I took some flack last week for my first post on this subject. I expected to of course. It’s not like I wasn’t advised against it. My view is that something wrong has been going on and the whistle needed blowing on it – for the greater good. Better we put our own house in order than have the Daily Mail do it for us.

I know that I wrote a strongly worded piece and if you’ve not been close to this issue over the years the passion/frustration may be hard to understand or easy to misunderstand. I’ll expand on that later – there’s an illuminating back story to tell.

And passions run high on both sides as we’ve seen, but a lot of what’s been posted has not been about the real issue here.

In this second post I want to pull the focus back to the facts.

Inconvenient facts.

For over five years Good Energy have been making a very simple, very plain English, public promise to retire a certain amount of ROCs. That’s a fact. (A list of public claims on retirement is here – they all say the same thing.)

The data from OFGEM shows beyond argument that Good Energy’s ROC retirement claims have never been met – they have never been the truth. This is also a fact.

We raised this with Good Energy two months ago, they offered all sorts of responses before finally coming up with what I’m going to dub – ‘ROC claim number two’. This was first made known to Business Green here.

‘ROC claim number two’ goes like this – Good Energy don’t retire the 5% of ROCs which they claim to (in ROC claim number one), they have a different policy which sees them retire an ‘equivalent amount’ – by which they mean something quite complex, though it boils down to less actual ROCs than claimed.

This policy has never been set out in any Good Energy documentation we can find, it’s never been made public before now – you have to wonder why. There’s a public policy on the one hand and a secret, substantially smaller, one on the other hand. Not very good practice at best. Looks like deliberate deceit to me – but that’s opinion, based on my reading of the facts.

According to Juliet Davenport (CEO) Good Energy have just been misunderstood.

Well, not by people whose first language is English I feel. A claim to retire 5% is a very simple thing to understand – impossible to misunderstand. If there’s a gulf between that claim and the actuality then the reason is the claim itself is false – it does not accurately portray the reality.

But what is this hitherto secret ‘ROC claim number two’ all about?

It’s not simple, but in effect it means that if they claim to retire 5% ROCs they will actually retire nearer 3%. Because in their own estimation it’s not the ROCs that count – it’s the value retired, so 3% ROCs retired at full value equals 5% at partial value. Make sense? I don’t think so.

OFGEM have confirmed that there is no such concept in the Renewables Obligation. It’s a Good Energy construct. Fact.

You have to ask why not just say ‘we retire 3% ROCs’ why try to big this up as 5% (while meaning ‘financially equivalent to 5% at buyout value only’ without saying so).

That’s not a very transparent way to operate. I think this is also a fact.

But the big question is this – Is ROC claim number two ‘real’?

Did Good Energy retire ROCs all this time on that other ‘unspoken’ basis?

We crunched the new numbers… Drum roll time again… No they did not!

This is also a fact.

Here’s the table showing the number of ROCs that would need to be retired to meet this ‘new policy’ set against the number actually retired with the % of the new ROC promise actually met – or not – in the final column.

Clearly this new policy has not been adhered to.

One untruth appears to be following another.

ROC claim number one, the public one, is clearly not the truth.
ROC claim number two, the fall back private one, is also clearly not the truth.
Is there a ROC claim number three?

Over to you Good Energy, ready to come clean yet?

Cheers.

It starts with this:
For the last five years Good Energy (a small UK based green electricity supplier) has been claiming to retire 5% more ROCs than they are legally obliged to do. Supposedly to encourage other people to build new green generators.

It’s been their one big claim to green fame. And it’s the single thing that’s brought them recommendations from FOE (Friends Of the Earth), NCC (National Consumer Council) and Ethical Consumer magazine – and it’s brought them customers of course.

Good Energy have repeated this 5% claim in all their marketing material and pushed the recommendation of FOE and NCC consistently now for five years. It’s been a very simple bold claim – ‘we retire 5% more ROCs than our legal obligation’ is a typical format. No wriggle room there. You either do or you don’t.

Nobody ever thought to check if they actually have been doing this though, until two months ago when we first asked OFGEM. I’m not sure why, except we know them pretty well and it seemed more than possible to us that they were saying one thing and doing another. More on this later if anyone’s interested.

OFGEM had some trouble with their systems and their data and it took about two months to get the final, final version of the numbers, although they were pretty close to the first version to be fair.

The most amazing thing is Good Energy, according to OFGEM (the industry regulator and keeper of ROCs no less) have never, ever, in all this time – met a single promise to retire 5% ROCs. Not once in five years.

There was more – For the last two years Good Energy have retired no ROCs at all…!

