Today marks the 10th birthday of the Climate Change Act, the cornerstone of the legislative and policy environment from which the UK’s approach to decarbonisation and climate change mitigation has been built.

The Act sets out an ambitious target to reduce net UK carbon by the year 2050 to 20% of a 1990 baseline, and the UK has already made incredible progress against it, reducing emissions by 43% by 2017.

It is fair to say that the power industry has been most transformative in support of these reductions, but with renewable energy having more prominence in urban and rural environments, and indeed the media, than ever before, what more can be done to support its mainstreaming?

From across the country, a team answered the call and assembled (like a sort of Renewable Avengers) to discuss the future of green generation. Lining up were:

Sam Kimmins, Head of RE100 at the Climate Group

• The RE100 brings together the world's most influential companies committed to 100% renewable power.

Nadia Smith, Policy Analyst, Renewable Energy Association

• The Renewable Energy Association is the UK’s largest trade association for renewable energy and clean technologies, representing around 550 companies operating across heat, power, and tranpsort. 

Mike Shirley, Head of Marketing, SmartestEnergy

• SmartestEnergy is the UK’s leading purchaser of independent generation, supplier of renewable electricity, and provider of demand response services.

Ben Brown, Energy Bureau Manager, Landsec

• Landsec owns and manages some of the most recognisable buildings in the country, supplying them through a mix of onsite electricity generation and renewable energy tariffs.

1. For individuals and organisations who are keen to explore renewable energy, but are daunted or confused by the industry: is there a ‘right’ place to start?

Sam Kimmins: The ‘right’ place to start is to set out your ambition – and we believe that should be 100% renewable electricity. This is what all our RE100 member companies commit to, and it’s what we need all businesses to achieve if we are to reach the zero-carbon grids required to meet our Paris Agreement climate goals by 2050. By setting a 100% target, your organisation demonstrates that it is serious about renewables, enabling you to develop a strategy with a clear end goal that the organisation is aligned behind – rather than tinkering around the edges.

Nadia Smith: In an industry with such a varied range of technologies, which is growing and diversifying at a rapid rate, it can be easy to become overwhelmed. Understanding your energy consumption, needs and habits will help narrow down the relevant options to you, and install renewable technologies with the highest efficiency, and therefore returns for you and the environment.

Ben Brown: I’m fortunate that, at Landsec, we have invested the time and resources to assess solutions available to us. We believe that the most effective way to consume renewable energy is to generate it yourself, displacing grid costs and providing opportunities for revenue streams. We have set a target to deploy 3MW of renewable capacity on our buildings by 2030, and we’re already halfway there.

Mike Shirley: Signing up to a renewable energy tariff is a real low hanging fruit. However, it is important to understand what you’re actually buying. To truly add your consumption weight to the decarbonisation process, you need to be clear that the renewable energy you are buying is authentic, is backed by Renewable Energy or Gas Guarantees of Origin (REGOs & RGGOs) and is validated to be allocated against your supply.

2. Ofgem recently stated that: “…suppliers can buy REGOs cheaply, so it is easy and cheap for suppliers to ‘green’ some tariffs. As such, our starting point is that simply having renewables in the portfolio is not enough to demonstrate that a tariff is providing support for renewables.” Are green tariffs really valid?

NS: We believe that green tariffs which are 100% renewable energy are extremely supportive of the industry. The REGO purchase mechanism is a ‘tried and tested’ initiative across EU states, and accredited by Ofgem, ensuring accountability. Furthermore green suppliers must prove additionality, a requirement which has recently been confirmed in the derogation decision from Ofgem on the Energy Bill Price Cap – a consultation process which the REA was proudly involved in.

MS: REGO’s are the way forward, I agree, but there is a difference between simply having REGOs in your portfolio and tracking renewable electricity from the original point of generation, through the system to the end consumer. For a consumer to receive the “value” of the renewable electricity, they should ensure that they are the only consumer benefiting from that MWh of electricity. As more consumers commit to renewable electricity, the REGO will become the core differentiator and will carry the value differential between conventional and renewable tariffs.

BB: I completely agree with Mike. Where we don’t generate our own energy, Landsec uses REGO-backed products, subject to an appropriate internationally recognised audit standard, such as ISAE 3000. I think that, without this third-party assurance in place, it’s difficult to claim a green tariff supports the renewable industry. Energy attribute certificates issued by a generator that find their way onto the secondary market, simply because the actual end users of that energy don’t want or need them, do not support investment in renewables.

