Europe should look at consumption of renewables not just production

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hydropower plant Norway (photo Statkraft)

hydropower plant Norway (photo Statkraft)

European consumers actively chose to buy more than 550TWh of renewable electricity last year, 20% of all electricity consumption. Yet EU member states are not required to report on consumption of renewables, only  production. This gives a false picture of what is happening in the market, say business representatives involved in purchasing and producing green electricity. Dual reporting – of consumption and production – would show that some countries are much further ahead in meeting renewables targets than official statistics show, while others are doing less well. It would also stimulate renewable energy production by putting consumers in the driving seat. The upcoming review of the Renewable Energy Directive presents an opportunity to correct this flaw.

Across Europe, consumers are choosing renewable electricity and are doing so on a large scale. Last year consumers actively chose to buy more than 550TWh of renewable electricity, roughly equivalent to 20% of all European electricity consumption. If one includes green electricity that is subsidized with citizens’ taxes, such as in Germany, where such electricity is automatically deemed to be owned by the public, 770 TWh of renewable electricity was consumed in Europe, according to RECS International, an organisation that represents a wide range of market players supporting a standardised tracking system for electricity consumption. [i]

“This is a phenomenal accomplishment by European consumers yet it is not reported in national or European statistics,” says Jared Braslawsky, secretary general of RECS International. “We are always focusing on production, not consumption.” 

“It’s incredible how little information on the corporate and consumer demand-side of electricity use there is. I couldn’t believe it when I started looking”

Every year, as a consequence of the Renewable Energy Directive, adopted in 2009, governments report to Brussels on their progress towards the 2020 renewable energy production targets. They calculate “the gross final consumption” of renewable energy as the quantity of electricity produced from renewable sources.   Yet different pictures emerge about a country’s renewable electricity depending on whether production or consumption is measured, says Braslawsky.

For example, according to 2014 Eurostat figures 8% of all electricity consumed in the Netherlands is renewable. “That statistic is based on how much renewable electricity is produced in the Netherlands”, says Braslawsky. “But actual consumption is much higher at 40%. Why? Because consumers are choosing to buy renewable electricity which is imported from other European countries.”

Consumer-centred

Consumer surveys show that citizens are willing to pay a premium for renewable electricity, according to Jörg Mühlenhoff, renewable energy spokesperson of BEUC, the European Consumer Association. In France and Germany people are willing to pay up to 10% more for 100% renewables-powered electricity, while in the Netherlands a third of consumers surveyed were willing to pay up to €12 more per month for renewables. 

In 2015 German electricity end-users consumed 248.5 TWh of renewable electricity (160.9 TWh supported through feed-in tariffs and 87.6 TWh certified green electricity), roughly a third of which was imported from producers outside Germany.  “In terms of renewable electricity production Germany has roughly achieved its 2020 target but in terms of consumption German consumers have more than surpassed the country’s target of 200 TWh,” says Braslawsky.

With dual-reporting consumers in Norway would see that by exporting much of their renewable electricity to the Netherlands they are in effect now consuming non-renewable electricity

RECS wants these facts – what consumers are choosing – to be mandatorily reported Europe-wide. “We’d like to see a dual reporting obligation in the new renewable energy directive,” says Braslawsky. “Otherwise we are miles away from the European Commission’s so-called consumer-centered energy policy.”

Corporate best practice

Dual reporting, in which both production and consumption data are gathered and communicated, has already become standard practice for corporate renewable energy users, says Braslawsky.

“5,500 companies in one reporting agency alone, CDP (formerly the Carbon Disclosure Project), report electricity usage based on a production mix and a company-specific consumption mix, a method developed by the Greenhouse Gas Protocol, an international tool for greenhouse gas accounting,” he says.

RE100, the global initiative of big businesses such as Google, Microsoft and Ikea, which have committed to sourcing 100% of their electricity from renewables in the future, supports the concept.  “Dual reporting is a really important area and definitely something that we support,” says Emily Farnworth, RE100 campaign director. Most RE100 members have operations in Europe and they have an increasing desire to know more about their electricity options, she says.

“We believe that greater transparency will stimulate renewable energy production because it will become clearer how great the demand really is”

“It’s incredible how little information on the corporate and consumer demand-side of electricity use there is,” Farnworth adds. “I couldn’t believe it when I started looking. We haven’t found any dataset, at least in the public domain, on electricity use. We seem to still be in a very traditional mindset focused on what generation capacity is needed.”

