This is the transcript of Episode 13: Beyond Green Electricity (Mini) of the How to Make a Difference podcast. Go to the episode page to listen to this episode and for the show notes. Furthermore, we encourage you to read our blog post on green electricity.
Elisabeth Ignasiak: Hey everyone!
Chinmai Gupta: Hey everyone!
Elisabeth Ignasiak: This month’s theme is green electricity. If you’re new to this podcast, we recommend that you listen to episodes 10, 11 and 12 first, where we explain how the electricity markets work, what’s going on behind the scenes and what types of green electricity contracts there are.
The key question we want to answer is: Does me switching my electricity supplier make a difference and what kinds of contracts should I look out for?
Chinmai Gupta: In the last 2 episodes we discussed the different types of green energy companies. There are companies that buy only the guarantees of origin, there are others that buy both the GOs and their energy supply from the renewable energy producers, then there are large energy companies that might have green energy plans or there could be a small renewable producer that also supplies electricity to homes.
Today however, we take the discussion towards a new angle, and that is of labels. Labels ensure that a product fulfils a minimum standard and are normally based on independent audits that verify the quality of the product.
Elisabeth Ignasiak: Labels help consumers find green electricity suppliers that go beyond just increasing the demand and just buying GOs. So, these are suppliers that proactively invest in new green infrastructure. And these labels are not dissimilar to labels we know like organic or fairtrade. Basically it’s a stamp of approval that shows certain criteria set by these labels have been met.
Chinmai Gupta: So while every label has its own criteria, they all follows a common theme: which is some way of ensuring that investments into new renewable infrastructure are made.
Elisabeth Ignasiak: We listed quite a few interesting labels for countries all around the world in our article on green electricity – so check that article out. We’ve put the link in our show notes.
Chinmai Gupta: Let us know if you know of a label that we have not come across, or also let us know if your country is not listed and maybe we can try and find some sources for you as well.
Elisabeth Ignasiak: We thought it might be really interesting to look behind the curtains of these labels. So today we’re speaking with someone from the Grüner Strom Label, which is a German label.
Chinmai Gupta: And what does Grüner Strom mean? “Grüner” means “green”… and…
Elisabeth Ignasiak: Exactly, “grün” means “green”, and “Strom” is just “electricity”, so it’s literally “green electricity label”
Chinmai Gupta: Ah… green electricity… right, thank you.
Elisabeth Ignasiak: Well… without further ado…
Interview with Christian Knops: 3:15
Chinmai Gupta: Today, we’re speaking with Christian Knops, he is the head of communication at the Grüner Strom Label, which is a German NGO certifying green electricity and gas providers. Welcome to our show, Christian.
Christian Knops: Hello, thank you for it inviting me to the show and I’m interested in… in your questions.
Elisabeth Ignasiak: Let’s jump right into the questions. We explain to our listeners that electricity suppliers have to buy guarantees of origin, to prove the green electricity production. So, that means by switching over to a green contract, they increase the demand for green electricity, which over time, of course, leads to more green electricity being produced. So my first question is: Do you agree with that statement?
Christian Knops: Yes… No! The thing is, this is kind of Utopia, how the green electricity market should work, but it doesn’t work this way. Because guarantees of origin, regarding to… to the market in 2017, in whole Europe, we had about, more than 700 terawatt-hours of guarantees of origin, and just to have a clue about the relations, the German electricity market has about 63 terawatt-hours in 2017.
Elisabeth Ignasiak: And just for clarification, when you say the German market: do you mean explicitly the German market for green electricity or do you mean the whole,… you mean the green…
Christian Knops: I mean the green electricity market in Germany.
Elisabeth Ignasiak: Yeah.
Christian Knops: There are in Europe 10 times more guarantees of origin for green electricity than the German electricity market has. And from all of these guarantees of origin, that were retired guarantees of origin about 643 terawatt-hours. So in the end, the difference is about 64 terawatt-hours in 2017, which were not used, so we just had the whole German electricity market, not in use.
Chinmai Gupta: Right. So you’re saying that there is an oversupply of guarantees of origin all across Europe. And this oversupply seems to be similar in size to the entire German market for green electricity. That’s huge!
Yeah, exactly. So, there is no mechanism, which makes green electricity and renewable energy, more attractive for investments because of guarantees of origin.
Elisabeth Ignasiak: You’re saying that because the demand is much lower than the supply, increasing the demand doesn’t actually change anything as long as it’s still below the supply. I was actually thinking to make an analogy with… with apples. So I thought, you know, let’s say an apple farmer has a tree that produces 100 Apples every year. And he has demand for 70 apples, even if the demand increases to 80 apples. He still doesn’t have an incentive to plant a new tree, because 100 apples is still more than the 80 apples he has demand for. Does that more or less capture what you’re trying to say with electricity?
Christian Knops: Yeah, exactly. There is another thing, I just talked about, the apples, which are actually produced, but we also, we also have… We also have apple trees, which, which are still not in use, which are still not farmed. What I want to say is, we have about 200 terawatt-hours of green electricity in Europe, where we don’t have guarantees of origin, because it’s not that they’re just not produced the guarantees of
Elisabeth Ignasiak: Oh! Okay. So green electricity is being produced, but they don’t even create the guarantee of origin because there’s no demand for it.
Christian Knops: Yeah.
