OVO’s fuel mix challenge: out with the coal, in with the renewable
By Justin DeKoszmovszky Tuesday 06 January 2015
One of the questions we get on our fuel mix has to do with coal. It is a great question and we love having customers and potential employees who are that engaged with the issues. The short answer is, we are proud of the steady increase in our renewable share but we are not happy about how much coal we have in our fuel mix.
Why so much coal?
Coal was an important part of the UK’s history, but it has very little place in our future. Coal had its time when we had few other options available, but it is now too dirty, too polluting and, increasingly, too imported (41% of coal used to generate electricity in the UK during 2013 came from Russia).
OVO does not wittingly buy any coal or coal-generated energy. What happens is that the ‘vertically integrated players’ (energy companies which both generate energy in power stations and supply it to customers through retail businesses) naturally supply a large proportion of the energy they themselves have produced. This means the fuel mix they report will be heavily weighted toward whatever type of fuel their own generation portfolio might use.
This leaves independent suppliers (those owning no generation assets) reporting what is left over once, for example, the majority of nuclear and gas has been claimed by its owners. Independent suppliers like OVO, buying largely from the wholesale market, have no control over ‘this residual mix’. Because OVO buys energy from the wholesale market, we end up with more coal and a higher CO2 intensity than we want and even more than the average. We are not happy about this.
What is OVO doing about coal?
OVO doesn’t take this sort of incumbent market failure and just accept it. Raising awareness and fixing fundamental and important problems like this is a serious priority for us. Because of how long it has been around and how much we relied on it in the past, coal remains a big part of our national fuel mix. This needs to change.
Along with a number of other key stakeholders, OVO is working hard on the policy side to encourage new market mechanisms to allow us to get out of coal. We think there should be a clear carbon price to make coal less competitive. We are also looking at regulatory innovation to enable suppliers to signal they want less coal in the system. While that may be a long fight, OVO is consistently increasing the amount of renewable power that we buy which directly reduces the amount coal-generated power we sell. We have to balance this with the cost but we are proud of our track record.
Would you like to join us in finding a cleaner, safer more independent way to power the UK? Every customer on our Greener plan is 0% coal and 100% renewable power—that helps! We are also more than happy to discuss this further let’s keep the conversation going on Twitter.