A spokesperson for multinational Philips, a RE100 member that has committed to use 100% renewable electricity by 2020, and has increased its use of renewable energy from 8% to 55% in 6 years, says the company “appreciates the transparency the dual reporting will bring to the market. As a company, we also report in a very transparent way on our use of renewable electricity, for example in our Annual Report 2015.”

Tom Lindberg, managing director of ECOHZ, a Norwegian renewable energy developer, also supports the call for dual reporting. “Let’s show both,” he says. “Yes, let’s recognise a production mix in a country which allows us to reach the 2020 targets, but let’s also recognise that a country has this customer-driven demand. It should be recognised and communicated.”

BEUC’s Mühlenhoff is less convinced about the need for dual reporting. “I honestly don’t see the point in it,” he says. “Most member states are complaining about the high level of statistics they are required to send to Brussels. There is already enough transparency in terms of what member states are doing.”

What consumption data?

Would national governments need to do a lot to report their renewable electricity consumption data?

“The good news,” says Braslawsky, “is that governments wouldn’t have to do a huge amount as much of the consumption information is already available. It just isn’t being looked at and reported in the right way.”

For example, research by green infrastructure advisers, Grexel, published this August, uses publically available data from a number of sources to monitor renewable electricity consumption in Austria, Belgium, Germany and the Netherlands.

The data includes:

  • monthly statistics from ENTSO-E, the European Network of Transmission System Operators for Electricity
  • data from the Association of Issuing Bodies (AIB), whose members oversee the certification of renewable electricity to the European Energy Certificate System (EECS) standard
  • non-EECS national certified renewable electricity market reports
  • local energy authorities’ reports of renewable volumes non-eligible for certification
  • electricity targets reported in National Renewable Energy Action Plans

The most accessible data, according to Braslawsky, comes from EECS standard certified electricity that has been issued with a Guarantee of Origin (GO). (See box.)

In some countries, notably Germany, a high share of renewable production is not issued with a GO due to legislation that prevents feed-in tariff supported electricity from receiving GOs. Nevertheless, data concerning this electricity, which Grexel calls supported electricity – and which grew in volume Europe-wide by 12.5% to 216 TWH between 2014-2015 – can be easily included in national dual reporting requirements.

Benefit to consumers

Why is the reporting of green electricity consumption so important, according to RECS? After all if you look at the whole European picture, all the renewable electricity that is produced is consumed. But according to Braslawsky this misses the point. Dual reporting, he says, would greatly improve transparency for consumers. It’s about putting customers in the driving seat, which is one of the official goals of the Energy Union.

Current regulations around the disclosure of the fuel-mix used to generate electricity are complex and confusing for consumers, he notes. “There is no standard format for fuel-mix reporting and limited coordination on this between countries.”

How do we know when energy users have consumed renewable electricity? 

There are different ways but one system relies on the issuing of electronic attribute tracking certificates known as Guarantees of Origin (GOs). These are issued to energy producers for every 1 MWh of renewable electricity generated. 

GOs can be issued for all types of electricity generation – as is the case in Austria, Switzerland and Sweden – but are only required for renewables under Article 15 of the Renewable Energy Directive. 

Renewable electricity GOs fall into two categories – those within the European Energy Certificate System (EECS) subscribed to by members of the Association of Issuing Bodies (AIB), and those certified by national bodies outside of this standard. 

EECS GOs are tradable across national borders among countries that have joined the AIB and that are connected to its electronic hub. 

Once certified electricity is consumed, its GOs are cancelled in order to avoid double counting. “You can only prove that renewable electricity has been consumed when the GOs have been cancelled,” says Braslawsky. “Cancellation volumes give the best indication of a country’s GO market as they demonstrate actual demand.”

In 2015 the increase in cancellations of GOs together with the decrease in volumes of issued GOs, created a shortage of supply for the first time, according to a report by Grexel published this year entitled ‘Development of the Guarantees of Origin market, 2009-2015’.

In 2015, according to data from the AIB, 34% of all renewable electricity production in the EU and the EEA as a whole was certified EECS. This percentage is set to increase. 

Twenty-one countries are fully signed up to the EECS standard. Spain, which has 70 TWh of available GOs, recently joined. Lithuania’s regulator is awaiting government approval to join; Greece is actively applying; and the Portuguese and British competent bodies are presently in discussion with the AIB about joining, according to Dirk Van Evercooren, president of the AIB. 

In total the consumption of half of Europe’s renewable electricity production is accounted for by cancelled EECS and non-EECS GOs, according to Grexel. 

