The green, green gas of home

Renewable energy is now a mainstream technology that is cheaper and more advanced than ever – in 2011 clean energy suppliers made up less than 1 per cent of the market, now they account for around 17 per cent of it. Why? It’s a heady combination of consumers becoming increasingly aware of their carbon footprint, and suppliers becoming more willing to help them tread lightly. In short, there’s a green revolution afoot, and it’s not all about electricity.

Competition is booming in the green gas sector, thanks to technological advances and government funding, which in combination mean consumers are now able to help the environment and their pockets at the same time – compared to many standard variable tariffs (SVTs), green options are now being marketed as increasingly affordable. It’s all a far cry from the sandal-wearing, muesli-munching image that all things green evoked not all that long ago.

And advances in the market are being made all the time – just last month French utility company Engie announced plans to switch all its gas operations to biogas and renewable hydrogen by 2050, making it 100 per cent green. And back on our shores, Eon recently said its new EV tariff will come with 100 per cent green gas.

At last count there were an estimated 200,000 UK households signed up to green gas tariffs across eight different energy suppliers, and yet the green gas market says it still has significant scope to develop. A recent study by Green Energy said renewable gas production could hit 149TWh by 2050, which is enough to power more than 10 million homes.

Also last month, the Green Gas Certification Scheme (GGCS) announced it had sold 1TWh of renewable gas, which is enough to cover the annual consumption of 83,000 homes. All the signs seem to suggest we’re teetering on the edge of a green gas revolution – but are we?

There’s no doubt the affordability of green gas tariffs is improving, but the green army can’t dodge the fact that they remain more expensive than most.

And looking to the future, it’s uncertain whether government intervention in the retail market will help or hinder the continued expansion for green gas. The Draft Price Cap Bill has suggested green tariffs may be exempt from price regulation – will this allow competition to keep pushing prices down? Or could it incentivise suppliers to keep green tariffs high as a defence against the profit erosion caused by the demise of SVTs? With many customers in financial situations that don’t allow them to act on expensive green sentiment, this might be a blocker to further green gas growth.

The green gas industry has come a long way in the last few years, and with the decarbonisation of heating high on government’s agenda – if 2050 carbon targets are to be met – it shows much promise.

However, there’s no doubt that challenges remain ahead if the industry is to burgeon from this promising position. Utility Week asks five green gas suppliers about their plans for development:

Engie

French natural gas supplier Engie plans to switch all its gas operations to biogas and renewable hydrogen by 2050, making it 100 percent green, its chief executive Isabelle Kocher said last month.

The reason for the surge of interest in green gas, she says, is decarbonisation. She says the world is now focused on decarbonising electricity via renewable energy, but that electricity only accounts for a minor part of total energy demand. “Most of the energy consumed is for heating, cooling and transport,” she said. “By massively deploying green gas we could decarbonise all that.”

The power and gas group has some 70 biogas projects worldwide, and says if all its projects get approval its annual investment in biogas could soar tenfold to hundreds of millions of euros a year.

Eon

“Clearly future growth [of the green gas market] depends on providing products and prices that are attractive to customers – both business and residential,” says Jason Smith, pricing and proposition manager at Eon.

And he adds part of the driver for both green electricity and gas products will continue to be “shareholder commitment from larger businesses, their performance in carbon reporting league tables and, particularly among high street names and household brands, the ability to challenge competitors in the market with corporate social responsibility (CSR) achievements and environmentally friendly operations.”

What will hold advancements back though, he says, is not price, but the lack of certification and traceability, without which he says there can be limited progress. “Market data shows there is currently only about 4TWh of bio-methane on the grid, and only half of that is currently registered for certification, so the UK has a way to go to produce a sufficient supply of green gas and begin to phase out ‘normal’ gas.”

Corona

In order to develop, the green gas industry would benefit from more government backing, says Chryssa Tamvaki, commercial analyst, strategy, risk and reporting at Corona. “In order to encourage the industry to phase out normal gas, the UK government should support even more new and existing biomethane plants.”

She says Corona has really seen consumer appetite for green gas gathering pace in the last few years. Describing it as “a new era for green gas”, she says, “customers are now aware of climate change targets and are more conscious about limiting their emissions.”

The GGCS has helped in this area, she adds, “as it offers a clear, credible and transparent system for customers to know we are supplying them with green gas that has been securely tracked through the supply chain.”

Orsted

“Over the past six months there has been a noticeable increase in interest in green gas certificates from customers in the I&C and SME space,” says Luke Bannar-Martin, senior commercial developer at Orsted. “And this has definitely been beneficial as we are now starting to see that interest translating into actual sales, though mainly at the smaller scales.”

In response, Orsted is set to open the Renescience plant in Northwich, Cheshire next year – the world’s first bio plant of its kind, it will convert mixed black bin waste into recyclable material streams and biogas.

Because far from feeling inhibited by potential lack of demand or prohibitive pricing, Bannar-Martin says “ultimately, the biggest barrier [to market growth] will be the limited volume of viable feedstock.”

Green Energy

When it launched the product in 2016, Green Energy was the first UK company to supply 100% green gas. But since then, CEO Doug Stewart says the market has matured. As to the prohibitive pricing of green gas, he says it’s a myth: “The cheapest tariffs are all totally unsustainable. SVT or no SVT, our gas is cheaper than British Gas and our electricity is cheaper than all of the big six – green gas is no more expensive than brown gas.”

The problem, he says, “is that consumers are so used to being told they’re being overcharged that they can’t see the wood for the trees. It’s an education issue, and a question of rhetoric.”

As to what the networks can do to support the green gas industry, he says “as long as there are an acceptable number of routes into the grid at attainable prices then there’s no issue with the network. They could perhaps be encouraging the industry more by keeping a watchful eye on what’s happening and where, and supporting the certification scheme.”

The GGCS itself, he says, is a success in his book: “It’s doing a good job – it’s doing what it was designed to do. Consumers see it as what it is – a means for auditing the industry, and that can only be a good thing.”

How the GGCS works

Established in 2011, the Green Gas Certification Scheme issues ‘Renewable Gas Guarantees of Origin’ (RGGOs) for units of biomethane injected into the gas grid and securely tracks them through to gas consumers who are provided with a Green Gas Certificate that can be used as evidence of their biomethane use.  The scheme was established by the REA Biogas Group and is run by the Renewable Energy Association via its subsidiary Renewable Energy Assurance Limited (REAL).

A producer generates biogas from anaerobic digestion, upgrades it to biomethane and injects it into the gas grid. The producer registers the injection on the GGCS system, which automatically assigns each unit (kWh) injected with a RGGO, effectively ‘tagging’ each unit in much the same way as a Renewable Electricity Guarantee of Origin (REGO) tags a unit of renewable power in the electricity grid.

The underlying principle is ‘one unit in, one unit out’, ensuring that there can be no double counting of the green benefits of the gas. This enables the producer to sell guaranteed green gas on to users who are keen to be able to show their gas has come from a renewable source. This helps them measure performance against a sustainability plan, or demonstrate compliance with government requirements.