Homeowner Blog

How Green Are Green Energy Tariffs?

George Riley · 14 Jul 2021

In the last few years there has been a surge in clean or renewable energy tariffs - in May, over half the tariffs on the market were advertised as ‘green’. But there are conflicting views on the ‘greenness’ of electricity tariffs, often coming from suppliers looking to prove their stance is the right one.

So how green are green energy tariffs really? And what’s the best way to ensure your home is running on zero carbon power?

How the grid works

The national grid is an infrastructure shared by the UK’s energy suppliers and consumers. Electricity is fed in from every sort of generator (coal, gas, solar, wind etc.) and mixed up, before being distributed around the country. This means that even if your supplier offers a ‘100% renewable energy’ mix, the actual electrons coming into your home won’t necessarily be renewable.

But you would expect your usage to be matched to an equivalent amount of electricity generated from clean sources, right?

Well, the way it works is a little more complicated...

Current fuel mix of UK electricity

By law, energy suppliers have to publish their fuel mix and update it at least once a year.

Last year, 37% of the UK’s electricity came from renewable sources. This was just over the 36% from fossil fuels. The remaining comes from nuclear, imports and storage:

UK electricity generation 2020

Data source: Drax.

So how do we know that the renewable portion of a supplier’s mix is matched to renewable sources?

Renewable energy certification

Renewable Energy Guarantee of Origin (REGO) certificates are issued by Ofgem to eligible generators - one per MWh generated. Suppliers use them to prove the renewable share of their customer’s electricity as part of their Fuel Mix Disclosure requirements, redeeming the certificate within 16 months of generation.

Energy suppliers can also use European Guarantee of Origin (GoO) certificates to disclose their fuel mix - these are issued for renewable energy generated in the EU. Ofgem will recognise EU GoOs provided the electricity has been supplied in Britain and the GoO has not been used previously elsewhere.

solar farm

Here’s where it gets tricky. REGOs can be traded separately from the actual electricity that earned them. The price of REGOs reflects supply and demand - in 2020 it was about 50p per certificate. Most of this comes from subsidised renewables (paid for in our electricity bills). Therefore the low cost REGOs do not necessarily encourage more, unsubsidised renewable generation to be built. It also enables some suppliers to ‘become green’ overnight, buying certificates for around £1.45 per customer per year, without directly supporting any generators (and even if all the power they source is from fossil fuels).

An alternative to buying from the wholesale market is to buy directly from generators via purchase power agreements (PPAs). These are long term contracts that offer security to generators and suppliers, but may be more inflexible and result in higher unit prices. Suppliers may also own some generators themselves.

How to tell if energy suppliers are actually green

Some suppliers do buy green energy along with its REGO certificates. But they may also buy dirty energy. Then when they launch a renewable tariff, green customers are matched to a green supply, while the mix for other customers just becomes dirtier.

So the two questions to ask of supplier are:

  • Does the company directly buy renewable energy as well as REGOs (and how much of its energy is bought directly)?
  • Does the company supply 100% renewable energy to all its customers?

Supporting new sources of clean energy to displace fossil fuels from the system is the only way the UK will achieve a completely renewable, non-polluting electricity supply.

According to a report by Baringa, only Good Energy offers 100% renewable energy backed by PPAs:

Electricity supplied by renewable PPAs

Scottish Power claims that Anonymised 3 is Smartest Energy and Anonymised 2 is Octopus Energy. It’s worth noting that Octopus Energy Group is acquiring its sister company Octopus Renewables, which owns a lot of clean energy generators, so this could significantly change the percentage above.

While sourcing all renewable power from PPAs may be desirable, it can lead to the supply being less efficient and more expensive (which is why suppliers like Good Energy are exempt from the price cap). Ultimately there’s a balance between engaging customers in renewable energy, while respecting what they can afford and not misleading them.

Green gas

Suppliers that offer ‘green’ gas may use biomethane to displace a modest percentage of fossil gas in the national fuel mix, and carbon offset schemes to cover the rest (though the benefits of offsetting are contentious). Biomethane is produced when natural waste - such as food, crops or manure - degrades. When it’s burned, it releases the carbon that was absorbed by the organism, making it almost carbon neutral.

Currently only Green Energy UK offers 100% green gas. Ecotricity is building green gas mills to turn grass cuttings into biomethane via anaerobic digestion - the first one is being constructed in Reading this year.

How to ensure you’re using renewable energy

With the wholesale electricity market so murky, there’s really only one way to be certain you’re using clean power: generate it yourself.

The most realistic way to achieve this at home is with solar panels. They probably won’t supply 100% of your demand, but you can monitor how much they do, and boost your usage with batteries by storing solar electricity for use outside of daylight hours.

To learn more about investing in your own clean energy source, give us a call on 0118 951 4490 or download our guide to solar PV:

Download now

Topics: Tariffs, Solar PV, Environment

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