You have to go back three years to find a year that they actually retired any ROCs in – And then they managed just 40% of their 5% promise.

We were pretty stunned.

We dug deeper.    

The total value of the broken ROC promises, these last five years, is bigger than Good Energy’s total reported profits for the same period – had they been keeping their word, they would have been trading at a loss. Perhaps trading insolvently.

One of the biggest ironies here is that both FOE and NCC sought to offer consumers confidence, in a confusing market (they said), through their research they offered a strong endorsement of Good Energy as the greenest supplier and an ethical company.

But neither organisation undertook any actual checks, they just accepted what they were told. That’s a pretty awful thing for champions of the truth to do, IMO.

Maybe it was a subliminal thing, a company with Good in the title must be good right? Wrong it would seem, Good Energy have been dishonest to them both, not just once, but over a number of years – claiming to retire 5% while they knowingly did not.

There can be no doubt here – the claim was to retire 5% additional ROCs and the facts are that this has never even once been met.

And it’s three years since Good Energy retired any ROCs at all.

This is serial deceit, perhaps fraud is a fair description – deceit for monetary gain. Perpetrated on FOE, NCC, on customers and on shareholders – people who bought shares during this time based on profits that have been inflated by the broken ROC promises.

Customers have been paying a £100 a year or so premium to be with Good Energy, something NCC said was ‘fully justified by the ROC retirement’ – without ever checking of course. Consumers can sleep safe in their beds with champions like this on their side…

And check this, welcoming proposals from OFGEM for new green tariff guidelines, Juliet Davenport, CEO of GE wrote this in the Guardian in Feb this year:

“We must tackle these false claims for domestic green power tariffs. It’s time to overhaul the system that allows electricity firms to hoodwink customers trying to go green”

“… having called for clear rules, regulation and transparency over green tariffs for several years, I thought I would offer some clarity.”

“While they may not be perfect, we feel the guidelines could shine a welcome light into some murky waters.”

The most breathtaking and bare faced hypocrisy you’ve ever heard? It is for me.

We might expect such behaviour from one of the Big Six, or big oil company and we might expect FOE to be jumping all over them for it – where are you now guys?

Worse part for me is this:
Good Energy’s purpose in the last five years has been to try and force on the UK market this philosophy of ROC retirement – something that we have been arguing all this time is ineffective (it does not lead to new capacity) and too costly to be affordable. Ripping up ROC certificates is a waste of customer money, money better spent building something, that’s been our stance and for that we’ve been slated by FOE and NCC.

So yes, it’s rather a schadenfreude moment for us.

Good Energy have been putting profits before promises, deceiving the consumer groups that have been recommending them – trying to foist their, now clearly bankrupt, philosophy of ROC retirement on the rest of us, while not doing it themselves.

I am flabbergasted actually, it’s the most amazing con.

Since we first raised the issue with Good Energy they’ve offered a series of responses – first came mild offence that we should even question this, second was reassurance that the 5% retirement actually did take place, third came ‘we retire 18 months late’ – easily disproven and then dropped to be replaced by ‘we’re too busy actually, with an advert in Bath Life, to deal with this’ I kid you not.

We also flagged it to FOE and NCC – they’ve both been slow to react, simply asking Good Energy if they really have retired the 5% ROCs and, it seems, happy to accept the assurances that they have. OFGEM meanwhile maintains that they most definitely have not.

It’s time for Good Energy to just come clean. The promise was simple, the failure is as equally simple as it is total. No more lies pls guys.

Cheers.

ETA: Here’s a table with the figures for a more complete picture:

Where to start… OK – ROCs and REGOs.

ROCs derive from the UK’s Renewable Obligation that obliges all suppliers to hold certain small percentages of ROCs as a proxy for having green electricity in their mix – this % goes up each year by about 1% and is currently approaching 10% as an annual obligation.

ROCs are widely traded separately to power. For example the Big Six are always drastically short of ROCs and seek to buy them as stand alone bits of paper wherever they can.

Good Energy are also short of ROCs which seems odd when you think that they buy 100% green electricity from the markets and their obligation for ROCs is still in single figure percentages by contrast. The reason for that is that GE buy most of their power without ROCs.

Ecotricity is long in ROCs. This year our own green energy is over 50% of our fuel mix. The 37% figure BTW is last year – all Fuel Mix Disclosure is a year in arrears – because electricity supply isn’t complicated enough… So Ecotricity has over 50% ROCs and needs less than 10% – roughly speaking.

