4th August 2021
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.
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.
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.
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:
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.
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 .
These certificates prove that a megawatt hour of renewable electricity has been generated. There are two types:
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.
There are four main, different approaches that energy companies take to providing 100% renewable electricity tariffs:
Many companies use a combination of these.
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.
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 or carbon offset.
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:
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.
*Online survey of 3,622 members of the general public in September 2020.