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Ofgem falls short on green energy deals

Consumer concerns over green tariffs not addressed
offshore wind farm

Opposition groups think wind is too unpredictable to be a reliable source of energy

New guidelines on green tariffs from energy regulator Ofgem have failed to meet consumers’ expectations.

Current government rules say that at least 9.1% of the electricity supplied to customers must come from renewable resources, such as wind power. However, this can be misleading for consumers who believe that by going for a green tariff they will be making a further impact on carbon emissions by increasing demand for renewable energy above and beyond the 9.1% already required by law.

According to a recent Ipsos Mori poll for Ofgem, consumers strongly support green tariffs that supply 100% renewable energy. 84% of people said they felt that the most valuable kind of green tariff is one where ‘all electricity is derived from renewable sources’.

Yet Ofgem’s guidelines also allow companies to market tariffs that do not supply 100% green energy as ‘green tariffs’.

Carbon offsetting least valued

The new guidelines, already agreed by the big six electricity suppliers, also allow companies to offer carbon offsetting projects as part of a green tariff – the feature least valued by consumers in Ofgem’s research.

As such, power companies can continue to produce electricity in the traditional way and supply only the required 9.1% from renewables, but still market a tariff as ‘green’ by making tree planting schemes or donations to environmental projects or charities part of the tariff.

‘Short of the mark’

Responding to the publication of Ofgem’s guidelines, Dr Rob Reid, Which? policy adviser, said: ‘Having finally addressed consumer confusion on green tariffs, Ofgem has produced guidelines that fall short of the mark. This is a missed opportunity to encourage investments into alternative energy supplies. The majority of consumers said they would value green tariffs that are 100% renewable and yet the new guidelines allow green tariffs based on almost everything but.

‘This means that a company can continue to produce energy in the same old way, investing only the obligatory 9.1% in renewables, and still market its tariffs as green simply by planting a few trees or donating money to environmental projects or charities.’

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