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Green gas in the pipeline

Molly  Lloyd Molly Lloyd Analyst
14th August 2019

Interest in supplying green gas is increasing in the business market. In July, our Non-Domestic Supplier Insight Service found that SSE has joined the growing number of business suppliers, including Ecotricity, ENGIE, Octopus Energy and Ørsted in adding green gas to the mix of products they offer.

Suppliers tend to go down one of two routes when adding green gas offerings to their range of products. The first is to offer a biogas product, made from agricultural materials, food waste and water waste. These products are generally backed up with renewable gas guarantees of origin (RGGOs), to certify that the gas comes from a renewable source. RGGOs are issued for every 1kWh of green gas that has been produced, with the supplier matching each kWh of gas the business consumes with a RGGO. The second route a supplier can go down is to offer a carbon neutral product, where the customer’s gas consumption is offset through investing in sustainable development and carbon reducing projects. For example, Octopus Energy works with partners to ensure that, for every tonne of CO₂ released by its green tariff customers, one tree is planted in the UK and the tonne is fully offset by protecting areas of the Amazon rainforest in Brazil.

Uptake in green gas has been slow but is gradually progressing. The Green Gas Certification Scheme, a program that tracks green gas through the supply chain, stated in its 2018 Annual Report that it expects over 2TWh of RGGOs to be issued for 2018 green gas products. It found that consumer interest had broadened, from a few early adopters to a range of large corporates and small and medium (SME) sized businesses. However, anecdotal evidence from Third Party Intermediaries shows that the premiums on green gas products are still too high for many SMEs to consider these types of products.

Green gas is also gaining traction in the domestic market with suppliers such as Bristol Energy, Ovo Energy and Coop Energy launching domestic green gas offers. The Green Gas Scheme found that there is now an estimated 1.0mn households on tariffs that provide between 6-100% green gas, backed by RGGOs. While there currently isn’t a high enough production of green gas to supply the whole market, carbon offsetting provides an alternative option. Alternatively, founder of Ecotricity, Dale Vince has suggested using grass to make green gas and has claimed that grasslands could provide enough gas to heat all the UK’s homes.

About the Non-Domestic Supplier Insight Service

This service includes a set of profiles for each non-domestic supplier, focusing on key information, routes to market, organization structure and operational performance. This is supported by a monthly update highlighting developments in product offering, strategic direction and marketing.

The latest developments in the non-domestic market also feature in our upgraded training course on the GB retail market. The new agenda for the course, GB Energy Retail Competitive Landscape, addresses the key themes picked up in our ongoing research across the business and domestic supply markets.

For more information about our blog or our new training course on the GB retail market please get in touch with m.lloyd@cornwall-insight.com