How we guarantee your electricity is 100% green
28th November 2018
Lots of people ask us how we can promise customers 100% green energy when we don’t generate it ourselves.
There are a few different ways of being green. It’s not quite as simple as just buying energy from renewable generators and sending it straight down the wires to our customers’ homes.
That’s for a number of reasons. Firstly, all energy — green and “brown” — is mixed when it’s fed into the distribution network through the National Grid. Secondly, the nature of renewable fuel sources ( i.e., the sun only shines in the day time, and wind is sporadic — even in this country) doesn’t always link up with our 24/7 energy needs.
At the moment, one of the ways we ensure 100% renewable energy for our customers is by contracting directly with green generators around the country to buy their renewable energy — this is what energy folks call a Power Purchase Agreement (PPA).
We partner with three solar sites to directly buy the solar energy they generate. During their peak generation periods, these sites could collectively power 80,000 UK homes.
North Laides Farm, Eakring
Generates: 12 MegaWatts
This massive farm in Nottinghamshire is our largest-generating PPA. It doubles as a riding school for local kids, who even ride along a track through the solar panels in their lessons.
Craymarsh Farm, Wiltshere
Generates: 2 MegaWatts
Set in Wiltshire, in one of the more southern, sun-prone areas of the UK, Craymarsh Farm generates 2 MegaWatts of sweet, solar energy. You can literally see it on Google Maps right now, here:
Hill End Farm, Hampshire
Generates: 3 MegaWatts
This solar farm is set on a large plot of farmland in the Hampshire town of Sherwood St John. The local council decided to transform this regular bit of farmland into a solar site in 2014 (check out a picture of the farm's construction below). Hill End generates enough renewable power to save around 1,375,220kg of CO2 emissions per year.
But we can’t buy all our energy like this.
We insist upon transparency here. We reckon Power Purchase Agreements are going to be a central part of the UK’s electric future, but right now, they can't meet all our energy needs. To understand why, all you need to do is compare the typical energy usage pattern of a UK home with the times the sun is shining:
Our challenge: the sun only shines at certain times during the day, and we need energy 24/7. We bulk-buy energy in advance to ensure we can offer affordable rates, hedging how much energy we think our customers will need over the course of a year. We can do this fairly well, thanks to years of historic energy usage data, and some pretty clever people.
However, it becomes much more challenging trying to predict how much solar energy will be generated each day – particularly a day three months from now. Under, or overestimating the amount of solar energy we need, can be incredibly risky, and super costly. And we’re working really hard to hit that sweet spot between what’s good for the planet and good for your wallet.
As we move further away from fossil fuels, one of the challenges we’re facing is how to make the best possible use of energy generated from the sun, or the wind – using what we can when generation is highest, and storing any excess to use when the sun isn’t shining.
The future of solar
As our dependence on fossil fuels decreases, and technology improves to move us ever closer to the low-carbon future we need, we’re looking at ways of making the most of solar energy.
Businesses, for example, have an energy usage pattern much more in line with solar generation times (9 to 5 links up pretty nicely with sunrise to sundown) – so the potential for real-time energy matching already exists for our business customers. We offer Leicestershire businesses localised renewable energy from a nearby solar farm, and are in the process of offering real-time matching like this in a number of different spots around the UK.
We’re also designing technology to make renewable energy work for us. Energy storage solutions are on the rise, from established technologies like pumped hydro storage, to more cutting edge developments such as vehicle-to-grid charging, which will see two-way electric vehicle batteries power homes in times high demand and low generation.
Just this week, Arsenal Football Club, our long-time Premier League partner, launched a UK football first at Emirates Stadium – a 2 MegaWatt battery storage system with enough capacity to power a whole game at the Emirates with stored renewable power, from kick-off to full time.
This battery stores energy when solar and wind generation are cheap and plentiful, and when energy demand is low. Then, when energy is most expensive, and most in demand (4pm to 7pm daily), Arsenal’s evening game runs on battery power, easing strain on the grid by the equivalent of several thousand household’s worth of energy.
At peak periods when there’s no game on, the stored power can also be fed back into the grid to help reduce high energy demand – so there’ll be times coming up when UK homes are being powered, in part, by Arsenal FC energy, straight from Emirates Stadium!
This truly innovative collaboration has picked up tons of major national press from The Guardian to ITV, and even made it into international news, including Forbes, Bloomberg, and CNBC. Seriously cool stuff.
For now… what are the alternatives to buying renewables direct from generators?
Aside from these Power Purchase Agreements, we fulfil our 100% renewable promise by buying Ofgem-issued certificates, each signifying a MegaWatt (MW) of renewable energy that’s already been generated.
The wonderful world of Renewable Energy Guarantee of Origin (REGO) certificates
For every MegaWatt of renewable electricity generated, the energy regulator Ofgem issue a Renewable Energy Guarantee of Origin (REGO) certificate to the generator. These can then be sold to energy suppliers when they buy power from the generator.
Every year, energy supplier have to publish where they’ve sourced their electricity from (their ‘Fuel Mix’). When it comes time to disclose this Fuel Mix, suppliers use the REGOs they’ve purchased as proof of their renewable credentials.
We buy enough of these certificates to cover every single unit of energy our customers use. This means that our customers’ demand on the National Grid is only met by renewably-generated sources.
