European companies are setting up a system that will allow green energy certificates trading across the continent.
HAMBURG – HEW is the first German energy company to sell green electricity based on tradable certificates to business customers. The first buyer is the organic food wholesale company Naturkost Nord Grohandelsgesellschaft. Matthias Deppe, managing director of Naturkost Nord, has bought 63 green certificates of 1,000 kWh, which corresponds to his company’s annual electricity consumption of 63,000 kWh. The price was 15 Euros per certificate. The certificates guarantee to Deppe that an amount of electricity equivalent to his consumption will be produced from renewable energy sources somewhere in Europe, independent of the physical delivery to his company. HEW purchased the certificates for Naturkost Nord in Ireland, where the company Eirtricity is operating a brand new wind farm which went onstream in October 2000 and operates without any state aid. Since the Irish market, which is growing at 6% per annum, opened in February 2000, Eirtricity has built up a substantial customer base supplied with competitively priced electricity produced from wind farms throughout Ireland. The company has plans for the development of over 500 MW of wind generated electricity in Ireland, where wind power is quickly becoming the most competitive source of electricity. The transaction was brokered by the international energy broker Natsource which is specialized in emissions trading and which already helped to bring about the CO2 transaction between HEW and the Candadian energy company TransAlta in May. The basic principle of trading green certificates is the separation of physical electricity and environmental benefit. The electricity from the Irish wind turbines is fed into the Irish grid. The envienvironmental benefit – i.e. the reduction of greenhouse gas emissions – is acknowledged in the form of a certificate, which may then be traded separately. In this way, Matthias Deppe participates in the environmental benefit of the Irish wind farm. Deppe: “I am thinking globally. My electricity could just as well come from Swedish biomass power plants or Dutch wind turbines.” As far as mitigation of climate change is concerned, it is irrelevant whether the green electricity is produced in Ireland or in Germany. In this way, Deppe will achieve the environmental benefit much more economically than with certificates from Germany. One reason for this is the fact that there are many locations for wind turbines in Ireland with high wind speeds over long periods and, thus, low electricity pro-duction costs. Just like trade in CO2 reductions, trading green certificates fol-lows the principle of directing environmental investments to where the greatest effect per Euro can be achieved. The Renewable Energy Certificate System (RECS) – an open pan-European initiative of energy companies, environmental organizations, trade associations and governmental agencies, of which HEW is a member – is currently preparing the organiza-tional framework for the pan-European trade in green certificates. In this framework, several companies will provide trading plat-forms on the internet. Natsource already has such a platform in operation. A test phase of RECS, in which HEW will participate, is due to start at the beginning of 2001. Dr. Helmuth Groscurth, head of HEW’s Energy Concept Future: “We hope that as many companies and countries as possible will participate in the test phase. The pan-European trade will only work, if there is a widely accepted, trustworthy infrastructure, on which certificate transac-tions can be handled. ”