Showing the collective consumption of all renewables in a country – through dual reporting – would help counterbalance this lack of clear information. “For example there is a potential problem of dual-perception: consumers in two countries, say Norway and the Netherlands, thinking that they are both consuming renewable electricity.” With dual-reporting consumers in Norway would see that by exporting much of their renewable electricity to the Netherlands they are in effect now consuming non-renewable electricity.

If applied Europe-wide dual reporting would bring much greater clarity to the information available to those consumers – both household and corporate – who are actively choosing green in ever greater numbers, as well as to policy makers. This would motivate suppliers to source more renewable energy. “We believe that greater transparency will stimulate renewable energy production because it will become clearer how great the demand really is,” says Braslawsky.

Braslawsky says a dual reporting obligation should be included in the new Renewable Energy Directive. “It’s a relatively small action that is completely in line with EU ambitions to empower the consumer. Most importantly it would acknowledge the businesses and citizens who are really in the driver’s seat.”

Editor’s Note

Iva Pocock (@iva_pocock) is a freelance journalist based in Ireland.

[i] This excludes 359 TWh of renewable electricity production that was neither certified nor supported, therefore not actively chosen by consumers either through their purchase of green energy or subsidization through taxes.

Comments

  1. Gidon Gerber says

    just to clear up a potential misunderstanding: you cannot control the physical flow of electricity within a grid, it just follows the path of least resistance. so consumers in the Netherlands may pay for renewable electricity, but may physically receive electricity generated from non-renewable sources. for the climate, it just as as good, as long as the renewable electricity is paid for, it can be generated and consumed somewhere. it does not matter where the greenhouse gas emissions are avoided. but what you are really proposing is to report where green electricity is paid for, now where it is physically consumed.

    • Tilleul says

      Actually the idea that there is a “flow” of electricity is also a simplification which has no physical reality. The lamps are lightnen by electrons coming from the lamp, not from the powerplant.

  2. says

    This is an extraordinary article.

    Please explain how renewable energy ( RE ) is ” consumed ” – apart from the accounting exercise you are proposing.

    The vast majority of electricity consumed comes from the grid , and therefore physically the user consumes electricity in proportion to the mix that is on the grid. If that user also has a power purchase agreement ( PPA ) with an RE supplier to take an amount of electricity equal to its consumption , it then claims that it only uses, buys or consumes 100 % RE.

    This is known as ” greenwash ” or , in more direct terminology , a blatant lie.

    The RE 100 , ( including Apple etc ) is built on this chicanery.

    This reality is green accounting fraud

    • Karel Beckman says

      Maybe you should read the box on Guarantees of Origin before you start accusing people of fraud. Or do some thinking. The point of a GO or green energy certificate is that somebody who sells it guarantees to put an equal amount of renewable electricity on the grid that you have purchased. Even though you don’t actually consume it, somebody does, so there is nothing fraudulent about this.

    • Mike Parr says

      I’d suggest your post is “extraordinary” in its lack of understanding. You can time-stamp electricity (using real time metering) both from the point of view of production and consumption. A rather simple accounting/reconciliation exercise then follows between those producing and those consuming – renewables (or nuclear or whatever the end user has decided they want to consume). Very little to do with lies, everything to do with simple tech and accounting. Hopefully you have learned something.

      • Diarmuid Foley says

        Mike
        Absolutely that is correct. However my point is that the user or consumer cannot distinguish physically where the energy comes from, all that can be claimed is that X units of renewable electricity was produced and X was consumed across the grid. This has been parlayed into claims ( by companies such as Apple and others in the RE100 cohort ) , that their facilities are powered by Y% of renewable electricity ( in Apple’s case they claim between 87-100% ) , whereas in fact they are powered by exactly the same mix of sources as everyone else on the grid.

        The only ” consumption ” of Renewable Electricity in this claim is that of ” green energy certificates ” , i.e. an accountancy one.

        This travesty , which is facilitated by green certificates of origin or GO’s , tricks the public into believing that these companies are 100% renewable or “green”.

        By objection is not about the production ( or indeed the certification ) of energy as renewable, its about how their use has been corrupted into a marketing strategy.

        • says

          Diarmuid Foley,
          RECS International understands your issues but has a concern that the core message is being missed in the discussions. RECS International does not approve or disapprove of the type of electricity that is being produced by a generator, rather it is important to report and monitor the factual production. This production – unless there is a physical cable between the generator and the electricity user – cannot be tracked in a physical way from the generator to the user. This is done on the basis of contracts, which are based on instruments (the GO) which are a 1-for-1 representation of the factual generation that took place from a specific generation device. If we wish to make the electricity market a consumer-driven market we have to give consumers a choice. The GO is the way to give consumers that choice. It is natural that consumers will make claims based upon their choice (just as they do with fair-trade coffee).

