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18 July 2021

Differences between green energy suppliers

Energy companies take different approaches to selling renewable energy - find out which is best for you.
SI
Sarah Ingrams

Around 60% of energy companies only sell tariffs with 100% renewable electricity, and around 60% of customers are with those firms, according to a report from energy consultancy Cornwall Insight commissioned by Which?.

But companies have different approaches to providing their renewable electricity. So if you have a clear idea of what you want from a green tariff, check carefully that you’ll get it – it’s not always easy to tell at a glance. 

Electricity pylons with trees and houses

Can I get 100% renewable electricity to my home?

The sources of the electricity that comes by wires to your home at any moment depends on where you live and how much renewable generation is happening across the country at the time. On average, our electricity is 38% from renewable sources. This is the standard fuel mix of the National Grid. 

UK fuel mix

If you buy a 100% renewable tariff, it does not change the electricity that comes into your home. It does change what part of the energy market you are paying for.

If you’d like to start generating your own renewable electricity, find out more about solar panels and home energy storage.

Pouring boiling water from an electric kettle

What are the rules for renewable energy tariffs?

There is no set definition of what a renewable or green tariff is, and companies take a variety of approaches. It’s not clear to customers either – when we asked more than 3,600 people to choose from a list of definitions for renewable energy tariffs, a third said that they didn’t know*.

To make an ‘environmental claim’ about a tariff, an energy company must:

  • Show that the environmental gain is because the customer chose the tariff
  • Publish its fuel mix and information about the environmental benefit of the tariff
  • Be able to prove where its renewable energy has come from, by having enough certificates.

To sell a tariff labelled as 100% renewable electricity, an energy company must buy enough certificates for renewable energy to match what customers on the tariff use over a year.

Signing a contract

If a company has bought enough certificates to match all of its customers’ electricity use (on all tariffs), it will be able to say that its overall fuel mix is 100% renewable. You can see the fuel mix for energy companies rated in our survey.

These certificates prove that a megawatt hour of renewable electricity has been generated. There are two types:

  • Renewable Energy Guarantees of Origin (REGO) if they’re from the UK 
  • Guarantees of Origin (GoOs) if they’re from the EU.

But these certificates don’t prove that the company has generated any renewable electricity itself, nor bought renewable electricity directly from a generator. Companies can buy them without buying the associated renewable electricity.

Woman looking confused comparing green energy tariffs

Different approaches to renewable energy tariffs

There are four main, different approaches that energy companies take to providing 100% renewable electricity tariffs:

  • Providing renewable power from generators the company operates to meet customer demand;
  • Helping customers to buy stakes in renewable generation and matching their consumption to the output (e.g. a customer buys a stake in a wind farm) – this is rare; 
  • Having a contract or trading deal to take the output of a renewable generator and incorporate it into a tariff;
  • Matching customer consumption against renewable output via traded certificates (e.g. REGOs).

Many companies use a combination of these.

Does green energy cost more?

REGO certificates cost around £0.30-£0.80 per megawatt hour in 2019, according to Cornwall Insight, which equates to around £0.87-£2.32 per household per year. They cost less in 2020. So it doesn’t cost a company very much to be able to say it sells renewable electricity. 

That’s how some of the cheapest tariffs you can buy offer '100% renewable electricity'.

However Cornwall Insight says that REGOs ‘do not represent an investible revenue stream for the generating party’. 

It tends to cost more to buy from companies that have more direct links to renewable generation.

Two employees in high-vis working at a wind turbine

Three energy companies were given exemptions from the price cap on default energy tariffs because they proved to energy regulator Ofgem that they have higher costs because they support renewables, that they support renewables beyond existing subsidies, and that customers have actively chosen to buy them. These companies are:

All applied to Ofgem to be allowed to charge more and their tariffs are typically among the priciest available. 

Some companies let you ‘top-up’ your tariff – essentially pay more for additional green features. This could be increasing the proportion of renewable electricity you pay for or adding green gas or carbon offset.

Coal-fired power station

How do you tell if you’re picking a truly green energy company?

Since there is no set definition of what a green or renewable tariff is, it can be hard to tell. First, be clear about what you want or expect from the company you buy from. Then, look out for the following to help you:

  • Does the company say it owns renewable generation, such as solar or wind farms?
  • Can you tell if the company buys power (as well as certificates) from generators? Sometimes you’ll be able to find a section where the company asks generators to get in touch about selling power to it.
  • Is there a clear explanation of how the company proves that the electricity it sells is 100% renewable? 
  • Does the company explain what REGO (or GoO) certificates are and how it uses them?
  • Does the company have direct links to fossil fuels? Some companies generate renewable power and also own gas power stations or invest in oil.

Don’t be swayed by environmentally friendly images, designs and phrases if they’re not backed-up with factual information.

Even so, it’s often tricky to tell what a company is really doing to support renewable electricity. It's something we’ll be investigating further and reporting back on later this year.

Woman planting tree saplings

Other sustainable features of energy companies

Besides 100% renewable electricity and green gas, companies have other approaches to improving their sustainability including:

  • Sustainable accreditation, such as Bcorp or Vegan Society;
  • Encouraging sustainable behaviour through time-of-use tariffs or including smart thermostats in their tariffs;
  • Making charitable donations;
  • Participating in community or charity energy programmes (such as involvement with solar panel community projects);
  • Tree-planting.

*Online survey of 3,622 members of the general public in September 2020.