Apportioning electricity generation is a fundamental question with respect to several EU policies and market processes, which has been assessed within an IEE-funded E-TRACK project.

Since the beginning of 2005, a consortium of 13 project partners and subcontractors from all over Europe – under the lead of Öko-Institut of Germany – have been assessing the status of electricity tracking. And the team have now developed a harmonised approach for tracking electricity in Europe, according to an E-TRACK standard.

Why is tracking so important?

Tracking of electricity attributes is an important prerequisite for EU policies like electricity disclosure; indicative EU targets that mandate the market share of electricity derived from renewable energy sources; support schemes for RES-E and cogeneration; as well as for the implementation of Guarantees of Orgin (GO). Furthermore, tracking electricity is a crucial element when looking to supply green power for voluntary demand. Different approaches to tracking electricity are currently applied, including contract-based tracking, the use of certificate systems or the application of statistical default values.

But major problems arise because the application of these different approaches is often poorly co-ordinated wth the anticipated use of the information provided. This becomes obvious when electricity disclosure is based on uniform statistical default information (which does not give relevant information to consumers in order to differentiate between particular electricity products.)

Also, the different electricity tracking systems are rarely harmonised, resulting in market barriers and multiple counting of particular attributes (specifically the valuable ones, mainly renewable electricity). For example, some countries do not subtract the volumes of electricity being tracked explicitly from their statistical default information – which is used additionally – resulting in double counting of these attributes.

Therefore, a joint standard for harmonising the electricity tracking methods applied could support manifold EU policies, as well as enhance an internal market for electricity generation attributes. The E-TRACK project team has developed the E-TRACK Standard supported by an intensive consultation process including over 30 national and European workshops – with roughly 400 participants from all interested stakeholder groups. The E-TRACK Standard is based on some key elements:

Domains are defined as regional entities for electricity tracking, which regulate and define all internal procedures. This also has to include clear specification of the relationship to other policy schemes such as national support schemes. The individual domains have to communicate with each other through a common structure – using a central hub as a data interface between national domains is considered the most feasible tool to ensure this.

Explicit tracking can be done on a voluntary basis. As explicit tracking is relevant for particularly valuable attributes, it has to be based on the reliable mechanism of tradable certificates held in electronic registries, including redemption of certificates when being used. However, if particular claims for a product portfolio are made they have to be backed by explicit electricity tracking using certificates. It is considered crucial that GOs abiding by EC Directives are integrated into the certificate system.

The European Energy Certificate System (EECS) established by the Association of Issuing Bodies (AIB) already provides the appropriate means for such a certificate system. As certificates can be traded on a secondary market independently from physical electricity, this is a very flexible instrument that assures that the liquidity of markets for physical electricity is not affected. Still, such certificates can also be bundled to physical contracts, if required, by national regulations or by the consumers.

For all attributes which are not explicitly tracked on a voluntary basis, a residual mix of statistical default information for a certain region (i.e. one single or a group of domains) has to be applied. The respective residual mix is calculated by subtracting attributes being tracked explicitly (like redeemed certificates or feed-in systems with particular allocation mechanisms), and by correction for exports and imports from the overall production mix for the particular region.

Other reliable electricity tracking mechanisms may already be in place, being applied in national support systems. If they are harmonised with the certificate system and the calculation of the residual mix, these may also be used rather than the statistical default data – in order not to lose best available information. However, this is considered as a transitional approach in order to allow for a smooth development towards a more comprehensive adaption of the harmonised E-TRACK standard.

The E-TRACK Standard defines operational structures, and assigns responsibilities to particular organisations. It is crucial that the provisions of the E-TRACK Standard are coordinated with all policy schemes concerned, in order that the tracking results are consistent and compatible with their envisaged application, and vice versa. Therefore, governance of the E-TRACK Standard itself is an important role. With this in mind and based on the stakeholder consultation process, the E-TRACK project team recommends an independent single purpose umbrella organisation supported by the European Commission and national governments.

Cost efficiency of electricity tracking systems based on a harmonised tracking standard and the corresponding benefits of the tracking system have been key elements in the E-TRACK project. In order to estimate these parameters, the cost of 7 existing national tracking systems plus the RECS system were assessed. Furthermore, the anticipated costs of expert judgements given by potential implementers, operators and users of such systems were evaluated.

The cost drivers considered, include both system development and implementation as well as system operation and maintenance. Basing on these inquiries the project team has gained estimations for total annual costs of the E-TRACK Standard (including annualised cost for development and implementation) for all the EU27 plus Norway and Switzerland. These range between €11.7 million and €71 million, depending on the level of existing structures which can be integrated, in the coverage of the market by explicit tracking and in the level of relation to various policy measures (and therefore the level of quality management procedures).

Assuming an equal distribution of these costs among all electricity consumption in Europe, this accounts for €4.1 per GWh to €25.1 per GWh, which is only 0.0082% to 0.05% of the current wholesale market price. Therefore it has been shown that the cost impact of such a harmonised electricity tracking standard would be very low, especially if existing structures and tools are integrated in the tracking system.

The E-TRACK Standard has found general support by major stakeholders when it was presented to 170 participants at the E-TRACK Conference held in Brussels in March 2007. In order to keep pace with current developments, the follow-up project E-TRACK II will assess tracking-related policies like the ongoing implementation of GO for high-efficient cogeneration, and give further assistance on implementation of the principles outlined in the E-TRACK Standard.

About the author:

Dominik Seebach works for the Öko-Institut e.V.

For further information, please see the project's website – www.e-track-project.org – or contact Dominik Seebach or Christof Timpe.