What does ERE yield, and where does that '10 cents per kWh' come from?

You see it everywhere. "Earn 10 cents per kWh with ERE." Sometimes it says 7 to 10 cents, sometimes even 15 or 20 cents. Sounds nicely concrete. But who actually came up with that?

That 10 cents doesn't come from a law book. It's mainly a rule of thumb that circulates because people combine two things. They look at what HBEs did over the past years, and they calculate how many ERE you get per charged kWh. Then a number comes out that surprisingly often lands around 10 cents.

That just doesn't mean it will always stay at 10 cents.

First this: there is no fixed ERE price

An ERE is tradeable. That sounds abstract, but it's simple. If there's more demand than supply, the price goes up. If there's lots of supply, it drops again.

So when you ask what ERE yields, you're actually asking what the market currently pays for a kilogram of CO2 reduction.

Tomorrow that can be different again.

Why everyone still starts with HBEs

ERE is the successor to HBE. The old system is better known, and there's historically more feel for what a certificate was roughly worth.

There's also a very concrete bridge between both systems. The NEa has established that HBE savings balances are converted during the transition with a conversion factor of 46. One HBE becomes 46 ERE.

If you also know that one HBE in the system equals one gigajoule of renewable energy delivered to transport, then you can suddenly calculate instead of guess.

From euros per HBE to euros per ERE

Suppose an HBE is worth 10 euros. Then the derived value per ERE is about 10 divided by 46. That's roughly 22 cents per ERE.

If an HBE is more like 15 euros, then it becomes 15 divided by 46. Then you're around 33 cents per ERE.

And here the first misconception immediately arises. Some sites act as if "10 euros per HBE" is some kind of fixed truth. It's not. There are documents that calculate with 10 euros as an assumption, but there are also documents that mention HBE prices were around 5 euros and that expectations were it would rise again. In short, it fluctuates.

Okay, but how many ERE do you get per kWh?

Now comes the step that almost everyone skips in marketing. How many ERE does one kWh of home charging actually yield?

For electricity, the NEa publishes a fixed calculation rule. You take your delivered kWh, multiply it by the renewable share and by a fixed fossil reference, plus the conversion from kWh to MJ. That's how you arrive at a number of ERE.

The renewable share is usually a grid average. So not your energy label, not your contract text, and not automatically your solar panels either. It's about an established percentage that's determined per year.

If you want to get a feel for it, you can work with a simple assumption. Suppose the renewable share is 50 percent. Then you end up with about 0.33 ERE per kWh. So roughly one-third ERE for every kWh you put into your car at home.

And there's the origin of that 10 cents

Now you combine those two steps.

You have a price per ERE, and you have ERE per kWh.

Take the example of 10 euros per HBE. That was about 22 cents per ERE. Multiply that by about 0.33 ERE per kWh, and you end up at around 7 cents per kWh.

Take the example of 15 euros per HBE. Then you're around 33 cents per ERE. Multiply that by 0.33, and you're around 11 cents per kWh.

And then you immediately understand why you see 7 to 10 cents everywhere. It's not a secret deal. It's just the same calculation everyone does, with a slightly different assumption about the HBE price.

The Tweakers discussion actually sums it up perfectly. People mention 7 to 10 cents as an indication, but with the note that it depends on supply and demand and can therefore rise and fall.

Why you sometimes see 20 or 30 cents come up

Sometimes you see quotes where much higher amounts are mentioned. Think 20 cents or even 30 cents per kWh.

That's possible on paper, but then something different must be true than the standard scenario. For example, that the renewable share in the calculation comes out to 100 percent, or that the ERE price is temporarily high in a thin market.

But there's almost always a second half to the story. In the same discussions you also immediately see the costs appear. Audits, fixed annual fees, commissions, installation costs for extra hardware. If you add those up, the net picture can suddenly be a lot less exciting than the headline.

So if you see a high amount somewhere, the best follow-up question is very boring. Is this gross or net?

Why the price will move, even if everyone is still throwing around one number

ERE is becoming a market. Markets move.

Sometimes because the demand side peaks toward deadlines. Sometimes because supply suddenly increases, for example when many households participate at once. Sometimes because regulations sharpen details.

That's also exactly why it's wise not to see ERE as a fixed earning model. See it as a bonus that comes along with what you're already doing. Then you're immediately in the right mindset, and then it mainly becomes a matter of choosing who you arrange it with, and under what terms.

Read more

• ERE certificates: how does it work? — the basics of ERE explained
• ERE certificates: what to consider before connecting — before you link anything
• Booking service provider and verifier: who does what? — the roles in ERE registration
• Comparing ERE providers without regret — questions to ask
• NEa: Emission reduction units (ERE)