Eon’s 100% renewable promise is one small step, but the sector must make a giant leap

Following Eon's announcement that it will supply customers with 100 per cent renewable electricity, Adam John takes a look at what else large energy suppliers could be doing to better protect the environment.

On Saturday (20 July) the world will mark the 50th anniversary of Apollo 11, the mission which saw mankind set foot on the moon for the first time and while everyone else reflects on the remarkable achievements of Neil Armstrong and his crew, perhaps as a sector we ought to reflect on “Earthrise”, a photograph taken during the Apollo 8 mission by astronaut Bill Anders.

Earthrise, which showed our tiny planet set against the inky backdrop of the universe as it rose above the moon, kicked off the modern environmental movement according to some commentators.

It continues to serve as a timely reminder that we must do all we can to help protect the environment of our only home and emphasises the need to build new renewable energy generation.

Last week big six supplier Eon announced that going forward, it would only be offering customers 100 per cent renewable electricity.

The reaction was mixed and while some in the industry were quick to praise the supplier for taking the environment-conscious step, others pointed out that merely promising 100 per cent green power is not quite the step the industry needs.

Eon will generate electricity from its own renewable assets, covering more than half of its electricity customer base (1.7 million homes). It also has agreements with independent wind generators around the country to directly purchase the electricity produced.

The remaining electricity is matched with 100 per cent renewable electricity sourced externally through initiatives such as renewable electricity guarantee of origin (REGO) certificates from the likes of wind, biomass and solar sources.

The REGO scheme is EU-mandated and provides transparency to consumers about the proportion of electricity that suppliers source from renewable generation.

The purpose of the certificate is to prove to the final customer that a given share of energy was produced from renewable sources.

Ryan Thompson, a senior partner at Baringa Partners, argues that while the REGO scheme is not exactly lined up as a perfect supply chain, it is creating more demand for green power.

Thompson adds: “I think from a carbon reduction point of view it’s a good thing, the more suppliers that are committing to supplying green energy, the better it is going to be in the long run.

“It is providing a market to encourage more renewable power.”

More demand can only be a good thing for the market but Eon has consistently proven it is more than capable of creating renewable generation.

Undoubtedly the supplier already has strong green credentials but it could be argued that proposing to supply power using REGO certificates is not quite the renewable revolution it seems, as several industry commentators have already suggested,

Tom Steward, regulation and compliance manager at Good Energy, says suppliers claiming to offer 100 per cent renewable electricity were simply “buying very cheap, second-hand certificates” and adds they do not create demand for renewable electricity.

“When people sign up to a renewable tariff, they want to know they are making a difference. Consumers need to be aware which suppliers are offering a genuinely green tariff and those which are simply buying brown power with renewable certificates on the side.

“The value of these certificates speaks volumes; at the moment the market value is about 50p per megawatt hour. For a typical domestic customer, this represents a contribution of about £1.50 to the renewable generator.

“Unfortunately, that is not going to move the dial in terms of investing in new renewables; creating investor confidence, or creating a route to market for existing renewable generators. Is it misleading? Yes it really is.”

Steward insists there is a “simple solution” and that is to ensure REGO certificates are traded with the power they relate to, which will encourage suppliers to sign more direct contracts with generators.

Sharing similar views is Dale Vince, the chief executive of fellow renewable supplier Ecotricity.

Vince says using REGO to become “100 per cent green” is ok but is “pretty much a non-event” in terms of green outcome.

He also suggests Eon should be focusing on building new renewable generation, instead of relying on existing assets.

Over the last decade Eon says it has invested more than £3.3 billion in renewables and currently manages a fleet of 21 onshore and offshore windfarms plus two biomass plants.

The company adds: “These certificates guarantee that an equivalent amount of renewable electricity was generated to the amount supplied.

“Eon has been a driving force behind the renewables revolution in the UK. Our first wind farm was built on Anglesey back in 1992. We were behind the country’s first offshore wind farm 20 years ago and last year completed our latest project off the Sussex coast.

“In the last decade we have helped the industry to reach a place where environmentally friendly power sources can outperform fossil generators.”

Without a doubt, it can only be a good thing that a big player like Eon is shouting about its green credentials. With some reports suggesting we have a mere 12 years to prevent global temperatures increasing by more than 1.5⁰C, it’s only a matter of time before more suppliers follow suit.

Yet in order to have a real impact, companies must put more focus on building new renewable generation rather than relying on REGO certificates. Ultimately buying up REGOs will force more renewable building in the future, but surely it is better to tackle this issue now?

With more attention on global warming than ever before, Earthrise serves as a timely reminder to energy suppliers that we only have one home and they would do well to do all they can to protect it.