Government’s renewable energy deal not ‘green’

The government has just signed a £1 billion per year contract to receive ‘green’ electricity, but there are concerns that the deal’s conditions might not support the development of renewable sources.

In June the government contracted EDF Energy to provide up to 1 terawatt hours of renewable energy per year, but without requiring the company to retire the associated Renewable Obligation Certificates (ROCs) it might not actually create new capacity.

The four-year contract, worth £1 billion per year, amounts to a third of all electricity currently bought by government bodies through the Office of Government and Commerce’s procurement service OGC Buying Solutions. The OGC brokered the deal, which will come into force in October, with support from the Environment Department (DEFRA).

However, despite their apparent good intentions, renewable electricity tariffs have been criticised for not encouraging suppliers to develop renewable capacity beyond government targets.

Under the government’s Renewables Obligation, electricity suppliers must already source a specific amount of electricity from renewables each year. But the National Consumer Council claims suppliers are simply repackaging these responsibilities as green tariffs (ENDS Report 384, p 11 ) and customers are signing up for renewable electricity that they would have received anyway.

The only way to ensure this does not happen is to retire the ROCs associated with the electricity. If they are not retired they can be sold on to other electricity suppliers, meaning the environmental benefit will be double-counted.

The government’s new contract does include an option to retire ROCs. In a statement, OGC said "the reason ROC retirement is an option is that… buying ‘green’ energy cannot be counted as reducing CO2 without it".

But the decision to retire them will be taken at departmental level and cannot be guaranteed. It will depend on a department’s "economic and sustainability target requirements", the OGC said.

Central government departments have committed to sourcing 10% of their electricity from renewables by March 2008.

Retiring ROCs is costly. Earlier this year the average price per ROC, representing 1 megawatt-hour of renewable electricity, was £47.50. At this price, retiring 1TWhr worth of ROCs could cost the government £47.5 million.

But with demand for renewable electricity in the UK far outstripping supply (ENDS Report 387, pp 14-15 ), the government could be expected to do all it can to boost renewables growth. This contract suggests otherwise.

The OGC was unable to state what types of renewables will be used to generate the electricity. However, EDF’s current renewable fuel mix is dominated by landfill gas (47%) and wind (21%). Small-scale hydropower makes up 14%.

The EDF contract also includes an assessment programme to see if renewable electricity can be generated on the government estate, and an option for customers to buy carbon offsets.

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