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GREEN ENERGY SUPPLY CERTIFICATION SCHEME

SUMMARY OF ACHIEVEMENTS: 2010-2015

Green Energy Supply Certification Scheme Page | 2 Summary of Achievements, August 2015

Contents The Green Energy Supply Certification Scheme ..................................................................................... 3

Overview ............................................................................................................................................. 3

Tariffs .................................................................................................................................................. 5

Carbon Savings through Additionality ............................................................................................ 6

Non-domestic Tariffs ....................................................................................................................... 8

Marketing the Scheme ........................................................................................................................ 9

Approvals and Audits .......................................................................................................................... 9

Competition from non-certified tariffs ............................................................................................... 9

RMR, Licence Condition 21D and the ending of the Scheme ........................................................... 10

Concluding Remarks.......................................................................................................................... 11

Appendix 1: Screenshot showing full tariff listing at February 2013 ................................................ 12

Appendix 2: Full Panel Member Listing ............................................................................................ 13

Solitaire Townsend – Chair (November 2009 – July 2015) ........................................................... 13

Stephen Andrews (July 2012 – July 2015) ..................................................................................... 13

Giles Bristow (January 2013 – July 2015) ...................................................................................... 13

Nick Eyre (January 2010 – July 2015) ............................................................................................ 13

Virginia Graham (January 2010 – July 2015) ................................................................................. 14

Simon Retallack (January 2010 – May 2010) ................................................................................ 14

Sally Uren (February 2011 – February 2013) ................................................................................ 14

Secretariat ......................................................................................................................................... 14

Ian Byrne (November 2009 – July 2015) ....................................................................................... 14

Appendix 3: Ofgem's Final Green Supply Guidelines (February 2009) ............................................. 15


The Green Energy Supply Certification Scheme

Overview

The Green Energy Supply Certification Scheme (the Scheme) was launched in February 2010. It was

established to enable consumers to gain confidence that electricity marketed as "green" provided

additional environmental benefits. Certified electricity had to meet minimum standards for matched

supply from renewable energy, additional carbon savings and transparency. Developed by the

energy industry, with the active support of Ofgem and consumer groups, the Scheme sought to

implement Ofgem's Green Supply Guidelines, which had been published in early 2009 following an

extensive consultation process.

“The overarching aim of the guidelines is to reduce customer confusion by

providing clarity to customers on whether the tariff they purchase, that has been

branded as ‘green’, has an environmental benefit over and above what suppliers

are already required to do.”

Ofgem Green Supply Guidelines, February 2009

During 2009 an independent Panel was appointed, chaired by the sustainability communications

expert Solitaire Townsend. The Panel set up procedures to enable industry participants to work

together without falling foul of competition law, and an independent Secretariat – the National

Energy Foundation – was appointed to administer the day to day affairs of the Scheme.

This activity culminated in February 2010 with the official launch of the Green Energy Supply

Certification Scheme in the House of Commons, with seven energy companies – the so-called Big Six

plus Good Energy – offering certified green electricity tariffs. These tariffs had all been developed or

adapted to meet Ofgem’s Green Supply Guidelines and been independently assessed. Their

suppliers had also committed to meet new standards in transparency about the products.

L-R: Virginia Graham, Simon Retallack, Solitaire Townsend and Nick Eyre at the launch of the Scheme in 2010


The Scheme was bound by Ofgem’s Green Supply Guidelines, and the Scheme’s own Rule Book was

carefully written to implement them in a fair and robust manner, while avoiding excessive

bureaucracy. Although the detailed rules and structure of the Scheme were quite complex, the

reasons for its existence were simple. When a consumer buys a ‘green’ energy tariff they must be

confident that:

1) Their electricity use will be matched with renewable energy (matching)

2) The tariff will deliver further green benefits (additionality)

3) Rules on transparency and annual audit will be enforced by an independent panel

(independent certification)

Matching, additionality and independent certification were at the heart of the Scheme. Similar to a

Kitemark, the Scheme awarded a ‘green label’ to energy tariffs that will deliver a real, measurable

environmental impact. Ofgem owns and protects this Green Energy Certified Label.

Sample of a full label including fuel mix disclosure and additionality statement

Ofgem’s Green Supply Guidelines stated "The supplier must provide Tier 1 information to customers

at the point of sale. The supplier should also include Tier 1 information regarding green tariffs on its

website and in all marketing material. This information must include:

• A Fuel Mix Disclosure chart

• An additionality description

• An additionality symbol/mark demonstrating that the environmental measure/activity as

part of the green tariff results in the abatement of at least a minimum level of Carbon

Dioxide equivalent (CO2e) emissions."

