EY UK Energy blog

Enable the Label: The case for electricity labelling in the UK

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Posted: Wednesday, 16 July 2014 at 12.00pm

We were pleased to hold a great 'Enable the Label' event at our London office on 9th July, where over 100 people from across the energy industry (consumers, suppliers, and policy-makers) gathered to hear about a new green electricity labelling initiative, where the power we consume is given an A-to-G rating depending on its carbon intensity, (from 'A' rated zero carbon electricity to 'G' rated electricity from dirty coal).

With greater clarity given to the 'quality' of the power, consumers are enabled to make procurement decisions favouring low carbon power as well as enabled to communicate their consumption in a simple, graphical, and colourful way. We've already seen eco-efficiency ratings create increased demand pull for 'A' rated cars, washing machines and other electrical appliances - let's hope the same can happen for renewable power.

I believe 4 P's sum up the key messages of the event:

  • Piloting: We heard first from BT, one of the largest consumers in the UK, that has already been piloting and refining the label concept. It has proved popular so far among a wide range of internal and external stakeholders. But now more piloting is required by other large consumers to test out the label. EY is considering being one of the pilots. I hope your organisation may consider this opportunity too!
  • Partnerships: We heard next from two suppliers (npower and EDF) that are supporting this initiative. This process clearly  needs to be done in partnership between consumers and suppliers to fine-tune a simple, practical and attractive solution. It is hoped that the label will improve competition between suppliers for sustainability-minded customers as well as providing greater transparency and justification around what is labelled a 'green tariff'.
  • Policy: Finally we heard from Government (Sarah Harrison, a Senior Partner at Ofgem) and their plans to change the way carbon emissions from power are reported, following a consultation earlier this year. In the early days of the label, while it is being piloted and in its voluntary stage, it is likely that demand for A-rated power may not exceed supply, and so additional renewable power may not be triggered. For the moment the label needs to be fully integrated into forthcoming Defra/Ofgem/WRI regulations and ultimately - to bring real benefits to UK plc - there needs to be a mandatory nationwide scheme. This would escalate demand pull, possibly to a level where lower subsidies are required and renewables can compete on a closer parity with fossil fuels.

and finally...

  • People: The subsequent round-table discussions emphasised the fact that everyone has a stake in making this initiative a success! We need to get the word out about the label to as many people as possible; communicating its benefits and understanding any weaknesses that need addressing. The 'democratisation' of energy is about giving the power back to the people! Let consumer demand for clean renewable power shape the future energy mix.

Ben Warren, Head of Energy and Environmental Finance at EY said: “Renewables are vital for the UK’s energy future but energy market reform has tended to focus almost exclusively on increasing supply. An electricity label is a welcome intervention to help stimulate demand for green power by providing a clear framework for businesses.”

What an Electricity Label could look like

EY - Example electricity label

EY - Enable the Label: The case for electricity labelling in the UKEnable the Label: Summary report for business

The report, Enable the Label (1Mb, July 2014), was written by Utilyx and commissioned by a steering group that comprises the Aldersgate Group, BT, EY, HSBC, Reed Elsevier, Sky and the Retail Energy Forum. The report recommends that businesses speak to their energy supplier to adopt an electricity label and help transform the energy market. A practical guide is included on how to adopt an electricity label in 5 easy steps.

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