This is the presentation I used in a webinar for Leonardo Energy on 13 November 2017. It's about how Guarantees of Origin work and how they make green energy contracts reliable. Corporate electricity consumers now adopt sustainability strategies, choosing only electricity from renewable sources. Some go further and engage in Renewable Power Purchasing Agreements. In both cases, Guarantees of Origin are instrumental.
3. Simple? With 2 production facilities…
…things get a little more complicated already
4. On the electricity grid, power has neither…
smell,
nor
colour
And that distinguishes electricity from other products
It’s impossible to label, nor to package the green electricity
separately!
Fuel mix
5. And if we now add a second consumer…
How to make green electricity reliable?
…things tend to get really complicated!
6. Why am I telling this story?
I am not an electricity supplier
I don’t produce electricity
But AIB’s focus is on a key element in this story:
the Guarantee of Origin
We are an international not for profit association with members
in 20 countries (and growing)
Our goal is to have Europe work together around the instrument
that makes green electricity trustworthy
Association of Issuing Bodies
8. Status of AIB membership in Europe
MembersMembers
Formal applicantFormal applicant
Active Observers
Countries to observe
9. AIB’s activities
• Developed and maintains the European Energy Certificate
System, which acts as a de facto standard
• Operates a hub for trading GOs
-> Vital role in GO market and disclosure
• Has taken over operational tasks from RE-DISS (2016):
– Residual mix calculation
– Country profiles
• Member audits/reviews
• Fraud prevention
• Policy guidance: Reflection Paper RES Directive (June 2015),
Reaction to the proposals on GOs in RED II,…
10. European framework – 3 Directives
Internal Energy
Markets Directive
2009/72/EC
Energy
source
disclosure
RES Directive
2009/28/EC
RES
GOs
Energy Efficiency
Directive
2012/27/EC
HEC
GOs
12. So what are GOs for anyway?
Given that GOs are for "proving to final customers the share or
quantity of energy from renewable sources in an energy
supplier’s energy mix“, so called ‘Disclosure information’,
their purpose is not (explicitly) to support or stimulate new
investments in renewable production capacity!
GOs should be seen as an instrument for consumer
empowerment, not for direct investment stimulation
GOs are time stamped and expire if not used, but then end up in
the residual mix, and cannot be claimed by a single consumer…
13. Disclosure and GOs…
… are two sides of the same coin
•GO is proof of production
•Disclosure information is proof of consumption
From production to consumption is one single process chain,
so from a policy perspective, they need to be looked at as one
integral process
The current disclosure process is on an annual basis
The Clean Energy Package opened a discussion about the lifespan
of the GO…
14. Why would you be bothered with GOs?
Corporate Social Responsibility reporting
Carbon Footprinting
Environmental footprint of products and organisations
Green energy procurement
Climate leadership
Science Based Targets Initiative
Greenhouse Gas Protocol Corporate Standard (Scope 2 emissions)
RE100/WeMeanBusiness
Power Purchase Agreements
…
17. Corporate consumers are getting pickier and rightly so!
Trends:
Locally produced
From particular (renewable) sources:
– Solar
– Wind
– Hydro
– …
Unsupported production
From recently build facilities
Or a combination of all of the above…
Trends in electricity sourcing
GOs
enable
such
choices!
18. CO2 is an important part of this!
Grid CO2:
600g/kWh
Hydro CO2:
0g/kWh
Nuclear CO2:
0g/kWh
Wind CO2:
0g/kWh
Coal CO2:
800g/kWh
19. Mission of GOs (according to AIB)
Electricity consumers must be able…
•To choose power from a specific origin
•To trust in the system that guarantees green electricity: no
double counting or ’greenwashing’
•To be informed and understand how their decisions influence
the planet and society,
•To take responability for their impact on the environment and
the climate, be accountable
•(for multinational consumers) To be able to use the same
concept and processes all over the AIB-area
21. Corporate sustainability strategies
Level 1: on site investment
No explaining to do, marketing is no-brainer
Need for financing, physical circumstances must be suitable, lot’s of
partnerships and/or responsibilities
Level 2: off site investment, e.g. Power Purchasing Agreement with a
newly built or to be built wind park
Need for finance but can be shared, lot’s of partnerships and/or
responsibilities, but how to prove you are using the power from the
wind turbines?
You need GOs!
Level 3: sourcing green electricity: you need GOs!
22. Additionality?
A rising demand for electricity from renewable sources will
contribute to more production
It’s basic economics!
GO is not homogeneous, generic instrument: you can ask for
locally produced, for specific technologies, for newly built plants,
…!
Greenwashing?
‘Greening coal power’ is not possible, you can only buy electricity
and then buy GOs to make sure that you use green electricity
But electricity suppliers must inform consumers to the extent
they desire!
Are you making a difference?