Energy Suppliers

Green Energy Supply Certification Scheme

Panel

OfgemGreen Supply

Guidelines

Green Energy Supply Certification Scheme

Rule Book

Tariffs Audits

Green Energy Scheme

Collaboration Agreement

NEF Secretariat


Whilst the Green Supply Guidelines remained firmly under the control of Ofgem, the Panel had full

control over the constitutional documents of the Scheme. The Energy Supplier Members submitted

tariffs for certification to the Panel and paid a joining and annual fee.

The Scheme’s launch was cause for celebration, not only because UK consumers could now purchase

independently certified green tariffs, but also because the journey to agreeing the existence of a

scheme had been long and occasionally fraught. Ofgem had published the Green Supply Guidelines in

February 2009, and the energy industry and stakeholders then passed through months of debating

the structure of a voluntary scheme to apply them.

Member Suppliers were required to meet the Rule Book standards in exchange for the right to use

the Label in their marketing to consumers. The key Rule Book conditions may be summarised as:

Marketing Management Measurement

Transparency on the Member

Supplier’s overall energy mix in

all green tariff marketing

Preventing the ‘double selling’

of the same environmental

benefit to both household

consumers and businesses

(LECs must be retired not sold)

Using consistent, standardised

calculations for reporting of

carbon and number of

customers across tariffs

Clear information on matching

and additionality in all

marketing

Meeting any commitments to

build renewables projects using

green funds within set

timescales

Providing independent

evidence for carbon emissions

reductions from ‘new’

technologies

Honest marketing and use of

language (e.g. avoiding

contentious terms such as ‘zero

carbon’)

All tariffs by Member Suppliers

claiming to be ‘green’ must be

certified by the Scheme

Independent audits of supplier

compliance with the Scheme

Tariffs

The Scheme received strong support from suppliers, offering a range of attractive tariffs. All the Big

Six – British Gas, EDF Energy, E.ON, RWE Npower, Scottish Power and SSE (trading as Southern

Electric, Scottish Hydro and SWALEC) – introduced tariffs, as well as one the strongest specialist

"green suppliers" in the market, Good Energy. Although Good Energy's initial offering at the time of

the public launch was a new "Green & Gold" tariff built around offsets, it soon responded to

customer demand and brought its main Good Energy tariff into the certification fold, rapidly

becoming one of the top three certified tariffs by customer numbers.

British Gas (Centrica) introduced the largest number of certified tariffs over the life of the Scheme,

including some that were only available for a limited period. At various times it offered tariffs that

supported green funds, offered energy saving devices to customers, or purchased traded offsets.

RWE Npower restructured its longstanding and popular Juice tariff to provide additional CO2 savings,

mainly through community projects while continuing to support more innovative projects once the

minimum carbon savings required by the Scheme had been met. Npower also sold a white label

product under the name of National Trust Green Energy.


SSE (which traded under the Scottish Hydro, SWALEC and Southern Electric names initially) also

offered customers a choice of certified tariffs built around either energy saving measures or offsets.

In contrast the other suppliers (E.ON, EDF Energy and Scottish Power) chose to stay with a single

domestic tariff for the life of the Scheme, preferring continuity of offer to innovation, with E.ON also

offering a dedicated small business tariff under the name "Easy Green".

Despite some concern that certified green tariffs would prove to be an expensive option, only

attractive to wealthier consumers, a detailed comparison of costs for a customer with typical

consumption taken from a leading price comparison site in July 2011 showed that this was not

generally the case:

Carbon Savings through Additionality

The requirement for additionality was a key differentiator for tariffs certified under the Scheme. It

would no longer be enough to buy renewable energy and to hope that in some way this might

encourage new supplies to come on stream; instead each customer had to contribute to some

additional savings. Savings were available through four routes:

• Traded carbon offsets

• Green funds supporting small-scale third renewable energy installations

• Domestic energy efficiency installations (including in customers' homes)

• Other projects that could demonstrate CO2 savings

800

900

1000

1100

1200

1300

1400

1500

1600

An

nu

al

Co

st (

£)

Comparison of 173 Dual Fuel Tariffs

ranked by ascending price

Non-Green Tariffs Green Tariffs


Most certified tariffs were based on either offsets or green funds. At the start it was agreed that a

minimum CO2 saving of 1 tonne1 per customer per annum would be needed for traded offsets but –

to ensure a broad equivalence of cost – only 50kgCO2 per annum would be needed from green funds

or energy efficiency projects. (No projects were put forward in the fourth category, although there

were some discussions about UK-based forestry projects.) By the end of the first year there were

just over 100,000 customers on certified tariffs. The largest component of the total CO2 savings

came from offsets, although considerably more customers were supplied on tariffs linked to green

funds or energy efficiency programmes:

1 Initially this was 1.8 tonnes for offsets under the Government's QAS quality scheme, or 1 tonne for those

meeting the international Gold Standard. After the QAS was closed in summer 2011, the default option was to

use Gold Standard offsets.