The difference between buying renewables through REGO certificates vs through PPAs is really hard to grasp. So we thought we’d try a tastier metaphor:
Imagine a shared office biscuit cupboard (the National Grid), constantly stocked with around 70% fig rolls (turgid, taste like they're 1000 years old even if brand new – fossil fuels) and 30% jaffa cakes (sunny, benevolent – renewables).
The biscuits are all sourced by a few generous souls in the office who can be convinced to do the shop run, stocking the cupboard with people’s personal orders as well as a bikkies for everybody. They’re the generators. The office biscuit-eaters are energy suppliers. They're free to take biscuits, or add them, to the cupboard. But either way they have to pay for what they eat.
Some will only eat jaffa cakes, as they want the best for themselves and the people around them. Others absentmindedly chew through whatever biscuit is available when they’re peckish, eating a combination of fig rolls and jaffa cakes. Mostly fig rolls. We want better for these people.
Say you’re an office biscuit eater, and a strict jaffa cake purist (like us!) There’s a few ways you can guarantee you a) get your biscuits, b) pay for them and c) make sure everyone knows you’d never touch a fig roll.
You can either:
- guess how many biscuits you’ll eat in the next week and pay a kind soul to add the biscuits to the cupboard for you (a Power Purchase Agreement, essentially)
- buy your own biscuits, avoiding the cupboard all together (equivalent to building your own generators), or…
- eat the jaffa cakes that are already in the cupboard (the REGO system)
A REGO is like taking the amount of jaffa cakes you need from the existing supply in the shared biscuit cupboard, and slapping the money down on the kitchen bench. With a guaranteed supply, there's no risk with this method. Comparatively, with a PPA, you have to guess how many biscuits you’ll eat and buy them based on some complex hedging. And if you over- or under-order, it can be really costly (if you undershoot, a biscuit-buyer might charge more for the inconvenience of an emergency midweek biscuit top-up. If you buy too many, they might spoil). With REGOs, you’re buying biscuits that are already in the shared cupboard, meaning cheap and safe access to guaranteed jaffa cakes.
What are the drawbacks of REGOs?
REGOs don’t really foster growth in renewable energy generation, because you’re just buying from the existing pool of renewable fuels already circulating on the grid. Suppliers don’t always have to buy the energy itself – just the REGO certificate representing it – so there’s less of a clear, traceable line from source to supplier to consumer. And ideally, we want to pay generators directly so we can begin to encourage more renewable generation and green up our grid even further!
You can claim all you like to be a jaffa cake purist, but what’s to stop you swiping the odd fig roll from the cupboard, too? With a PPA, there’s a traceable link between the biscuits you buy and the biscuits you eat. A more transparent, proveable purchasing option.
The REGO certificate method also means the person buying biscuits for you isn’t getting paid directly for their work. You’re not directly encouraging more jaffa cakes to be added to cupboard, which means the overall cupboard doesn’t improve its jaffa cake to fig roll status. And ultimately that’s what we’re all fighting for, right?
REGOs can only exist if a MegaWatt of renewable energy has already been generated. REGOs might not be as traceable as other methods, or foster new renewable generation in the same way, but behind every REGO, clean, green energy has been generated in the same amount to power people’s homes.
Currently REGOs the cheapest, most reliable, and most common way of ensuring 100% renewable energy. We believe they're are a good first step in the journey to 100% green energy, getting people used the idea that you can go green without breaking the bank.
Thinking long term, we aim to supply all our customers' energy from source – actually building our own renewable farms, and forging a deeper connection between us and our renewables suppliers. This is the “getting up and going to the shop for your own blooming biscuits, for once in your life” option.
We’ve already made inroads into this through our main backer, Octopus Group. OG is the UK’s biggest investor in onshore large-scale solar (meaning generation sites not at sea, and not on house roofs). They have over 150 sites across the UK, mainly comprised of solar farms. Though Octopus Energy don’t directly own those sites, these solar farms are central to our relationship with Octopus Group.
But the wheels are turning on some proprietary Octopus Energy sites – we’re already in talks to make our own renewable farms happen, and while we say ‘longer term’, Octopus Energy’s first few years in operation have been characterised by speedy, massive growth (from 0 to 450,000 customers in our first two years) and nothing’s slowed us down yet.
Having our own generation sites, similar to PPAs, will mean a higher and higher percentage of the National Grid is comprised of renewable fuels, meaning that by and large, people are consuming cleaner, greener energy without even knowing the difference.
So for now…
We fulfil our 100% renewable energy promise through a combination of 1) buying energy through direct contracts with renewable generators (PPAs) and 2) buying Ofgem-issued REGO certificates, each signifying a MW of renewable energy they’ve generated already.
We always have our eyes on ways to ensure a more traceable, direct, and transparent energy procurement process. One that actually encourages more renewable energy to be generated, meaning a greener grid for everyone, staunch Jaffa cake purists and come-what-may fig roll munchers alike. Right now, hitting that sweet spot between “good for the planet” and “good for your wallet” is our priority, because we firmly believe that green energy shouldn’t be a niche product. We need to switch as many people as possible to renewable energy to ensure our low carbon future, and the only way to do this is by offering it at prices accessible to everyone.
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