Industry Voice: SSE Energy Solutions' Gary Stalker looks at how pragmatic government policy and enhanced transparency around green energy solutions can bring more businesses on the net zero journey
SSE powers change. And we want that change to be lasting, fair and transparent.
That's why, in addition to investing £24bn in new renewables sources and other infrastructure by 2031, we're exploring what the future of green electricity buying could look like.
Going further on green energy transparency and meeting demand
Today, there's unprecedented demand for green energy. Around 40 per cent of power in the British grid comes from renewables.
Each unit of renewable electricity is tagged with a certificate, called a REGO (Renewable Energy Guarantee of Origin). Electricity suppliers use REGOs to offer green tariffs, and organisations can use these REGO-backed tariffs to lower their carbon emissions for reporting purposes.
Importantly, electricity suppliers just need to own the certificates: they don't have to buy the associated green electricity. This has led to a certificate market where REGOs can be sold by renewable generators and bought by suppliers.
SSE believes now is the time for the system to evolve. Customers want greater transparency about where their renewable energy comes from and providing this will help increase confidence and trust.
SSE Energy Solutions' green tariffs are 100 per cent backed by both the electricity and the REGOs purchased from the wind farms and hydro stations that SSE owns and operates. We think this should be the minimum standard for green tariffs so, as a near-term measure, we've called for a change to the government's rules - ensuring suppliers must buy both the green energy as well as the associated certificate before declaring a tariff green.
Moving to 24/7 tracking and beyond annual reporting
And we can go even further.
Renewable generation varies with the weather - some days are windier or sunnier than others. However, carbon emissions are reported based on annual calculations: current reporting requirements mean organisations match their annual electricity usage with an equivalent number of REGOs.
This means a customer can buy, through their green tariff, enough REGOs to cover their electricity use for a year - but the REGOs might have been generated at a time when the customer wasn't using electricity. For example, a customer with high overnight demand can buy a green tariff backed by solar REGOs.
To put it another way, customers might consume 100 per cent renewable electricity on a yearly basis but consume a much smaller percentage on an hourly basis.
This can change, and it starts with analysing how customers' hourly consumption corresponds with the hourly output of renewable assets. The ultimate objective would be to have all customer demand 100% matched to renewable generation on an hourly basis, which could deliver a wide range of benefits to the system and customers.
SSE has already started to explore ways in which this can be done. Earlier in the year we joined the Energy Tag initiative which is leading some of the industry's work in this area. Alongside this, we're taking part in a demonstrator project led by Granular which will look at the mechanics of tracking hourly energy certificates.
We're not proposing that everyone can achieve 100 per cent hourly matching overnight: it will take time. But it is an exciting next step for both suppliers and customers to consider as we all move towards net zero.
UK policy must back affordable greener energy
As a nation we need to stabilise costs as well as climate change. This means ensuring that policy decisions are based on the lowest-cost pathways which can deliver more affordable energy. Cost-effective and rapid deployment of established and new renewable technologies is key.
Evidence clearly shows that accelerating the drive to build more offshore wind is the cheapest, quickest route. For example, once Dogger Bank offshore wind farm is fully operational in 2026, it will be the largest in the world and supply 5 per cent of the UK's demand. Had it been operational last winter, it could have saved each household £67 thanks to the design of the UK government's support mechanism for renewables.
In addition to dealing with the immediate affordability crisis through its support package, the UK government has a vital opportunity to make a decisive leap away from an energy system that's dependent on imported fossil fuels, towards a system which uses more secure, homegrown and clean sources of power.
Investing now will not only bring down emissions, but also reduce our future exposure to gas markets and support jobs and growth. Net zero, and the investment required to get there, is part of the solution, not the problem.
Building for the energy transition
It's not simply about building more renewables. We also need to upgrade our energy system, to make it more flexible. This will support a range of renewable generation and storage - including pumped hydro and battery sites - as well as heat pumps, electric vehicles and so on.
Developing better and more widespread energy storage will enable us to utilise renewables fully, capturing energy when conditions are favourable, to use in down times. Technologies like batteries play a crucial role when it comes to balancing the grid.
The growth in electric vehicles also brings opportunities as well as challenges. To encourage lower carbon energy usage, time of use tariffs reward businesses financially for charging EVs at times of low demand or high renewable generation.
Our national energy grid needs to be fit for purpose to cope with and make full use of this variety of solutions, so we can become more sustainable.
To help businesses take an active part in this transition to net zero, SSE Energy Solutions delivers sustainable energy and infrastructure through a collaborative, whole system approach.
Gary Stalker is strategic account manager for major bids at SSE Energy Solutions