30538

3368

45

30381721700

Green Energy Supply Certication Scheme -Source of Additionality tCO2

Offsets - QAS (domestic) Offsets - QAS (SMEs)

Offsets - Gold Standard Green Funds

Mixed Green Fund/Savings Customer Savings

16966277

45

53219

3449

34006

Green Energy Supply Certication Scheme -Customer Numbers

Offsets - QAS (domestic) Offsets - QAS (SMEs)

Offsets - Gold Standard Green Funds

Mixed Green Fund/Savings Customer Savings


Numbers of customers and CO2 savings remained broadly static until the final year of the Scheme,

when two Members resigned in advance of the reforms around the Retail Market Review and the

introduction of Licence Condition 21D.

As an example of a project supported by a Scheme Member using money from a green fund, the

Juice Fund supported the installation of a demonstration ground mounted PV array at the Bishops

Wood Centre in Worcestershire. Although direct CO2 savings are relatively small, the project is

typical of those funded through suppliers: the Centre offers a wide range of curriculum based visits

for schools, outreach programmes, and continuing professional development (CPD) courses enabling

the panels to serve an educational purpose.

Non-domestic Tariffs

The number and take-up of non-domestic tariffs was disappointing. The Scheme was constrained by

a limit from the Ofgem guidelines of 55,000kWh/annum for non-domestic supplies that could be

certified. Although this was intended to ensure that domestic-type fixed cost tariffs for very small

businesses could be readily certified, in practice it meant that only two suppliers came forward with

certified tariffs. E.ON had its Easy Green non-domestic tariff certified and, from May 2010, Good

Energy's main tariff was certified which permitted micro-businesses to purchase certified supplies

through them.

Experience from other green supply certification schemes such as those in Australia or California

suggested that a key driver for suppliers is to allow businesses to promote their purchase of green

electricity as a marketing tool. After consideration, Ofgem were unwilling to licence a variant of the

label for this purpose, fearing it could be used to mislead consumers. Coupled with the limited

number of businesses that fell beneath the 55,000kWh threshold, this limited the attractiveness of

the Scheme for non-domestic customers, and in turn dissuaded suppliers from introducing more

tariffs. The recession also led to a more cautious approach by suppliers, with one citing the

mothballing of plans for a non-domestic tariff on an unwillingness among business customers to

consider green propositions "given the challenging economic environment".


Marketing the Scheme

The Scheme had a limited budget. As a result, marketing was principally carried out through the

Scheme's website, from which the above infographic is taken. As well as drawing on the Chair's

extensive experience in understanding how consumers react to green propositions, the Scheme

made limited use of an intern and a specialist consultant. However, in practice, much of the

marketing effort was devoted to ensuring that customers were able to identify certified green tariffs

on the main switching sites.

Approvals and Audits Before they were permitted to market a tariff, suppliers had to complete a proforma setting out

their plans for that tariff, including the type (and likely sources) of additionality. They also had to

provide a certificate from an independent auditor confirming that adequate procedures were in

place to ensure that the initial aims would be met.

The Panel had to approve these completed proformas before the tariffs could be marketed as

certified, and were also able to make comments at this stage. Crucially they were able to challenge

the tariff name, as it was through this that consumers could most easily be misled. In particular, the

Panel prevented a small number of tariffs from using names around "zero carbon".

At the anniversary of each tariff's introduction, suppliers were required to provide a summary

statement reporting its take-up (defined as number of customers Live on Supply) and the

consequent required level of CO2 savings. In addition, they had to provide an audit report providing

assurance that required savings had been met (or were in train, for projects being supported by

green funds), and that the requisite number of REGOs and LECs for UK supplies had been obtained

and retired to justify the matching claim.

The Panel did not refused to certify any tariffs during the operation of the Scheme. However they

did require several suppliers to make minor modifications to the way that they communicated with

their customers to meet the Rule Book standards.

Competition from non-certified tariffs

Not all tariffs sold as ‘green’ in the UK were certified under the voluntary Scheme. Whilst all the Big

Six energy suppliers and Good Energy were members, there were other tariffs advertised as ‘green’

that did not comply with the Green Supply Guidelines. In particular, the largest independent supplier

of green electricity at the time the Scheme was launched declined to take part, reportedly because it


would have required a significant change to that supplier's business model, as it was understood to

rely on selling LECs to businesses separately from renewable electricity to households. This supplier

also preferred to invest profits in its own renewable generation capacity, which did not count as

additionality under the Scheme rules. The supplier initially published a negative press release about

the Scheme. However, the fact that the Scheme did not include all green suppliers led to a two-tier

market of certified and non-certified suppliers, which was more damaging in the long term than any

adverse publicity. Although most of the price comparison (switching) websites distinguished

between certified and non-certified tariffs by using the Scheme logo, this may well have caused

confusion among consumers unwilling to look in detail at what the competing offerings provided.