23. Google it! Google on additionality
“Additionality is a tricky concept”
Imagine a power company built a wind farm many years ago. They built it because they thought it was good
business at the time, but the fact that it was a renewable resource was not important to their decision. They
currently sell the power into the grid, and they’re happy with their investment. Moreover, this power
company has no plans to build any more wind farms. The power company figures it could sell Google the
output of their wind farm; for their existing customers they would just make up the difference by buying some
other source of energy, perhaps from the coal plant down the street.
Say the wind project doesn’t yet exist. There is a company that wants to build one, but they need a reliable
customer to help them make the project financially sound. In this scenario, signing up would spur the
development of additional renewable power.
Perhaps a company does own an operating wind project, and is known to be a serial developer of renewable
energy projects. They use the cash flow from one project to finance the next or to convince Wall Street that
they have bankable income. As in the previous case, we would consider the power from this wind farm as
additional since we have confidence that the proceeds will be used to finance additional renewable power.
24. Google it! Google on additionality
“Additionality is a tricky concept”
Imagine a power company built a wind farm many years ago. They built it because they thought it was good
business at the time, but the fact that it was a renewable resource was not important to their decision. They
currently sell the power into the grid, and they’re happy with their investment. Moreover, this power
company has no plans to build any more wind farms. The power company figures it could sell Google the
output of their wind farm; for their existing customers they would just make up the difference by buying some
other source of energy, perhaps from the coal plant down the street.
Say the wind project doesn’t yet exist. There is a company that wants to build one, but they need a reliable
customer to help them make the project financially sound. In this scenario, signing up would spur the
development of additional renewable power.
Perhaps a company does own an operating wind project, and is known to be a serial developer of renewable
energy projects. They use the cash flow from one project to finance the next or to convince Wall Street that
they have bankable income. As in the previous case, we would consider the power from this wind farm as
additional since we have confidence that the proceeds will be used to finance additional renewable power.
ADDITIONAL!
ADDITIONAL!
NOT ADDITIONAL!
28. GOs are recognised as strategic instrument now
• On site: for claiming the green character of production (non-
tradable GOs)
• Off site PPA:
• Needed to ‘close’ the business model
• Trusted and understood by finance providers
• Green procurement:
• Understood by buyers,
• Reassured by the possibility of choice
• Many goals: CSR, Carbon footprinting, SBT,…
29. Regulators verify and should inform!
An example is the ‘Origin
Comparator’ of Belgian
regulator VREG which
allows consumers to
compare the fuel mix of
suppliers down to contract
level
For RES, information on
technology and country of
origin is given
Empowering information
for consumers!
30. Regulators verify and should inform! (2)
With VREG’s ‘Greencheck’ you can verify whether the electricity
supplier is fulfilling the promise of supplying RES originated power
31. Reliable and transparent
AIB facilitates reliable transparency through standardisation:
- Where, How, When is the power produced?
AIB members commit to following a unique standard and consistent
methodologies
Peer reviews ensure credibility and reliability
Our goal:
a transparent market,
where empowered consumers
drive the energy transition
32. AIB - guaranteeing the origin
of European energy
Dirk Van Evercooren, AIB President
dirk.vanevercooren@aib-net.org
+32 (0) 478 550480
Hinweis der Redaktion
In a normal power system, electricity comes from many sources, so consumers don’t know where it comes from.
How do you prove the source of the energy to consumers?
We need a simple story!
It’s not about: “There are no green electrons” – we can forget about ‘the green grid, versus the grey grid’.
Slide 4:
How do we give power to the people with Gos? Well, the mission of Gos is to enable consumers to:
Choose the origin of their electricity freely and support the type of electricity production they prefer
Take responsibility over their impact on environment and be able to influence it. Each consumer should be responsible for the CO2 that is emitted in the production of electricity he/she is using and also be able to affect his/her emissions
To trust that electricity tracking works and leads to no double counting. In the end of the day a consumer should know that there is just as much renewable, nuclear and fossil energy consumed in Europe as it is produced.
Understand how to affect the environment with electricity purchase decisions. So not only to select the origin of electricity, but also know how to improve the environment with electricity purchase decisions.
Slide 4:
How do we give power to the people with Gos? Well, the mission of Gos is to enable consumers to:
Choose the origin of their electricity freely and support the type of electricity production they prefer
Take responsibility over their impact on environment and be able to influence it. Each consumer should be responsible for the CO2 that is emitted in the production of electricity he/she is using and also be able to affect his/her emissions
To trust that electricity tracking works and leads to no double counting. In the end of the day a consumer should know that there is just as much renewable, nuclear and fossil energy consumed in Europe as it is produced.
Understand how to affect the environment with electricity purchase decisions. So not only to select the origin of electricity, but also know how to improve the environment with electricity purchase decisions.