approximately 900 TWh).

In 2015, for the first time, an increase in cancellations of GOs, (and therefore of renewable energy demand) together with the decrease in issuing volumes, created a shortage of supply. This scarcity of supply marks a turning point in the development of guarantees of origin, setting the market in a good state for 2016 and the years to come.

With limited exceptions, guarantees of origin are issued by members of the Association of Issuing Bodies (AIB) – mostly transmission system operators, electricity regulators and energy market operators. Measuring consumption of renewables based on GOs is therefore relatively simple to implement, and will highlight the increasing demand from consumers and businesses for renewable energy.

The European Commission is currently preparing proposals for a new renewable energy directive (REDII) for the period 2020-2030, with a draft anticipated before the end of 2016. It’s not too late to include a dual reporting obligation in the new directive to support the citizens and businesses that are driving the European energy transition and show that collective action can make big changes.