Two smaller suppliers were also absent from the Scheme, advising the Panel that it was unduly

expensive to join given their limited customer bases. As costs were set by the Collaboration Group,

and not the Panel, it is perhaps unfortunate that the Suppliers who were part of the Group felt

unable to exercise greater flexibility to lower the barriers to entry for the smallest suppliers.

A "white label" product from a leading retailer was also certified under the Scheme initially, but

retailer chose not to publicise its involvement and let its certification lapse when it changed its

supply arrangements.

Initially non-certified tariffs were not seen as a major threat to the Scheme, but Ofgem estimated

that by 2013 they had at least as many customers in total as certified tariffs. This was reportedly

one of the drivers behind Ofgem's decision to move away from the voluntary arrangements under

the Scheme and to impose a new mandatory licence condition (21D) that would apply to all suppliers

making green claims in the electricity market.

RMR, Licence Condition 21D and the ending of the Scheme After the Scheme had been in operation for about 18 months, the Panel chose to run a consultation

called "Driving Demand". This explored ways in which the Scheme could be improved or enhanced.

Responses showed that those who had engaged with the Scheme were generally content with it,

although there were opportunities around:

• Extending certified tariffs to larger SMEs

• Reducing barriers to participation by small or new suppliers of green energy

• Clarifying rules around claims about 100% renewable energy when a supplier shows this on

their fuel mix disclosure for all electricity supplies

• Permitting ownership by supplier members of renewable energy schemes funded through

the additionality requirement

However, by the time the consultation had closed in early 2012, Ofgem was running its own

consultation into the retail market, commonly known as the RMR (Retail Market Review). With

Government concerned that the multiplicity of tariffs was confusing consumers and discouraging

switching, Ofgem decided to introduce a limit of just four tariffs per supply licence. Most tariffs were

to be time-limited and suppliers were automatically to switch customers back to the cheapest

available tariff when the time expired. Although certified green tariffs were not always the most

expensive, they were rarely the cheapest so it became clear that this could result in a mass transfer

of consumers away from their selected environmental tariff. Around this time, the introduction of


generous Feed-In Tariff rates for domestic solar PV generation may have led to some of the most

environmentally-aware customers giving less attention to purchased supplies, and selecting tariffs

that offered net billing or other benefits instead.

Owing to the relatively small numbers of customers on each certified green tariff, few if any of the

Big Six suppliers were expected to keep one as core tariff; at best they might introduce one as a

short-term offer, perhaps on sale for a month a year. In advance of the introduction of RMR at the

end of 2014, EDF Energy resigned from the Scheme as it had acquired the UK's nuclear power

stations and instead started marketing nuclear-generated electricity in its "Blue" tariff as a low-

carbon alternative to more traditional green tariffs.

A second initiative from Ofgem led to the eventual demise of the Scheme. Conscious that the

majority of green electricity was being sold by mid-tier suppliers outside the Scheme, and with no

legal constraints on double selling (or requirements for additionality), it decided to withdraw the

guidelines and replace them with a new Licence Condition, 21D, for supplies marketed as green.

While this carried forward the rules around matching supplies, it removed the need for additional

CO2 savings, merely demanding an unquantified "additional environmental benefit", and also ended

the need for suppliers to obtain third party assurance through audits. The new additional benefit

requirement also, in the Panel’s view, failed to meet consumers' expectations that by buying a green

tariff they would be encouraging the development of more renewable energy supplies. A second

Member resigned from the Scheme in Autumn 2014, on the basis that consumers would in future

rely on this new Licence Condition, even though it was less robust than the Green Energy Supply

Certification Scheme.

Although at least one Member was keen that the Scheme should stay in place after the introduction

of Licence Condition 21D on 1 April 2015. However, the Panel took the view that it would not be

viable under the original structure for the Scheme to continue, and the Rule Book would need to be

completely rewritten to meet the new market conditions. As a result it decided to extend the fifth

Scheme operating year to run from February 2014 to 31 March 2015, thereby allowing consumers

the benefit of certified supplies right up to the introduction of the new arrangements. It also agreed

to stay in place for long enough to ensure that consumers buying green electricity up to that date

were fully protected through independent audits, but to resign collectively as of 31 July 2015. The

Secretariat was requested to stay in place until such time as all the administrative arrangements had

been tidied up.

Concluding Remarks The Green Energy Supply Certification Scheme proved successful in its aims of bringing more order

to the market for green or renewable electricity for consumers in England, Wales and Scotland.

During the five years the Scheme was operational, an average of around 100,000 domestic and very

small business customers benefited from the Scheme and contributed to total additional CO2 savings

globally in excess of 120,000 tonnes through a mix of international offsets, community renewable

energy schemes (including ones at schools, theatres and small run of river hydro schemes) and

energy efficiency measures in customers' homes. It paved the way for a more broadly applicable

Licence Condition to be introduced, and helped build consumer confidence in green offerings

through its robust attitude to customer communications and assurance.


