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? (published in June 2021).
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 what you're after – it’s not always easy to tell at a glance.
In October 2021, we asked more than 40 energy companies to tell us specifics about the green electricity and gas they sell to homes, and looked at their websites to see how easy it is for customers to understand what they’re buying and uncover which energy supplier is the greenest. As a result, we made our first .
The source 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 40% from renewable sources. This is the standard fuel mix of the National Grid.
Source: Department for Business, Energy and Industrial Strategy's UK fuel mix, for 1 April 2020 to 31 March 2021.
If you buy a 100% renewable tariff, it does not change the electricity that comes into your home. But 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 firm 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. 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. Providers can buy them without buying the associated renewable electricity.
There are four different approaches that energy companies take to providing '100% renewable' electricity tariffs. These are:
Many companies use a combination of these, and firms can buy certificates separately from the renewable power.
The Committee on Climate Change explained that the ability to 'unbundle' REGOs from the power generated 'could mean that the supplier of the green tariff is not actually purchasing renewable electricity but it is simply purchasing the certificate'.
REGO certificates cost just £1.45 per customer per year in 2020, according to consultancy Baringa. Prices have risen since January 2021 but they're still relatively cheap.
So it doesn’t cost an energy company very much to be able to say it sells renewable electricity. That’s how some of the cheapest tariffs on sale in the past offered '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 energy from companies that have more direct links to renewable generation.
For example, buying renewable electricity directly from a generator on a long-term contract can provide guaranteed revenue and a route to market for the power without the costs of trading on the wholesale market, explains consultancy Baringa.
But with energy prices rising since autumn 2021, cheap deals are few and far between.
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 three 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, which essentially means you 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 tricky 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 hard to tell what a company is really doing to support renewable electricity. So, in July and August 2021, we asked 49 energy suppliers to tell us exactly how they sourced their renewable electricity.
*Online survey of 3,622 members of the general public in September 2020.