Utility Week

26 | 15TH - 21ST DECEMBER 2017 | UTILITY WEEK Customers Analysis R enewable 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. Why? It's a heady combi- nation of consumers becoming increasingly aware of their carbon footprint, and sup- pliers becoming more willing to help them tread lightly. In short, there's a green revolu- tion afoot, and it's not all about electricity. Competition is booming in the renew- able gas sector too, 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 with many stand- ard variable tariffs (SVTs), green options are 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 (formerly GDF Suez) announced plans to switch all its gas opera- tions to biogas and renewable hydrogen by 2050, making it 100 per cent green. Back on our shores, Eon recently said its new elec- tric vehicle tariff will come with 100 per cent green gas. At the last count there were an estimated 200,000 UK households signed up to green gas tariffs across eight different energy sup- pliers, 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 ten mil- lion homes. Also last month, the Green Gas Certifica- tion 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 revolu- tion – but are we? There's no doubt the affordability of green gas tariffs is improving, but the fact remains that is still more expensive than conventional gas. And looking to the future, it's uncertain whether government interven- tion in the retail market will help or hinder the continued expansion of green gas. The dra price cap bill proposes that green tariffs be exempt from price regula- tion, so will this allow competition to keep pushing prices down? Or could it incentiv- ise 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 past few years, and with the decarbonisation of heating high on govern- ment's agenda – if 2050 carbon targets are to be met – it shows much promise. However, there's no doubt that challenges lie ahead if the industry is to keep growing from this promising position. Here, 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 per cent green, its chief executive Isabelle Kocher said last month. The reason for the interest in green gas, she says, is decarbonisation. She says the world is now focused on decarbonising elec- tricity via renewable energy, but electricity accounts for only a minor part of total energy demand. "Most of the energy consumed is for heating, cooling and transport," she says. "By massively deploying green gas we could decarbonise all that." The power and gas group has around 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. He adds that part of the driver for both green electricity and green gas products will continue to be "shareholder commitment from larger businesses, their performance in carbon reporting league tables and, par- ticularly 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 may hold the sector back, though, 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 back- ing, says Chryssa Tamvaki, commercial ana- lyst, 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 biom- ethane plants." She says Corona has really seen consumer appetite for green gas gathering pace in the past 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 trans- parent 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 [indus- trial and commercial] and SME [small and medium-sized enterprise] space," says Luke Green gas going strong Alice Cooke examines the advances being made in the renewable gas market, and asks green gas suppliers what they have to say about the industry.

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