Appendix 1: Screenshot showing full tariff listing at February 2013


Appendix 2: Full Panel Member Listing

The Scheme was truly independent. While the energy suppliers paid for membership of the Scheme,

none of them sat on, or were permitted to attend, the official Panel meetings, other than by

invitation to make a short presentation about their activities. The Panel were able to demand

changes to the structure and communication of individual tariffs, and to withhold or deny the use of

the Label if needed. Ofgem were permitted to attend Panel meetings in an observer role, and took

up this opportunity for the majority of meetings.

Three Panel Members – Solitaire Townsend, Nick Eyre and Virginia Graham – served for the entire

duration of the Green Energy Supply Certification Scheme, bringing continuity as well as wisdom to

ensure consistently high standards for the Scheme. They were supported by up to two further Panel

Members at any time, selected for their knowledge of consumer protection, the environment and

the utility supply industry.

Solitaire Townsend – Chair (November 2009 – July 2015)

Solitaire is co-founder of the UK’s leading sustainability communications agency Futerra

Communications, advising businesses, charities and government on persuasive green messages. She

is the author of the influential Greenwash Guide on preventing misleading marketing claims.

Solitaire holds a Masters in Sustainable Development and is a member of the UN’s Sustainable

Lifestyles Taskforce, Ofgem's Consumer Challenge Panel and was named Ethical Entrepreneur of the

year 2009.

Stephen Andrews (July 2012 – July 2015)

Stephen is a consultant and director specialising in energy markets and businesses involved with

them. He founded and built up pioneering wind energy developer Windcluster and leading European

energy consultancy company ILEX (acquired by Pöyry in 2003). Since 2006 he has operated

independently through his own company. He has been a senior member of a number of Government

and international working groups tasked with designing and addressing policy changes for

distributed and green generation, he also represents these interests as an alternate member of the

Distribution Code Review Panel.

Giles Bristow (January 2013 – July 2015)

Giles oversees Forum for the Future’s work in the food and energy systems. He joined Forum to lead

the energy programme and this continues to be his particular area of expertise. The energy team

combines dynamic and creative thinking with a desire to challenge leading corporates to develop –

and bring to scale – products, services, financial mechanisms and business models that will bring

about a sustainable energy system. Before Forum, Giles worked as an environmental law specialist

with Slaughter and May and Chief Executive Officer of Carbon Leapfrog (now PureLeapfrog). Giles

has a keen interest in regulation and policy as routes to change. He has written a thesis on the

impact of UK fiscal policies on the project financing of onshore renewable energy whilst studying for

a Masters degree in Energy Policy and Sustainability at the University of Exeter.

Nick Eyre (January 2010 – July 2015)

Nick leads the Lower Carbon Futures group in the Environmental Change Institute at the University

of Oxford. He is a Co-Director of the UK Energy Research Centre, leading its work on decision

making. Nick was previously Director of Strategy at the Energy Saving Trust and has been a

researcher, consultant, analyst and programme manager on energy and environment issues for 25

years.


Virginia Graham (January 2010 – July 2015)

Virginia is Chief Executive of Renewable Energy Assurance Ltd., a subsidiary of the Renewable Energy

Association, running various energy certification schemes and consumer codes all of which promote

sustainable energy. Virginia has extensive experience in sustainable energy policy; serving as

Director of Environmental and Social Issues at Ofgem, she developed Ofgem’s sustainable energy

policy and ran a number of Government environmental programmes incentivising energy efficiency

and renewable generation. She has also been is Chair of Global Action Plan , for six years, non-

Executive Director, and later Chair, of and Eaga Charitable Trust for ten years and a non-executive

Director of National Energy Action for six years.

Simon Retallack (January 2010 – May 2010)

Simon was Head of Climate Change and Associate Director at the Institute for Public Policy Research

(ippr), the UK's leading independent, progressive think tank. Simon is also the founder of the Global

Climate Network, a collaboration of influential research and policy organisations in countries key to

tackling climate change. Previously, Simon led research for the International Climate Change

Taskforce, which provided advice to the UK Government for its presidency of the G8 in 2005. He is

also the author of a number of publications, including the prize-winning book STOP. Simon resigned

from the Panel when he took up a senior role at the Carbon Trust.

Sally Uren (February 2011 – February 2013)

Sally oversees Forum for the Future’s networks, communications activities and partnerships with

business. She is particularly interested in mainstreaming sustainability into core business activities

to create new, sustainable business models, as well as ways of making sustainability easy for

consumers. Sally completed a post doctorate research fellowship funded by DfID (then the ODA)

and did a PhD at Imperial College.

Secretariat The Secretariat was responsible for providing administrative support to the Panel, maintenance of

the website, running the Scheme finances, keeping the Rule Book up to date (for example with

revisions to CO2 conversion factors) and coordinating the annual audit process with the members.

The National Energy Foundation, a charity based in Milton Keynes with a focus on improving the use

of energy in buildings, operated the Secretariat for the life of the Scheme, with Ian Byrne responsible

for leading on the activities.

