Does Your Energy Provider Genuinely Supply 100% Green Electricity?

Low carbon and renewable sources supply more of our electricity all the time. In the UK more power was generated from clean energy than from fossil fuels between January and May 2019 for the first time since the Industrial Revolution. Almost 50% of total electricity production in the UK came from carbon free sources of electricity, including nuclear and renewables in 2018.

Only six coal-fired power plants remain operational in the UK today supplying around 3% of our electricity. Just ten years ago coal accounted for 30% of all electricity generated. The highest percentage of renewable energy is provided by wind farms. Notably new offshore wind farms have added to the creation of renewable energy in recent years. A significant contribution is also made by biomass fuel and solar PV to renewable energy generation. The amount of electricity generated from renewable sources is increasing year by year with one third of the UK’s electricity being supplied by renewable sources in 2018 compared to 29.7% in 2017.

Whatever tariff you’re on with your energy provider it is likely that some of the electricity supplied is sustainably generated as low carbon sources are making up an increasingly larger percentage of the national grid. All electricity suppliers are required by government to buy some renewable electricity in the mix of sources at this time. In addition to this some energy providers offer green tariffs.

A green tariff means that some or all of the electricity you buy is ‘matched’ by purchases of renewable energy that your energy supplier makes on your behalf. Your electricity could come from a variety of renewable energy sources including wind farms and hydroelectric power stations. Some green supply tariffs are also nuclear-free. Your energy provider should advise you as to what sources are included in the mix and what proportion of your supply is renewable. Some tariffs will be ‘100% renewable’ whereas others will offer a percentage of the total.

However, energy suppliers that do not generate or directly source green energy are at risk of misleading their customers if they claim they are 100% renewable according to a recent report.

Some suppliers purchase certificates from companies that generate renewable electricity which allows them to make the claim that they are providing zero-carbon energy despite the fact that much of the power they actually supply may come from fossil fuels. This practice is known as ‘greenwashing’.

Companies such as Green Star Energy, Ovo Energy, Pure Planet, Robin Hood Energy, So Energy, Tonik Energy and Yorkshire Energy all claim to sell ‘100 per cent renewable’ electricity tariffs when they neither generate any renewable energy nor buy any directly.

These companies buy Renewable Energy Guarantee of Origin (REGO) certificates, the aim being to prove to the final customer that a given share of energy was produced from renewables.

Each household uses on average a little over 3MWh of electricity per year, meaning suppliers can buy the certificates to match this usage for only around £1.55 per customer and claim a tariff is “100 per cent renewable”.

The consumer group, Which? expressed concern that many suppliers claim to be green when they are doing very little to support additional renewable energy supply.

Some suppliers were unhappy with this criticism. Steven Day, co-founder of Pure Planet said the Which? report:

“The report demonstrates a fundamental misunderstanding of the way electricity is generated, certified, traded, managed by the grid and supplied. All green suppliers have to use REGOs to verify that the electricity used by their customers is matched by electricity generated from renewable sources.”

However, Which? found that only 40 suppliers out of the 300 energy tariffs they analysed sold what they described as 100% renewable energy options. They said that greater transparency is needed around how ‘renewable energy’ is defined and marketed to ensure customers aren’t misled.

The results of a survey found that a third of people purchasing a renewable tariff thought it meant that all of the electricity delivered to their home would come from renewable sources.

As it stands it is not possible to achieve this due to power from all sources being linked up to the national grid before it is directed to individual homes.

So, it seems that some companies purchase the certificates to match up the energy they supply with green energy generated. Others go a step further and either generate electricity themselves or buy it from those that do rather than depending on REGO certificates.

Both Ecotricity and Good Energy source enough renewable electricity to match their customers’ usage though this tends to mean that their costs are higher and as a result their tariffs are more expensive.

Bother Ecotricity and Good Energy have been rewarded by the regulator Ofgem exempting both companies from its energy price cap on standard variable tariffs.

Regulator Ofgem said the company could continue to charge its 250,000 customers a premium because bosses at Good Energy were able to trace all their renewable electricity direct to its source.

This is reflected in the average cost of a Good Energy tariff being around £1,422 a year compared with the price cap average of £1,254.

Good Energy uses power purchase agreements (PPAs) which means that they buy electricity directly from wind farm and solar generators rather than buying the majority of their electricity on wholesale markets and then buying ‘REGOs’ which guarantee the equal amount of electricity created from fossil fuels is matched by renewable generation.

Founder and chief executive of Good Energy, Juliet Davenport, said:

“Our tariffs genuinely support the growth of renewables and clean technologies.  If we are going to tackle climate breakdown, individuals must be empowered to choose to be part of the solution. We know customers want the ability to make that choice, and recently it has been complicated by energy companies taking shortcuts to offer cheap ‘green’ tariffs.”

Ofgem said the decision was made because it recognised customers on Good Energy’s standard variable tariff (SVT) had chosen to be on it.

Officials added that the support for renewables provided by the extra cash is “materially greater” than “regulatory mechanisms”.

Good Energy strongly believes in supporting independent renewable generators by giving them a competitive price for the electricity that they export. Good Energy sources around 10% of our electricity from SmartGen customers.

Richard Headland at Which? said:

“As consumers grow ever-more environmentally-conscious, it’s concerning that some suppliers appear to be ‘greenwashing’ their energy tariffs, which could risk misleading customers. We believe there needs to be greater clarity on how renewable electricity is defined and marketed. People can only make informed decisions about where to buy their energy from if firms are more upfront and transparent about their green credentials.”

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