Renewable electricity tariffs are growing in popularity, and no wonder as we all strive to cut our carbon footprint and play our part in saving the planet. But are these tariffs as green as you might expect?
Look for a renewable electricity tariff and you won’t be short of choice. More than half of the 355 tariffs on sale when we checked in June 2019 claimed renewable electricity credentials. Three years ago it was just 9%.
But our research reveals that many companies selling renewable electricity aren’t doing what customers presume.
Some companies do buy directly from generators, or build wind or solar farms, but many don’t. And it can cost suppliers as little as £1.55 per year to say that your year’s electricity supply is renewable.
Companies’ marketing material, price comparison websites, staff on the phone, and even rules from energy regulator Ofgem aren’t helping customers understand different types of renewable tariff so they can buy what they expect.
Take our quiz to see whether you can identify the companies that back most renewables from among the unclear claims. Then use our research to understand the differences to help you choose a supplier that has green credentials you’re happy with.
A third of customers believe that if an energy tariff is marked ‘green’ or ‘renewable’ then they expect to get 100% renewable electricity supplied to their home. Another 11% expect that the supplier generates some of the renewable electricity it sells, and 8% expect that it generates all of it.
But it’s not technically possible for renewable power to be directed to your home unless you have a direct line to a generator (solar panels on your roof, for example).
The electricity you use at home to power your appliances is the same as your neighbour’s, regardless of the tariff you’re on, if it’s delivered from the grid. It’s not possible to direct ‘renewable’ electrons to some homes and ‘non-renewable’ electrons to others.
Electricity is generated from a variety of different sources, including 39.5% from renewables (see below). But it’s all mixed together in the National Grid, which is the distribution system for electricity.
How your electricity is generated
The only way to guarantee you use only renewable electricity is to connect directly to a generator, for example by installing solar panels on your roof. Find out more about solar panels.
But this isn’t widely understood, our research revealed, and some companies aren’t helping. For example one website states:
‘electricity supplied to your home [is] 100% green’
Plus there is a wide range of words and phrases used to describe tariffs implying green or renewable credentials.
What does green mean?
There are big differences in what companies do to support renewable generation but it’s not always clear from their ads and websites.
Although many tariffs made renewable claims, just four companies told us that they own renewable generation (solar or wind farms, for example). Six others have parent companies which do.
Around 15 say they buy some or all of the electricity they sell directly from generators, using contracts called Power Purchase Agreements (PPAs). These matter because they ‘provide a source of income to renewable generators that lets them be financially viable’, according to energy regulator Ofgem.
Others buy from the wholesale market and also buy certificates, called REGO certificates, to match renewable electricity already put into the system to what their customers use.
Renewable Energy Guarantee of Origins (REGO)
A REGO certificate is issued to a generator for every megawatt hour (MWh) of renewable power they put into the grid.
A generator can sell them alongside renewable power, or separately.
Energy firms buy them to show the proportion of renewable electricity they sell. Some buy them alongside renewable power directly from a generator, while others buy them separately – and after they have bought the electricity for their customers.
Energy firms must use them to prove the source of their electricity each year, to energy regulator Ofgem.
But it’s tricky to tell which companies take which approach to renewable electricity, and neither price comparison websites nor staff are helping.
We called seven firms whose websites we felt were unclear about how their renewable tariffs work, posing as a potential customer. Four said we would get renewable electricity directly to our home. One of these said it ‘buys it in advance from suppliers and then redistributes it through the lines to your property’.
Meanwhile, price comparison websites – the way most of us switch energy supplier – give options for ‘green’ or ‘renewable’ plans whose definitions vary.
Shades of green: green credentials compared
To help you find a supplier whose approach to renewables suits you, we’ve divided the firms and tariffs we found into three broad categories:
Pick a ‘leaf’ supplier if you want to be confident you’re helping increase the amount of new renewable electricity generated.
Ecotricity uses customers’ bills to finance building new sources of renewable energy.
Good Energy sets up contracts with small generators (eg farmers with fields of solar panels) who might otherwise struggle to get a good price for their power. Plus its high-tech forecasting ensures it knows exactly how much power its generators are feeding into the grid so it can buy enough to meet customers’ use.
But tariffs from these suppliers can be among the most expensive. Energy regulator Ofgem recognised this when it gave both firms, plus Green Energy UK, an exemption from the price cap on standard tariffs. It found that their higher prices are directly due to the support they give to generating renewable electricity.
But ‘pale green’ firms selling 100% renewable power backed only by REGOs ‘give the illusion of greenness to customers which can be misleading’, says Dale Vince, Ecotricity’s founder. Good Energy’s regulation and compliance manager Tom Seward explained that their tariffs ‘look like something we spend a huge amount of time on [to try to] create a more renewable energy system’.
These firms aren’t doing anything wrong according to Ofgem rules, but the rules aren’t clear enough to help customers make an informed decision.
Other things to consider
We looked specifically at renewable electricity in this investigation. But you might also want to consider whether firms are offering the following environmental measures when choosing an energy tariff:
- Green or carbon-neutral gas
- Carbon offsetting
- Donations to community projects