Ian Byrne (November 2009 – July 2015)

A Chartered Accountant and Chartered Environmentalist, Ian has worked in the sustainable energy

sector for over 25 years and helped develop two early labelling schemes: the National Home Energy

Rating and the Energy Efficiency Accreditation Scheme. He is Treasurer of the Society for the

Environment, sits on the advisory board for the Carbon Trust Standard, chairs the International

Standards Organization's Working Group writing ISO 17747 (Determining Energy Savings in

Organizations) and was formerly on the Institute of Chartered Accountants in England & Wales'

Sustainability Committee.


Appendix 3: Ofgem's Final Green Supply Guidelines (February 2009) 1. Aims of the guidelines 1.1. The key aim of these guidelines is to provide clarity to customers on whether green tariffs are truly "green". This in turn requires that, where tariffs are marketed as "green" by suppliers, they must apply the following principles: • transparency: tariffs need to be clear and consistent with public understanding and expectations

as to what constitutes green supply. Customers should have easy access to specific information regarding the tariff as well as more general information regarding the way that the electricity market, supplier obligations and green tariffs interact. The requirements on transparency, under these guidelines, are discussed in further detail in Sections 1.6 to 1.13 below;

• evidence of supply: suppliers will need to have and retain evidence, for the duration of the

relevant compliance period, to verify all claims regarding both the source of electricity supply and additionality (as described in the next bullet) so that this can be made available to the public or an external verifier. The requirements on evidence of supply, under these guidelines, are discussed in further detail in Sections 1.14 to 1.21 below;

• additionality: customers choosing a green tariff need to be able to be satisfied that their support

is contributing to additional environmental benefits or additionality. As such, they must be assured that the environmental benefit secured through their decision to sign up to the tariff would not have occurred in the absence of this decision. Benefits derived from existing support schemes, e.g. through the Renewables Obligation (RO) or under the Carbon Emissions Reduction Target (CERT), are not included. For example, assigning renewable electricity supported by the RO to a green tariff is not, in itself, evidence of additionality under these guidelines. A minimum requirement in demonstrating additionality should be met by suppliers to achieve accreditation under the scheme. The requirements on additionality, under these guidelines, are discussed in further detail in Sections 1.22 to 1.24 below; and

• accreditation: suppliers who have signed up to the guidelines will be required to agree and

develop an accreditation scheme within given time periods. This process may result in detailed accreditation scheme rules which could be appended to these guidelines. The scheme will require the employment of an independent accreditation body (details to be agreed). The aim of having the tariffs accredited will be to provide assurance to consumers that suppliers are actively engaging in the activities in which they claim they are undertaking within their marketing materials. The presence of an independent third party at the centre of the scheme will facilitate the feeling of assurance achieved by consumers and ensure that there is no bias, towards any one supplier, within the scheme itself. The development of the scheme will be overseen by Ofgem to ensure that its structure adheres to the key principles outlined in these guidelines.

1.2. These guidelines place additionality as a core principle. As a result of these guidelines, it must be clear to customers whether their tariff provides additional environmental benefits or not. This is consistent with consumer expectations of what a green tariff should constitute2. It is also crucial that customers are able to understand clearly and easily what they are getting in terms of environmental benefits. 2. Status of the guidelines 1.3. These guidelines are voluntary in nature and, given the high level nature of the principles contained within them, the green tariff products supported should be capable of evolving over time in line with the evolution of the market. However, where a signatory or other interested party considers 2 This is consistent with the conclusions reached through Ofgem's consumer research, carried out in December 2007, which highlighted that the key motivation for consumers in signing up to green tariffs is to facilitate additional environmental benefits. The conclusions of the research are available at: http://www.ofgem.gov.uk/Sustainability/Environmnt/Policy/Documents1/Final%Report%20from%20Mori%20re%20Consumers'%20Views.pdf


that certain provisions within these guidelines need to be revised, they should notify Ofgem. Ofgem will subsequently consider whether a consultation regarding this proposed amendment is required. 3. Scope of the guidelines 1.4. The guidelines apply to green tariffs targeted at both domestic and Small and Medium Enterprise (SME) customers that are offered by suppliers who are signatories to the guidelines. For the purpose of these guidelines, SME is defined as having an annual electricity consumption of less than 55,000 kWh3. 1.5. Further, the guidelines cover renewable tariffs only not low carbon tariffs such as good quality Combined Heat and Power (CHP) or nuclear. 4. Transparency General requirements 1.6. All marketing material and related information should be based on correct, up-to-date and specific information about the product that is being offered. Information provided regarding the market more generally and the obligations with which suppliers must comply should also be up-to-date and accurate. 1.7. The use of images and symbols should reflect the product being offered; for example, the use of images of wind generation should only be used where a supplier sources a substantial portion of its generation from wind. The exact detail of these arrangements will be agreed through the discussions that take place to establish the accreditation scheme. Provision of information on a tiered basis 1.8. In recognition of the different needs of consumers regarding the provision of information, suppliers must provide information to consumers on a tiered basis. The first tier of information will outline some of the key information which consumers should be aware of in advance of signing up to a green tariff. The second tier of information will provide an explanation of these symbols and the third will provide general contextual information regarding green tariffs and the electricity market. The requirements for the provision of information under the first, second and third tiers are outlined in more detail in paragraphs 1.9 to 1.13 below. Tier 1 information 1.9. The supplier must provide tier 1 information to customers at the point of sale4. The supplier should also include tier 1 information regarding green tariffs on its website and in all marketing material. This information must include: • a Fuel Mix Disclosure chart illustrating the relevant fuel mix of the supplier5 which shows the

