Separating energy supply and generation from transmission networks is called unbundling.

When a single company operates both a transmission network and engages in energy generation or sales, there is a risk that it will be motivated to impede competitors’ access to the necessary infrastructure. This hinders the establishment of fair competition in the market, consequently resulting in increased prices for consumers.

For example, dividing electricity service into its core parts (generation, transmission, distribution, and retail) and selling each part separately.

Charging separately for each component in production can lead to improved industry performance by encouraging competition and attracting new entrants.

What are Types of Unbundling?

It can be done in three ways, depending on each country’s preferences.

1. Independent system operator

Energy supply companies can still own gas or electricity transmission networks, but they must let an independent company handle all the operations, maintenance, and investment in the grid.

2. Independent transmission system operator

Energy supply companies can continue to possess and manage gas or electricity networks, but they are required to establish a subsidiary for this purpose. All crucial decisions should be made autonomously, without influence from the parent company.

3. Ownership unbundling

All integrated energy companies sell their gas and electricity networks. In this particular scenario, it is strictly forbidden for any supply or production company to possess a controlling stake or disrupt the operations of a transmission system operator.

What are Unbundled EACs?

Energy Attribute Certificates (EACs) are powerful tools that enable the tracing of the source of renewable electricity along with its valuable environmental attributes. The documents provide information to buyers about the location and time of electricity production, the technology used, the age of the power plant, and other details.

They provide access to renewable energy for organizations of any size. Energy prices are determined by supply and demand. This allows consumers to have options for their energy source without needing to sign long-term contracts. It means they don’t need a lot of knowledge about their electricity usage or a lot of money to make a choice.

It has the following advantages:

  • Allow customers to choose from different providers and installations to achieve their sustainability goals.
  • Buyers have more freedom to buy electricity and associated documents from different providers.
  • Make renewable energy more accessible and encourage everyone to participate in the transition to clean energy.
  • Unbundled certificates support clean power consumption by various providers regardless of their budget.

Also See: What are Solar Tariffs?

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Elliot is a passionate environmentalist and blogger who has dedicated his life to spreading awareness about conservation, green energy, and renewable energy. With a background in environmental science, he has a deep understanding of the issues facing our planet and is committed to educating others on how they can make a difference.

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