When financing windfarms the income from selling ROCs is half the total windfarm income – it’s a vital component. That’s one reason we think retiring ROCs is a crazy self defeating idea – ROCs are designed to make windfarms economically viable, so that more get built, and they do that well. To ‘retire them’ is close to self immolation … Well it is if you’re about building anyhow.

The other reason we’re against the practice is that it achieves nothing (except false hope) – the ASA have banned the claim that ROC retirement leads to more building – because GE and others have been unable to prove it. Won’t go into more here, it’s just something that sounds good in principle but in practice it’s nonsense.

So Ecotricity uses ROCs for what they are intended. GE uses them for greenwash IMO.

It’s the customer that pays for ROC retirement though.

ROC retirement is at least part of the reason that Good Energy are the UK’s most expensive electricity supplier. Or is it?

Anthony says Good Energy claim to retire 15% ROCs – the claims made by their team on the phone do indeed vary widely up to and beyond this amount. But the actual official claim is 5% of ROCs. This is the claim that GE made to NCC and to FOE et al for the last 5 years. NCC said this explains the (hefty) premium for Good Energy.

It doesn’t though – this amount of ROCs would cost about £25 per customer whereas the premium was £80 a year when NCC wrote that. (BTW it’s only £50 as of this week)

GE has been talking about building new green sources for 10 years or so, since the day they got started in energy supply. It may well happen one day. They came up with the idea of ROC retirement because it was something they could do and they needed a green story, an edge to claim greater greenness from. It’s not more than that. It’s an all but abandoned philosophy now.

There is more to this story though, something rotten at the heart of it all – coming soon.

Moving on to REGOs – these are certificates based on an EU wide scheme to verify and demonstrate the veracity of fuel source. Each unit of green generated gets one and each unit of green sold has to have one attached to them. Fuel Mix Disclosure is EU wide law and uses REGOs as evidence of source. REGOs are sold separate to power though. And it doesn’t matter for reasons of practicality/laws of physics.

This links to my comments that basically you buy non de script power in the wholesale markets, attach a REGO and it’s green. At its simplest this is because we can’t direct the flow of electrons to our customers and the grid system is a big mixing pot. Inputs are measured and can be offset against outputs – and that’s how the system works. But specific electricity can’t be delivered, so bits of paper are used to make sure that things like greenness are only sold once.

Moving on then to how many windmills will it take to power the UK. The rough rule of thumb that I use is it takes 1,000 MW to meet that 1% annual RO increment – it’s close but not forensic BTW.

On that basis we need 100,000MW of wind to power the whole UK – not allowing for issues of demand and supply balance – just total use.

That’s 50,000 of our 2MW machines, 33,000 of today’s typical 3MW machines and only 20,000 of the 5MW machines that are now appearing and will surely dominate in the future. Turbines up to 10MW are highly likely – that would obviously only take 10,000 – the reality will be a mixture of turbine sizes of course, as we build as we go.

As to land use – Many years ago an outfit called ETSU (gov quango..) undertook a study of the UK’s usable wind resource on land – and the word usable is important. They concluded that we had enough usable sites for wind energy to meet our entire electrical needs 3 to 4 times over. That was almost 20 years ago, with 20 year old technology.

Looking at it another way – on the question of spacing turbines – we reckon that in any given land area a wind farm will occupy just 1% of the land itself – due to spacing needs. Jeffrey calculates for us here that 1% of the UK’s land is 360,000 turbines – that’s 3 to 4 times the number of turbines my rule of thumb says we need for 100%. Which chimes with the ETSU study.

The big caveat that needs adding is of course supply and demand balancing – and let’s not forget energy use reduction.

I don’t disagree with Prof McKay on the need for us to reduce energy use, but I do disagree with his apparent fixation on that to the exclusion of actually building renewable forms of power. The two things are not opposing forces – they are reinforcing – we need to use less and make what we have to use, from renewables.

If we can reduce our consumption by 50% we need just 50,000 of today’s turbines and just 5,000 of tomorrows…. The UK has 2,500 already BTW (although smaller and older types)

There will still be supply and demand to balance though even under the best reduction scenario. For that we have the concept of Intelligent Demand, forget the days of dumb ‘energy on demand’ we can run the grid and our lives more efficiently. And we will.

I believe that the UK should generate way more than 100% of its needs from wind (onshore of course) and should export and/or usefully ‘dump load’ using large scale Intelligent Demand – because the ‘longer’ we are in terms of wind capacity (compared to needs) the more of the time that we will have enough when we need it – and also because we have so much wind – why not use it.