SK: Green tariff options which bundle energy with associated EACs are more impactful, but I’d go one further than this. To truly support the transition to a low carbon economy, where possible, customers should pursue green tariff strategies with specific attributes - such as only purchasing from new projects or specific technologies. This ensures that their purchases are contributing to the aggregation of demand through impactful procurement options available in the market.

3. What more can be done to maximise the uptake of renewable energy?

BB: I think the role of large disclosure schemes is crucial in supporting renewable energy uptake. In some instances, reporting criteria are very restrictive, and some schemes prohibit participants from reporting renewable energy as their landlords are already disclosing it. This has the potential to discourage dialogue with their landlords for greater investment in renewable energy. Loosening these requirements would likely reinvigorate demand from customers and catalyse the real estate industry into action.

SK: Corporate sourcing of renewables is a growing movement, with GW-scale increases in corporate purchases each year. A recent RE100 paper goes into detail on how exactly companies can maximise the uptake of renewables. One of the things it touches on is the real opportunity to scale up this growth through supply chains, and our RE100 members are working with their suppliers to make this a reality. It’s almost Ben’s point flipped on its head! Apple, for example, has already persuaded 23 of its suppliers to source the electricity used to produce Apple goods from renewable sources.

MS: Previously Sam talked about strategies to purchase energy from new renewable projects. A great option to stimulate investment is the use of a corporate power purchase agreement where the buyer agrees to procure energy over a long period from a proposed generation plant in return for long term price stability, and a supplier agrees to manage the energy offtake and billing. The developer can use this commitment as collateral to raise funds to build the new generation plant. SmartestEnergy are actively looking to support these solutions and will sleeve the energy into our customers’ contracts.

NS: In order to meet our legally binding climate goals and become world leaders in renewable energy, the Government must encourage the deployment of renewables and bolster this support with consistent long-term policy. Whilst the Government has shown some encouraging signs with publications such as the Clean Growth Strategy, chopping and changing of policy is impeding investment, resulting in some constraints to the growth of the industry. It is crucial that industry pioneers communicate their needs and experiences to Government and these are considered to enhance policy transformations.

4. How about the current policy and market landscapes? Are they good, or bad for the renewables market?

MS: The focus of policy has shifted from specifically supporting renewable generation to making the system more flexible to cope with the growing proportion of intermittent generation, which reached a record high of 31.7% in the second quarter of this year. This provides different challenges to the system and creates opportunity for innovation we haven’t yet imagined. This in turn works hand in hand with the continued development of renewables to increase renewable generating capacity whilst reducing energy intermittency.

BB: We talk a lot about electricity, but the recent surge in applications for green gas plants, represents up to £400m of investment into the UK. As Landsec is one of the largest consumers of green gas in the FTSE 100, I would hope that this pushes down the price of RGGOs, which currently represent a 10% premium on gas costs. Lower costs would undoubtedly stimulate demand, and we could see a virtuous cycle, transforming our gas mix in the next 5 to 10 years.

NS: Solar PV has seen a stagnation in installations due to the lack of a route to market, including the exclusion from large-scale support mechanisms and the ending of the Feed-in-Tariff in March 2019, which has supported over 900,000 small scale renewable installations in the UK. But costs have come down by 16% year on year and are expected to drop by a further 50% by 2030 (a trend common across all renewables technologies), and combined with the right regulatory changes, like reinstating an Export Tariff for small-scale PV, we expect that subsidy free installations could become common. Offering clear routes to market for the most economically viable technologies is key to a quick transition to a low-carbon economy.

SK: There’s a mix. The majority of renewable electricity PPA deals in Europe have been in Scandinavia, the Netherlands, the UK and Ireland, reflecting the favourable policy environment. Through our RE100 initiative, we’ve been working to open markets globally, and with our RE-Source Platform partners we’ve succeeded in ensuring that corporate sourcing is strongly represented in the new EU Clean Energy Package. As Nadia says, policy remains one of the biggest barriers to corporate sourcing but governments are waking up to the infrastructure investment opportunity this represents, and markets are increasingly opening up to take advantage of this.

5. Saving the planet aside, what do you perceive the benefit of renewable energy to be?

NS: Renewable energy and clean technology remain significant business opportunities. In 2016 the renewable energy industry employed close to 126,000 people. This is a number that has the potential to grow further. In fact, research by the REA and Innovas has found close to 16,000 jobs are now linked with the growing energy storage and electric vehicle industry.