different energy sources used and the percentage of each source making up the fuel mix. This will provide an indication to customers of the environmental credentials of the supplier. This requirement is in line with legal obligations on active suppliers to provide information to each customer that has received a bill or statement, in the 12 month period commencing 1 October, regarding the contribution of each energy source to the total amount of electricity purchased for supply by the licensee6;

• an additionality description, in plain language, briefly outlining the environmental

measure/activity that the supplier is undertaking on behalf of the customer to demonstrate additionality. If the activity is carbon offsetting, then this must be explained very clearly and the

3 Follows the definition used as part of the Energy Ombudsman 4 Before a customer enters into contract for a green tariff 5 If a supplier has multiple licences then it must use the FMD chart specifically related to the relevant licence 6 The requirement is contained at paragraph 4(a) Standard Supply Licence Condition 21


carbon offsetting product used by the supplier must be compliant with the Government's Quality Assurance Scheme for Carbon Offsetting7; and

• an additionality symbol/mark demonstrating that the environmental measure/ activity as part of

the green tariff results in the abatement of at least a minimum level of Carbon Dioxide equivalent (CO2e) emissions.

1.10. Where it is not possible to provide a pictorial representation of these attributes of the green tariff at the point of sale, consumers must be made aware of this information prior to entering into a contract for a green tariff. Tier 2 information 1.11. The second tier of information should be available from a publicly accessible resource (e.g. the supplier's website) or in printed materials and must explain the symbols presented in the first tier. As such it should provide details of: • the key messages that the fuel mix chart is seeking to convey; • the specific fuel sources that are referenced in the fuel mix and the key attributes of these fuel

types; • a website link or reference to the information that the supplier produces regarding their overall

fuel mix; • the environmental measure that has been supported as a result of the purchase of this particular

tariff, specifically what this will mean in practical terms; and • an explanation of the minimum threshold for additionality and how it was met and derived for the

tariff in question. Tier 3 information 1.12. Tier 3 information should also be available from a publicly accessible resource or in printed materials and suppliers should ensure that customers are made aware of this information in any marketing material or correspondence relating to the green tariff. This information must include the following: • suppliers have a Renewable Obligation (RO) under which they have to either pay a fee to Ofgem

and/or buy Renewable Obligation Certificates to fulfil their annual obligations; • the Government's ongoing aim of the RO is to encourage an increased amount of electricity to be

generated from renewable technologies; • the average amount that domestic/SME (as appropriate) customers on a standard electricity tariff

are already contributing to renewable energy as a result of the RO8; • a description of suppliers' Carbon Emissions Reduction Target (CERT) obligations; • the Government's ongoing aim of the CERT is to encourage an increased amount of energy

efficiency by domestic customers; • the average amount that average domestic/SME (as appropriate) customers on a standard

electricity tariff are already contributing towards the supplier's CERT obligations9;

7 http://offsetting.defra.gov.uk/

8 Figures to be provided by Ofgem

9 Figures to be provided by Ofgem


• for SME tariffs, a description of the Climate Change Levy (CCL) and levy exemption regulations; and

• for SME tariffs, the average contribution that SME customers make to support renewables