The fact that wind is free and clean (and endless) requires a new mindset to some degree – we need not be constrained by our total annual usage, let’s build 200% or 300% wind for example – generation will match demand more often/easily and there must be many good things we can do with that (surplus) energy. Just a thought.

I think that might cover most of the points! Cheers all.

It’s not un-common to hear people say ‘We need Feed in Tariffs in the UK, like they have in Germany – they’ve got umpteen Gigawatts of renewables from it’. And fair enough they do. It’s important not to confuse large scale FITs with micro though.

The problem for onshore wind (large scale) in the UK is planning not financial and therefore FITs just can’t help. We need German planning laws to emulate German success, in large scale wind.

But what about micro generation; Are feed in tariffs the answer to better deliver this?

Planning used to be a barrier to micro generation but no longer. The problem is just that the numbers don’t stack up. It’s a financial problem, the territory of FITs.

German FITs pay well for micro generation – more than 30p per unit. No wonder much more gets built there than here with our 10p or so. That’s how it works. It’s nothing to do with it being an easy system to use or anything else, just much more money.

But multiple ROCs would do the same job here. They recently doubled and it would be easy enough to have them quadruple (to emulate the value of German FITs) – much easier than to set up a new scheme. And here’s why.

Export from home generation cannot be economically metered, so the ‘system’ cannot attribute it to individual suppliers, it just reduces grid losses. FITs require an electricity distribution company to pay for the power, one who operates the grid – and who then passes on the cost to electricity suppliers working in that region. That’s how it works in Germany. It would be complex to set up and run – compared to multiple ROCs. And it would require new legislation, no small issue.

And would FITs for micro generation give us shed loads of renewables, like Germany? Well yes and no – it would be a boost, but let’s not overestimate how much they have in Germany – from micro gen. Germany’s incredible 12% renewables contribution is often described as coming from ‘wind and solar’ – giving the impression that solar (micro generation) plays a large part. It doesn’t.

Solar actually makes up 0.3% of Germany’s electricity – wind and other large scale renewables produce 11.7%. Put another way micro generation makes up just 4% of the electricity supported under FITs in Germany. It’s good but not as good as it’s cracked up to be.

FITs are good at stimulating micro generation simply because they pay well. Money is really what stimulates micro generation. FITs are a mechanism that works in Germany to provide that money, they could be made to work here but not easily. Whereas multiple ROCs could readily do the same job. The system and the legislation is in place and it works in a UK market context. There’s nothing clever about FITs, they just pay well. That’s easy to emulate. You’d think.

Our German friends do have something we lack – commitment to renewables. That’s what we need. German style commitment to Planning for large wind that works and Finance for micro generation that works.

(Feed in Tariffs – FITs – are a system of fixed prices for renewable energy paid to the generator by the ‘grid company’. The fixed price is above the ‘market’ price and hence provides financial support to enable more renewable capacity to be built.)

So what’s wrong with Feed in Tariffs?

Well, actually nothing. It’s a good way to financially support renewable technologies and so encourage their wider use. It’s worked brilliantly in Germany.

But do they have anything to offer the UK? That’s a different question altogether and my answer to that is a definite no. The reasons are simple enough -

Feed in Tariffs are the right answer to the wrong question.

The UK RO (Renewables Obligation) scheme does the same job. It provides support above that which the ‘market’ alone would give.

FITs work well, so does the RO. The RO is not the problem, so swapping it for FITs won’t achieve anything.

The dominant renewable technology in the UK is on shore wind – it’s technically mature, in mass production and it’s economic. We have enough of it to power the whole country several times over (we have 40% of Europe’s wind resource), and it’s expected to deliver the lion’s share of our renewable targets.

Does it need additional financial support? No, it does not. The government only recently resisted the temptation to reduce the support that wind currently gets through the RO – the trend here is reduced support not increased, because wind clearly has what it needs.

The one thing preventing the UK from having a massive contribution to energy needs from our wind resource is the planning system. And FITs won’t and can’t fix that. Feed in Tariffs are about financial support and that is not the problem. It’s really that simple.

There are technologies other than wind of course, like wave power for example, and they need more support (money) to work than wind does, but they are getting this through the existing RO mechanism – which is now giving multiple ROCs (Renewable Obligation Certificates) to certain technologies, like wave and tidal power. It’s as effective as feed in tariffs at this job.

Feed in Tariffs were a great idea 15 years ago and would have helped the UK then, but we finally got our act together with the RO some years ago (it’s our Feed in Tariff by another name) – and our problems today are not money, they are planning – only planning. Let’s discuss instead adopting German planning laws – now there’s an idea David….

You can now see part two in this series on Feed-in Tariffs here.