          • Tilleul says

            If you look at the horizon you will see giant pylons holding the physical cable connecting generators and electric users you were looking for, we usually call that “the grid”… Consumers are supplied by their energy supplier who needs to balance their consumption by contracting with power producers and it’s checked by the grid operators. If your energy providers is only asking renewable producers to supply you, you only use renewable electricity, simple.

            And if you don’t agree with that, then you also must admit that using national production doesn’t make any sense either : the grid is synchronized so you can’t assume the south of netherland is isolated from nuclear power from Belgium and the North from german wind power…

            The idea that you can’t isolate who consume what seems like old thinking from the 70s when we still had monopolies… It would be like saying that you can’t tell that my telecom provider is sending this message to energypost’s telecom provider because we can’t track the signal’s path…

            Anyway, the problem here is Norway so we can name it… They basically are flooding the market by selling their renewable production abroad so that norwegian who assume they are powering their electric vehicles with hydro from norway are actually powering their electric vehicles with dirty power coming from coal and natural gas because of this inacurate statitstics that allows double accounting in order to cheat the consumer.

            • Karel Beckman says

              Who is talking about isolating consumption? On the contrary, this is just the whole point: you can’t isolate, but you can track it. Is this really so difficult to grasp? Maybe read the article a bit more carefully before you comment? You do have a point about Norway, this is exactly why we should have a proper accounting system.

              • Tilleul says

                That was an answer to Diarmuid. I was actually saying thatyou can isolate consumption by tracking it here.

  3. Math Geurts says

    “in the Netherlands a third of consumers surveyed were willing to pay up to €12 more per month for renewables”

    Unfortunately there hardly are (and have been) consumers in the Netherlands who actually pay more for renewables. Statistics for “renewable consumption” don’t make any sense as long as there is no real price difference.

  4. Math Geurts says

    Indeed it is not fraud, but such consumers greenwash their souls. Like people who tell us that the price of 1 ton of CO2-emission should be 100 Euro and are proud to compensate their intercontinental flight for 10 Euro.

  5. Math Geurts says

    Of course, as long as producers receive additional payments for producing renewable energy, there is no reason for consumers to pay additionally for renewable energy. The additional costs are payed by all consumers or by taxpayers.

    The problem caused by “renewable” consumption is that these consumers tend to believe that a transition to renewable energy is rather easy because renewable energy is not or just a tiny bit more expensive than non-renewable energy. That’s actually only the case for hydro in Norway.

    • says

      RECS International understands your issue Math, it is also a concern of ours. Production subsidies distort market mechanisms and make the consumption of the commodity inherently cheap. Imagine if the German government were to subsidize the production of electric vehicles as they do renewable electricity. This is illegal because of state-aid guidelines (for which renewables are exempt) but two things would happen: 1. All electric vehicle production would go to Germany (for the state financing) and 2. Consumers would not pay a realistic price for the vechical (as its production costs were subsidized). Moving towards a consumption-based subsidy system is beneficial for the market, gives consumers a real choice in their consumption options, and can provide more cost efficient growth in the renewables industry. Look at U.S. RPS targets/costs for an example of this (NREL is good reports). The issue regarding production-based subsidy systems can be seen in an article by Karel Beckman here http://www.energypost.eu/end-near-national-renewable-energy-subsidy-schemes-eu/

      • Math Geurts says

        If fair-trade coffee or biological food would be as cheap as conventional food, most propably much more consumers would choose for such products, but at the same time that choice would be meaningless.

        A real preference for renewable power would include the willingness to pay p.e. 1 cent extra per kWh for hydro from Norway, or 10 cent extra for solar from Holland.

  6. Andre Berg says

    Will a transition to a consumer driven power market undermine already built renewable power? Most of the renewable power production built so far are most certain built in order for the state/country to increase it’s share of renewable energy. This development of renewable capacity has been subsidized (i.e. payed by the consumers in the country through taxes). Why should these customers once again have to pay for this capacity to prove that their consumption is renewable?

    At the same time, development of new renewable capacity will be more expensive than it already is, and the road to achieve Europe’s targets slowed down. At least for a long time, it will be cheaper for a country to fulfill it’s commitments/targets only through buying these OGs, when it in reality doesn’t have to build any renewable itself.

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