through the CCL. 1.13. The measures that will be applied, including possible sanctions, in the event that suppliers are not compliant with these requirements will be determined through the development of the accreditation scheme. Furthermore, the way in which tier 1, 2 and 3 information is presented will also be agreed and standardised through the development of the accreditation scheme to ensure consistency and facilitate greater customer understanding. 5. Evidence of supply 1.14. Suppliers will need to conform to the legal requirements relating to Fuel Mix Disclosure, as set out in Standard Supply Licence Condition 21 (Fuel mix disclosure arrangements), when making any claims regarding their overall generation portfolio. 1.15. Evidence of supply should be retained for the suppliers overall fuel mix and this evidence should follow the requirements of paragraph 8 of the Electricity (Fuel Mix Disclosure) Regulations 2005. Where particular generation sources are specified, the supplier should provide this evidence by category of generation source. 1.16. Evidence must also be retained (period to be agreed) regarding the environmental measure(s) in which the supplier has engaged in on behalf of its customers. The volume test 1.17. To ensure that double or triple counting the "greenness" of a green tariff does not occur and that there is consistency across the market, the following volume test applies: A supplier must hold the requisite number of Renewable Energy Guarantee of Origins (REGOs) to support the volume of renewable supply in a green tariff/contract. The supplier must also either retire or redeem any associated Levy Exemption Certificates (LECs) to ensure that they are not later sold on to other customers. 1.18. Imports of renewable generation from outside of the UK is treated as follows under the volume test: If the electricity is from a generator that has been issued with LECs then the supplier must retire the LECs and hold the requisite number of non GB or NI issued Guarantees of Origin recognised by Ofgem. If the electricity is from a generator that has not been issued with LECs then the supplier must purchase and retire LECs and hold the requisite number of non GB or NI issued Guarantees of Origin recognised by Ofgem. 1.19. Even once the volume test is met, a supplier cannot make claims that a green tariff is either carbon-free or "100% renewable electricity". However, a supplier can claim that it has matched the amount of electricity sold under its green tariffs with purchases of renewable electricity, if this is the case. 1.20. Furthermore, a green tariff must meet both the additionality10

and volume tests to receive accreditation under the green supply guidelines. Fuel mix allocations will not be taken, by themselves, to imply that a green tariff is additional and therefore further measures are necessary to be accredited under the green supply guidelines. 1.21. Suppliers can sell Climate Change Levy (CCL) exempt supply or LEC-backed supply under the guidelines only if the tariffs meet both the additionality and volume tests as set out above. Suppliers can also sell unaccredited CCL-exempt supply but this should not be described as green supply. 10

As outlined in paragraph 1.23


6. Additional benefits associated with the tariff 1.22. For green tariffs to obtain accreditation under the scheme, suppliers must also demonstrate that the relevant tariffs incorporate a certain minimum level of additionality. In demonstrating this, suppliers must first show that they are undertaking an activity or measure that results in the delivery of an environmental benefit that would not occur under a "Business As Usual" Scenario, consistent with the description of additionality in paragraph 1.1 under these guidelines. The supplier must then demonstrate that the additionality measure/activity that it is undertaking results in the abatement of at least a minimum level of CO2e emissions, as described below, and this must be certified through the accreditation scheme. The additionality minimum threshold test 1.23. For measures of additionality to qualify under the guidelines it is necessary that they are not only compliant with the requirements outlined above but that they also result in the abatement of at least a minimum level of Carbon Dioxide equivalent (CO2e) emissions. For domestic green tariffs, this minimum threshold level depends on the activity that the supplier is undertaking to demonstrate additionality: • for carbon offsetting activities, the minimum threshold is currently set at 1 tonne of CO2e

emissions abated per tariff per annum. The carbon offsetting product used by the supplier must be compliant with the Government's Quality Assurance Scheme for Carbon Offsetting11; or

• for all other additionality activities, the minimum threshold may be a figure less than 1 tonne of

CO2e emissions abated per tariff per annum but must be of broadly equivalent materiality. The minimum threshold for all other activities shall be agreed by all signatories to the guidelines before the accreditation scheme is fully operational.

For SME green contracts, the thresholds should be scaled upwards based on the electricity consumption of the SME12. 7. Assessment of whether a benefit is additional 1.24. A degree of responsibility and self-governance is required from suppliers in interpreting the additionality provisions and ensuring that something would not have happened under a "Business as Usual" scenario. This will be monitored as part of the accreditation scheme to ensure that suppliers that are signed up to the guidelines and accreditation scheme remain compliant. 8. Third party assessment of green tariffs 1.25. Implementation of these guidelines will require suppliers to agree a governance structure for the accreditation scheme for green tariffs. 1.26. The scheme should include provisions to ensure the auditing and verification of claims and the creation of an additionality symbol/quality mark which can be assigned to all tariffs that fulfil the requirements set out in these guidelines. 1.27. Once the accreditation scheme is in place and sufficient experience has been gained, Ofgem will review the guidelines to determine the possibility of extending them to include the I&C sector, low carbon tariffs and green gas. Ofgem will also revisit the additionality thresholds and consider the possibility of developing a ranking system, based on CO2e emissions abated, that allows for greater differentiation between tariffs. However, where a signatory or other interested party considers that certain provisions within these guidelines need to be revised, they should notify Ofgem. Ofgem will subsequently consider whether a consultation regarding this proposed amendment is required.

11

http://offsetting.defra.gov.uk/ 12

For example, if the electricity consumption of an SME is 25,000 kWh per year, then the green contract that it purchases should result in the abatement of about 7.6 tonnes of CO2 emissions per annum(based on an average household electricity consumption of [3,300] kWh per annum) if the environmental measure is carbon offsetting.

Version 1.1

18 August 2015