Greener than green!

Less white than white, we (and comedian Coluche) suspect, must be light grey. We know what the colour green is…it’s green! But greener than green? That’s a new colour – it was just released!

I’m not looking to recite Coluche’s legendary sketch on advertising, but I couldn’t help making a reference to my favourite comedian when I heard the announcement made on 18 October that ‘Seven independent producers are launching the Électricité Verte d’Origine Contrôlée [Controlled Designation of Green Electricity Origin]’, made in the presence of Elisabeth Borne, Minister for the Ecological and Solidarity Transition, and Brune Poirson, Secretary of State to the Minister of the Ecological and Solidarity Transition.

It is true that green electricity offers have been quite common in France since the markets were opened up, and that, among all of these ‘no added cost’ green offers, watching suspicions and accusations arise that they are not contributing to the energy transition have become just as common – that the pure and simple purpose is that of ‘greenwashing’.

Let’s try to get an idea of what colour electricity is.

Electricity, like natural gas, can be produced using renewable sources and therefore can have a ‘green’ origin. But as soon as renewable-sourced energies are injected into the different networks it is no longer possible to tell them apart from those originating from a ‘classic’ production method.

This means that regulation is the key to defining the traceability of renewable electricity, through the implementation of Guarantees of Origin (GO):

  • At European level, through European Union Directives
    • 2009/28/EC (Article 15)
    • as well as its ‘revision’, applicable since 01/01/2021, 2018/2001 (Article 19)
  • At French level, through the Energy Code
    • On the Legislative side: Articles L314-14 to L314-17
    • On the Regulatory side: Articles R314-53 to R314-67

Thus, the French regulatory body – the Energy Regulatory Commission (CRE) – offers the following definition:

 ‘“Green” electricity refers to electricity produced from renewable energy sources (hydropower, wind, solar, geothermal power, etc.) or by cogeneration. Green offers provide electricity of renewable origin, certified by guarantees of origin.’

RTE (the French Transmission System Operator), for its part, elaborates on the guarantees of origin mechanism as follows:

 ‘The guarantees of origin system allow for electricity generation to be labelled in order to show the end customer that a portion or a set quantity of the electricity is of renewable origin or produced through cogeneration.

In order to transpose the new requirements of Directive 2009/28/EC on energy from renewable sources, Decree No. 2012-62 of 20 January 2012 was enacted to amend Decree No. 2006-1118 of 5 September 2006 establishing the guarantees of origin framework.

In accordance with this Decree, following a ‘call for tenders’ procedure, Powernext was appointed the responsible party for issuing and monitoring guarantees of origin from 1 May 2013.

For all information pertaining guarantees of origin, RTE invites you to visit Powernext’s “guarantees of origin” page.

Thus, a supplier can guarantee 100% ‘green’ energy to its customer by using / cancelling out a number of guarantees of origin in an amount equal to this very customer’s consumption in MWh.

Still with me? ‘Keep moving – there’s nothing here to see!’ as the dearly missed Coluche would say.

Apparently, some problems arose in that a controlled designation label (by whom, incidentally? As of right now, the Institut National de l’Origine et de Qualité [French National Institute of Origin and Quality], a national public administrative body which manages, among other labels, AOCs and AOPs, doesn’t seem to be in charge of monitoring this new label) could be corrected through two types of commitment:

  1. Investing exclusively in renewable sources of energy production;
  2. Accelerating the construction and development of new renewable electricity generation plants in France.

Let’s forget the first commitment, which conveys a certain corporatist attitude as it seeks, somewhat heavily, to eliminate any company that would take the liberty of doing anything other than investing in renewable sources of energy production (this commitment would therefore not only exclude EDF and Engie).

