Growing numbers of homeowners are looking for ways to reduce their energy bills whilst at the same time making a positive environmental impact.
If you’re keen to do your bit for the environment, switching to a green energy tariff which supports renewable energy generation is an easy way to start. In fact, around a third of British homes are already signed up to green tariffs.
In this article, we take you through the ins and outs of green energy tariffs, and explain why you shouldn’t always take renewable energy claims at face value.
What is green energy?
Renewable energy, more commonly known as “green” energy, is any kind of energy that can be generated from natural sources with minimal or zero carbon emissions. This includes:
- Solar power: when sunlight is absorbed through panels and converted to electricity
- Hydroelectric power: when flowing water is used to rotate a turbine, generating electricity
- Wind power: when wind causes the turbine to rotate on an electric windmill, producing electricity
- Geothermal power: when heat occurring naturally from the earth is used to generate electricity
Of course, some of these ways of generating energy still carry some kind of environmental impact, especially when they involve installing machinery in natural environments. That said, promoting green energy in favour of energy produced by fossil fuels such as coal is considered essential in the fight to reduce carbon emissions and minimise the effects of climate change.
How do green energy tariffs work?
Switching to a green energy tariff doesn’t mean that all of the energy in your home will suddenly come from 100% renewable sources. Electricity generated from both renewable and non-renewable sources is all mixed together in the National Grid and then fed into people’s homes.
What it does mean is that your provider will match some or all of the energy that your household uses with the amount of renewable energy that they buy. Theoretically, this should mean that the more people who switch to a green energy tariff, the more renewable energy gets used in the Grid overall.
Does my supplier use renewable energy?
Energy suppliers are required by law to publish details of their “fuel mix” and update this information every year. This will tell you what percentage of their energy comes from renewable sources and what percentage doesn’t. You should be able to find a table breaking down your supplier’s fuel mix on their website or on your energy bill.
However, this isn’t foolproof and you can’t always take a supplier’s word about renewable energy at face value. In fact, some suppliers claim to use a much higher proportion of green energy than they actually do. They are able to do so by buying extra REGO certificates, which are explained below.
What is a REGO certificate?
Renewable Energy Guarantee of Origin (REGO) certificates are issued by Ofgem, the UK energy regulator, to renewable energy generators for every megawatt hour of green energy they produce. A megawatt hour (Mwh) is equal to 1,000 Kilowatt hours (Kwh) and is equal to 1,000 kilowatts of electricity used continuously for one hour. The certificates can then be bought by suppliers, who can submit them to Ofgem to prove they are buying electricity from renewable sources.
The issue is that while these certificates can (and theoretically should) be sold with renewable energy, they are also sold separately for as little as £1 each, so suppliers can buy extra REGO certificates to exaggerate how much renewable energy they are actually using. They can therefore continue to buy electricity from the fossil fuel industry while buying certificates to appear eco-friendly to consumers, in a practice that some refer to as “greenwashing”.
Suppliers often claim to use 100% renewable energy in their fuel mix but this isn’t necessarily always the truth – if their older fuel mixes show large proportions of non-renewable sources but their new ones suddenly seem to be all-green, then you probably have reason to be suspicious. The government has recently launched a review into the rules around green tariffs in an attempt to curb greenwashing and push suppliers to be more transparent about how they source their energy.
This doesn’t mean that fuel mixes can’t provide useful information to help you choose a supplier, or that every supplier is lying. However, if you can do your own research into how a supplier sources their energy, or contact them to ask how they do this and whether they buy REGO certificates, you may get a more accurate idea.
Which providers offer the best green energy tariffs?
Quite a few providers offer green energy tariffs, so it’s worth comparing as many deals as possible before deciding which might be right for you.
Suppliers offering green energy tariffs include 100 Green, Good Energy and Ecotricity. Bear in mind, however, that green tariffs are usually exempt from Ofgem’s energy price cap due to the support they provide for renewable energy generation, so in some cases your bills may end up being more expensive than if you chose a ‘non-green’ tariff.
If you’re considering switching your energy provider, it’s worth doing plenty of research so you can be certain you’ve found the best possible deal to suit your needs. Comparison websites such as MoneySuperMarket, Uswitch and Compare the Market enable you to compare the latest energy tariffs, whether you’re looking for a fixed or variable deal.
Are green energy tariffs more expensive?
As mentioned, green tariffs may be more expensive than non-green tariffs although with an increasing global focus on renewable energy, the costs of green tariffs should hopefully fall in the future. That said, the current energy crisis has meant that it’s virtually impossible to find any energy tariff that’s lower than the energy price cap, green or otherwise. You can read more about this in our article The energy bills crisis: what can you do about soaring costs?
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