Elisabeth Ignasiak: I see… I see. So, what can electricity suppliers and electricity consumers do to go further?
Christian Knops: I would say there are two things. One thing is – that’s a thing for transparency – is that the guarantees of origin and the real electricity supply: They should match. They should come from the same power plant. Because as you know, guarantees of origin and the electricity: they can come from different plants… so…
Elisabeth Ignasiak: Yeah. We actually explained to our listeners that the electricity and the certificates can be sold separately.
Christian Knops: Yeah, yeah. So… One thing for transparency is that the guarantees of origin and energy: they should match and should come from the same plant.
So, the thing, which is more important is to bring out to help or to bring the energy transition more further. So we need more plants, we need more renewable energy infrastructure, and so on. So, if you’ve just changed your electricity contract you just make your supply green. But that’s it. But that has no impact on the energy transition. So it’s more important that suppliers, who sell these electricity contracts also do investments in renewable energy.
Chinmai Gupta: So what you’re trying to do is encourage new renewable plants so that they can replace fossil fuel-based power plants.
Christian Knops: Yes. And you can do that, for example with electricity, labels, I would say.
Elisabeth Ignasiak: I mean… That’s what the green label is about, right? So what is the Grüner Strom Label, the organization you work for, doing to help the energy transition?
Christian Knops: What we do is: we, I would say, control every year, or every two years, the energy suppliers, with whom we work, about the energy supply. So we check if this is a green energy supply and we have this market, this coupling between guarantees of origin, and coming from the same power plant.
Elisabeth Ignasiak: Yeah. Those are the power purchase agreements, basically.
Christian Knops: No. These are not PPAs. We just checked the coupling between the guarantees and the supply.
Elisabeth Ignasiak: Aha. Okay, got it.
Christian Knops: And on the other hand, we check also that amount of about 0.5 cent per kilowatt-hour, in the private sector, I would say so,… private customer sector, sorry… that this amount is invested in renewable energy infrastructure. And in the end, we can say: For this energy product, this has really an impact for renewable energy because, in the last three years, there were built, three, four or five new green power plants… that’s more or less the key factor of our label.
Chinmai Gupta: So what you’re basically doing is, on the one hand, you’re making sure that there’s a link between the electricity production, and the electricity supplied to the customer. And on the other hand, you make sure that there’s a commitment from the electricity suppliers to invest a certain amount of money into renewable infrastructure.
Christian Knops: Yes, that’s correct. And we are in the markets since about 20 years and we realized about 1400 projects with about 70 million euro and they are co-financed so the real investment is, is more than 300 maybe 400 million, I’m not so sure at the moment.
Elisabeth Ignasiak: Well, thank you very much. That was very insightful, thank you for your time, thanks for coming on the show.
Christian Knops: Yeah, thank you very much. I’m really interested in the end the result in the end.
Elisabeth Ignasiak: Cool.
Chinmai Gupta: Wow. So that interview throws quite a curveball. So, at the moment, it seems like there is a huge gap between demand and supply. As Christian said, the total supply of green electricity in Europe is 700 terawatt-hours. While 64 terawatt-hours of green electricity were put into the grid without their GOs even being needed or used in 2017, another 200 terawatt-hours of green electricity were produced without GOs even being needed. So the supply, it seems, is way higher than the demand at the moment.
Elisabeth Ignasiak: One thing I wanted to add, is that we found and an Article in Utilities Middle East that has some good news: which is that the gap between supply and demand is actually closing slowly in Europe – so with more and more people and companies demanding green electricity this market mechanism might actually start working.
Chinmai Gupta: The one point that made me happy was to hear Christian call out for more transparency in the sector by saying that the guarantees of origin and the real electricity supply should come from the same power plant. Those have been my views exactly since we started digging deeper into the subject and I’m really happy to understand that I’m not the only one with views like this.
Elisabeth Ignasiak: Yeah. I thought that would make you happy.
Chinmai Gupta: The other thing that I liked, was that some of these green labels, hold green electricity companies accountable for investing a certain amount of their revenues into renewable infrastructure.
Elisabeth Ignasiak: Yeah. One caveat that I want to add, is that of couse this depends a lot on which country you live in. So depending on where you live you might not have these types of labels available. I mean – check out our blog – we have a lot of them listed, but it might well be that, you know, it just doesn’t exist where you live.
Chinmai Gupta: Based on everything that we’ve learned so far: We should try and switch our contract to a green electricity supply, that has a label to show its commitment to investing into new renewable infrastructure.
Elisabeth Ignasiak: Yeah, and the only thing I would add to that is: of course you might not have that option, depending on where you live, or it might be available, but it’s just not within your budget. Even switching to any green contract is always better than, you know, giving your money to a coal company. Definitely switch to green. And not even this may be possible for you. Every country has a bit of a different situation. So do what you can, depending on… on where you live.
Chinmai Gupta: I hope you’ve enjoyed all the angles of this story that we’ve presented to you. If you liked what you heard, do please share this episode with a friend or a colleague, you think might be interested in knowing a bit more about green electricity. The more people that join in this revolution, the bigger the change we can all make a difference together.
Elisabeth Ignasiak: And that’s it for today! See you next week where we take a trip with the time machine through the past and the future of green electricity. Bye-bye!
Chinmai Gupta: Bye-bye!