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The Energy Tariff Greenwash They're Growing in Popularity

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The Energy Tariff Greenwash They're Growing in Popularity THE ENERGY TARIFF GREENWASH They’re growing in popularity, but are renewable electricity tariffs offering what customers expect? Sarah Ingrams exposes unclear claims and busts myths to help you choose a supplier with green credentials you’re happy with 20 WHICH? MAGAZINE OCTOBER 2019 GREEN ENERGY f you’re attracted to it through the lines to your the idea of a renewable property’ – at best an example THE ELECTRICITY I energy tariff to do your of staff ignorance. bit for the environment, YOU USE TO POWER a quick comparison suggests Unclear claims YOUR APPLIANCES you’ve got plenty of choice. When Myths aside, there are big we analysed the 355 tariffs on the differences in what companies do IS THE SAME AS market, more than half claimed to support renewable generation renewable electricity credentials. but it’s not always clear from their YOUR NEIGHBOUR’S, Three years ago it was just 9%. The websites. When Good Energy cheapest will cost you around £500 states ‘we match the power you use REGARDLESS OF THE less than the priciest, per year. But in a year with electricity generated you may be shocked to find out the from sun, wind and water’, it TARIFF YOU’RE ON differences between them. means it buys electricity directly In a survey of almost 4,000 from renewable generators to people in late 2018, a third told match customer use for 90% of us that if an energy tariff is marked half-hour units throughout the year. ‘green’ or ‘renewable’, they expect But similar-sounding claims from that 100% renewable electricity is others don’t mean the same thing. supplied to their home. Another Most of us now switch energy 19% believed that the supplier supplier via a price comparison generates some or all of the website, but these are adding to renewable electricity it sells. the confusion with options for But these expectations give ‘green’ or ‘renewable’ plans most energy firms more credit whose definitions vary. than they deserve. A few do build and generate renewable power, but most merely buy certificates to show that renewable electricity has been put into the grid – although not by them. And it’s THE MIX OF ELECTRICITY staggeringly cheap and easy to do: companies can buy certificates SENT TO YOUR HOME to match the annual usage of a typical household for as little as It simply isn’t possible to get renewable electricity delivered directly to your £1.55. What’s more, we’ve found home from the grid, despite claims. Electricity is generated from a variety of that marketing messages do little sources (shown below), including 35.9% from renewables, according to the to dispel misunderstanding or government’s latest figures, but it’s all mixed together through the National clarify what terms such as ‘green’ Grid, the company that runs the distribution network for electricity. Energy and ‘renewable’ actually mean. firms can’t determine what arrives at your property. The only way to do this is to connect directly to a generator, such as solar panels on your roof. Myth-busting The truth is that the electricity GAS 41.9% you use to power your appliances is the same as your neighbour’s, NUCLEAR 16% regardless of the tariff you’re on (see WIND (ONSHORE) 11.3% right). It’s not technically possible to direct ‘renewable’ electrons to BIOENERGY 10.1% certain homes and those from WIND (OFFSHORE) 9.9% non-renewable sources to others. But this isn’t widely understood, COAL 3.5% and energy firms aren’t helping: we SOLAR 2.5% called seven whose websites were RENEWABLE SOURCES HYDROPOWER LEES NATHALIE ILLUSTRATION: unclear about how their renewable 2.1% NON-RENEWABLE SOURCES tariffs actually work, posing as OIL 0.3% a potential customer – four said PUMPED STORAGE 0.1% we’d get renewable electricity Fuel used in UK electricity generation, Jan-Mar 2019. directly to our home. One of these OTHER FUELS 1.8% Source: BEIS Energy Trends said they ‘buy it in advance from suppliers and then redistribute OCTOBER 2019 WHICH? MAGAZINE 21 Shades of green ■ Dark green: those that £1.55 – THE COST Although many tariffs made consistently generate enough renewable claims, just four firms renewable electricity themselves FOR A COMPANY TO said they own renewable generation to match customer use, or buy the (eg wind or solar farms). Six have equivalent directly from generators. SAY A MEDIUM-USE parent companies that do. Around ■ Mid green: those that generate 15 buy some or all renewable some renewable electricity or buy ENERGY CUSTOMER’S electricity directly from generators directly from generators – but this using contracts called Power only accounts for a proportion of TARIFF IS RENEWABLE Purchase Agreements (PPAs). the energy they supply, or they’ve Ofgem says these ‘provide a source only started doing this recently. of income to renewable generators ■ Pale green: those that don’t that lets them be financially viable’. exclusively offer 100% renewable Others buy from the wholesale tariffs or that neither generate Shell Energy said: ‘As First Utility market and buy certificates, called renewable electricity nor buy any we bought no REGO certificates. Renewable Energy Guarantees of directly from generators. They buy Since our rebrand … we’ve been Origin (REGO), to match renewable electricity on the wholesale market purchasing REGO certificates to electricity already put into the and purchase REGO certificates match all our customers’ usage in system to what customers use. to match their customers’ use. addition to some PPA agreements.’ For every megawatt hour (MWh) A REGO costs around 30-50p Shell Energy declined to tell us of renewable power put in the grid, per MWh of electricity, according how much it buys via PPA. one REGO is issued to the generator. to energy consultancy Cornwall Other companies sell both 100% Energy firms buy them to show Insight. If a customer uses around renewable tariffs and other tariffs the proportion of renewable 3.1MWh in a year, it could cost without this claim. Npower says electricity they sell. Some buy them a firm just £1.55 to say a customer’s that those on its renewable tariff get alongside renewable power directly tariff is 100% renewable. 100% renewable electricity (backed from a generator, while others by REGOs) while its other customers buy them separately, after they’ve Renewable transformations? get 2% renewable electricity. bought electricity for customers. When First Utility rebranded as British Gas, Green Network Energy To help you find a supplier Shell Energy in March 2019, it said and Ovo, among others, also don’t whose approach to renewables that all customers now got 100% exclusively sell 100% renewable suits you, we’ve divided the firms renewable electricity at no extra electricity tariffs. So, while some and tariffs we found (see table, cost. First Utility’s fuel mix was just customers are allocated clean p23) into three broad categories: 3.7% renewable. So how did it do it? power – others aren’t. GREEN CLAIMS THAT COULD LEAD YOU It says: ‘Electricity supplied It says: ‘We sourced all of It says: ‘Our customers vote to your home [is] 100% green.’ the electricity we supplied for either wind, solar, hydro, ASTRAY Reality: As shown in the from renewable generators, biomass or tidal. We’ll then graph on p21, no supplier including more than half from make agreements to source What companies can guarantee this. Foxglove hydroelectric generators and our energy according to each say and what that Energy told us that it a large proportion from wind.’ share of the votes.’ really means doesn’t own any renewable Reality: It’s a retail supplier Reality: It doesn’t have direct generation and buys REGO that doesn’t own hydroelectric agreements with renewable certificates for each unit generators or wind farms. It has generators to buy power. of electricity bought no PPAs to buy directly from It buys REGOs to match for customers. them either. It buys REGOs. customer use in line with votes. 22 WHICH? MAGAZINE OCTOBER 2019 GREEN ENERGY cap on standard tariffs. It found that their higher prices YOUR TARIFF’S are directly due to the support GREEN CREDENTIALS they give to generating renewable electricity. Others, such as Bulb and We’ve compared companies selling ‘100% renewable’ WHO CAN YOU Octopus (mid green), have electricity tariffs, using our dark/mid/pale green REALLY TRUST? some direct contracts but are categories to help you pick a supplier whose also keen to keep prices down. renewable credentials you’re happy with. SARAH INGRAMS, Octopus’ blog explains it wants WHICH? SENIOR RESEARCHER to ‘hit that sweet spot between what’s good for the planet ■ Consistently generate/buy enough renewable f you want to be and good for your wallet’. electricity direct from generators (only Ecotricity I confident you’re and Good Energy qualify here) helping increase Illusion of greenness ■ Generate/buy some renewable electricity direct the amount of new renewable But ‘pale green’ companies from generators electricity generated, pick selling ‘100% renewable’ power ■ Don’t exclusively offer 100% renewable tariffs a ‘dark green’ supplier. backed exclusively by REGO or don’t generate/buy renewable electricity For example, Ecotricity uses certificates ‘give the illusion of its customers’ bills to finance greenness to customers which building new sources of can be misleading’, says Dale Only 100% renewable% of electricity that’s electricity tariffs?renewable (overall) from generators?electricity direct renewable energy. Good Energy Vince, Ecotricity’s founder. Own renewable Buys renewable generation? sets up contracts with small ‘When people buy these tariffs Company generators (such as farmers we think they expect something with a field of solar panels) additional to happen’.
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