BB: There are wider economic benefits too. We are seeing increasing interest from our stakeholders concerning the governance of our utilities. Why? Because of a desire to act ethically; the now undisputable fact that sustainable companies are more profitable than their peers; and the need to publicly disclose mandatory and industry returns in respect of energy and carbon reporting. The maximisation of renewables in companies’ portfolios will minimise carbon emissions, which will become more important to investors as sustainability becomes embedded in company reporting.

SK: Ben’s right, and there are longer term commercial benefits too. Electricity markets are changing. Smart companies are gearing up now to navigate these new markets and to seize new deals and opportunities as they arise. Latecomers may find themselves at a competitive disadvantage as the leaders shape new markets.

MS: Renewables essentially provide zero marginal cost electricity. This will fundamentally change the operation of the UK. As the value of generated electricity drops and generation rises, we could have near-unlimited low, or no cost electricity, which releases many new opportunities, not least in heat and transport. We are starting to see electric vehicles and heating innovations hit the market but not yet at scale, and the opportunity to cheaply power these technologies could revolutionise the sector.

6. What plans do you have to shape the renewable energy industry in the future?

NS: We will continue to support the deployment of renewables and smart tech, including emerging technologies. Technologies such as deep geothermal, biomass and marine energy (which the UK has leading expertise and plentiful resources in) hold the potential to offer ‘baseload’ power, and it is estimated that geothermal energy could provide up to 20% of the UK’s power needs with the correct support. The UK’s first geothermal project, the £18 million United Downs project in Cornwall, began drilling this month and provides an interesting pioneer project to demonstrate challenges and opportunities.

MS: We believe that all customers will become “prosumers” – producers and consumers of electricity – and providers of balancing services (either on their own sites or externally for value). We are an asset-lite energy company that is transitioning our business to provide the appropriate services for that new reality.

BB: I had a great conversation the other day about technology as a service. So many promising low-carbon, and supporting technologies, like CHP or batteries, are underutilised due to complex operating systems and poorly constructed maintenance contracts. We’ll certainly be looking at opportunities to lease more equipment moving forwards, sharing savings and revenues with our partners, which by improving returns on investment, should encourage wider roll out of solutions across our portfolio.

SK: The market is changing and RE100 helps to accelerate that change. Our members have an aggregated electricity demand of 188TWh per year – greater than the electricity consumption of Egypt or Poland – and they represent over $100bn investment opportunity in renewable energy. This sends a clear signal to suppliers and policymakers that businesses want clean power and gives policymakers the confidence to enact ambitious policies that open up markets to corporate sourcing in the EU, Asia and other regions across the world.

7. What do you expect the long-term outlook for renewable energy to be?

BB: We’re seeing record levels of public support for renewables, and UK renewable energy capacity overtook fossil fuel capacity in September this year. The momentum is with renewables at the moment, and with less reliance on fossil fuels than ever, the potential to meet the Climate Change Act 2050 target, and limit global warming to 2, or even 1.5oC is a real possibility. I think that this conversation and the organisations represented demonstrates perfectly the collaboration that is occurring in the commercial sphere to realise change.

SK: We need to have zero carbon grids by 2050 at the very latest. That’s 32 years. Things are already changing faster than we expected and we’re seeing utilities such as NIPSCO in Indiana already planning to retire existing coal plant early, because it’s simply cheaper to replace them with new renewables. The electricity markets of the future will be fundamentally different to today, and as Seb Henbest of BNEF eloquently puts it, the power systems of the future will dance to the tune of wind, solar and batteries.

NS: I’d add that our ability to hit our climate goals will depend on consumer led participation in the industry. In the transition to subsidy-free or reduced subsidy markets, generation must now meet demand and market mechanisms, driven by public engagement and prosumer choice – a more democratic, and decentralised energy system is on its way.

MS: The technological and consumer behaviour changes that Sam and Nadia talk about will be supported by automation, miniaturisation and personalisation, making systems more prevalent and more local whilst removing the need for human intervention to balance these new smart grids. Companies and communities will be able to largely support themselves, benefiting from cheaper and more secure supply.

NS: It’s important to remember that despite huge successes, we still have a long way to go. There have been portentous warnings, exemplified in pleas from the BEIS Committee to bring an early ban on petrol and diesels cars, to the most recent IPCC report detailing the alarming dangers of global warming rising more than 2°C. Imminent action is required, but hopefully this conversation will provide some useful tips for organisations looking to take those first steps to support the renewables industry and mitigate climate change.