Let’s take a closer look at the second commitment, which involves two aspects:

  • Renewable energy is produced in France (thus, this certificate is perhaps ill-advised for consumers who consider wind turbines to be incompatible with the French countryside but are, on the other hand, in favour of renewable energy…in other places).
  • The use of these guarantees would provide financial contributions to the building and development of new power plants. In this respect, ‘it is important’, as the European Directive reminds us, ‘to distinguish between green certificates used for support schemes and guarantees of origin,’ and to remember that, in France, the development of renewable energies is essentially
    • defined by the Programmation Pluriannuelle d’Energie [multi-year energy program] (PPE),
    • implemented by the ‘calls for tender’ made by the CRE (Energy Regulatory Commission)
    • and financed via the special ‘energy transition’ allocation fund (CAS), an account whose funds are mostly derived from the CSPE [Contribution to the Public Electricity Service tax] paid by the French consumer, in an amount up to €22.5/MWh (excluding VAT), regardless of the colour of the electricity they use.

For the first time, guarantees of origin for French facilities benefiting from a support scheme were put up for auction by Powernext on 18 September 2019, and over 4.4 TWh of GOs were sold at an average price of €0.42/MWh. This means that slightly less than €2M (or ~€12M if we extrapolate to the six auctions) will be contributing to the CAS. This is in comparison with €6bn, the current cost of supporting renewables…

Now we understand a bit better why these guarantees can be offered to consumers at no added cost by the supplier promoting them!

The current auction price does certainly not, in any way, anticipate the prices of the next auctions, nor the emergence of a new paradigm that will contribute to rendering renewable energy support obsolete. In the meantime, such an initiative will no doubt make its contribution to the current colour blindness surrounding electricity and reminds us that, rather than an ‘AOC[1]‘, the European scale of the Guarantees of Origin system in force bestows upon them an actual ‘AOP[2]’.

[1] AOC: Appellation d’origine contrôlée [Controlled designation of origin]ː this protects the naming of products in France

[2] AOP: Appellation d’origine protégée [Protected designation of origin]: European label that protects the name of a product throughout the European Union

Philippe Boulanger

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Each month, one of our experts publishes an article describing his view on a specific topic of the constant changes taking place in the energy market, with special focus on the French market.

Profesional Experience

Céline, a young and dynamic person, had a first experience in the tourism sector as a community manager at Loups du Gévaudan, in Lozère. She joined HES team in November 2021 to diversify her knowledge: learning about the energy sector, specialising in marketing strategies in order to improve the company’s customer relations and, at the same time, developing her skills in coordination and project management.

Education

Céline graduated in Spanish and English Language, Literature and Civilisation at La Sorbonne IV (2018). She also holds a master’s degree II in cultural projects and establishments management, with a special focus on international tourism. She also studied abroad at the University of London (England) and Universidad de Morón (Argentina).

Céline Haya Sauvage

Marketing Responsible

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“Decarbonization of the Energy and Transport sectors is arguably today’s main economic driver for the industry.”

Profesional Experience

His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. Philippe Boulanger worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.

Education

Philippe Boulanger holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

Philippe Boulanger

Electricity Expert

HES-Philippe-Boulanger

“The world is changing. New investors pay particular attention to the energy sector while historical actors adapt their position to the market.”

Profesional Experience

Antonio started his career in the electricity sector in 1991 working as a member of staff for the General Manager of Sevillana de Electricidad (Spain). In 1997, he was in charge of the commercial regulation at Endesa Distribution. In 2000, he joined Endesa’s European M&A department. He was appointed CEO of Endesa Power Trading Ltd in 2003. He became Head of Energy Management for SNET, France, in 2004 and was appointed CEO of this company in 2008. In 2009, he held the position of Head of Corporate Development for E.ON France. In 2011, he founded Haya Energy Solutions (HES), a consulting firm which assists companies in optimizing their value chain: from strategy definition to day-to-day operations, based on a strong experience and understanding of the energy industry. From 2015 to 2018, Antonio was Chairman and CEO of 2 French CCGTs (2x410MW), owned by KKR. At the end of 2018, he joined Asterion Industrial Partners, a dedicated infrastructure investment fund, as an Operating Partner.

Education

Antonio graduated from the Escuela Técnica Superior de Ingenieros of Seville (Spain) and holds an MBA degree from Deusto University (Spain).

Antonio Haya

CEO