The rise of renewable tariffs: Are they as green as they seem?

Whatever your stance on energy (particularly given the recent cost of living crisis), renewable energy has increased in popularity in the last 20 years. In fact, renewables are set to account for almost 95% of the increase in global power capacity through 2026, with more than half of this being provided by solar alone.

As consumer demand for green energy continues to rise, we wanted to look a little closer across the UK to understand what a ‘green’ energy tariff really is, and whether they really are as green as they seem.

The meaning behind green

We should start by acknowledging that according to Which?, there is only one way you can truly guarantee that 100% of the energy you use is renewable: by directly connecting your home to a self-contained generator (i.e. installing solar panels on your roof).

For many people however, connecting their home to a generator isn’t feasible—costs aren’t always affordable, some don’t own the property they live in (meaning they don’t have permission to implement changes) and from a supply and demand perspective, if everyone went down the solar panel route, we’d no doubt quickly be hit by a national shortage!

So what can we—the everyday household energy consumer—do?

According to Simply Switch, we’re almost spoiled for choice here in the UK. 87.5% of the market is shared between 10 big suppliers. That’s your household names like British Gas, EDF, E.ON, Npower, ScottishPower, SSE and so on. But do these market leaders actually offer green tariffs?

We thought we’d take a closer look.

Getting cosy with British Gas

To provide some colour to the energy landscape, we started by looking at market leader British Gas, who say they have an aim to be net-zero by 2050 and that they’ve already made a great start “by cutting our own emissions by 39% since 2015 and saving 11 million homes worth of CO2 over the last 10 years.”

All of British Gas’ fixed tariffs “are 100% zero carbon” which means they “don’t use sources that produce harmful CO2 emissions”. In fact, British Gas claims that over three quarters of their electricity comes from renewable sources.

It’s great that companies like British Gas are setting their own targets to hit net zero, but we couldn’t help but be a little bit sceptical about their practices. Given the overuse of ‘green’ language combined with the reputation of big energy companies, we felt an obligation to do some digging around these ‘facts’ and put their claims to the test.

In October 2020, Good Energy released a policy paper titled “The problem of greenwashing” which explains that there are three different types of “100% renewable tariffs” in the market today. It’s worth noting that some suppliers apply a mix of these different approaches, sometimes in the same tariff.

• Investment tariffs – here, the energy supplier uses the funds from customer bills to directly invest in new renewable generation sites.
• Partnership tariffs – this is based on the idea that, rather than acting alone, supporting a community of renewable energy developers is the fastest route to decarbonisation. By buying power directly from renewable generators at a fair price, they can help to create a market for green power, giving a route to market for smaller generators that might otherwise have no place to sell their power to.
• Certificate-backed tariffs – this equates to buying little or no renewable power, but acquiring inexpensive certificates known as REGOs (Renewable Energy Certificate of Origins) or European Guarantees of Origin, that are issued to renewable generators when they generate power.

The (not so) shocking thing is that market leaders, who claim they’re “net zero” and “100% zero carbon”, are the ones who are relying almost exclusively on this third option: providing certificate-backed (REGOs) tariffs. This means they can buy a tiny amount of renewable power, acquire a certificate and tell their customers that the energy they’re getting pumped into their homes is 100% renewable.

It sounds unbelievable, but unfortunately it’s true. When Utility rebranded as Shell Energy, their fuel mix became 100% renewable overnight; simply because they acquired a REGO certification (see Figure 1 below).

Personally, the idea of a REGO certificates don’t sit right with me. Saying that you provide your customers with “100% renewable electricity” but needing to only purchase a single kilowatt of renewable energy to do so, has greenwashing written all over it.

Figure 1

So what now?

So consumers are facing a conundrum. British Gas is the current leader of the pack when it comes to general reporting on “green energy,” but unfortunately, it’s clearly not that “green” at all. So what—and who—can you really trust and rely on?

For those looking to make the decision to switch to greener energy sources, we suggest first looking at investment tariffs offered by companies such as Ecotricity & Good Energy. Renowned for their straight-talking, no-nonsense attitude, both brands provide more transparent information about their energy, underlined by their mission and vision for a more sustainable future.

Ecotricity, for example, claims on its website that 100% of its electricity comes from renewables, but that when it comes to gas, things are a bit more complex.

The leading eco-utility company is on a mission to provide 100% green gas to their customers, but in the meantime is carbon-offsetting the gas that doesn’t come from renewable sources and mixing it with gas that does. And unlike alternative green gasses, (which rely on animal waste), Ecotricity produces their green gas from grass cuttings.

Finally, a company being honest!

As individuals (and as a business) aiming to make improvements along our sustainability ‘journey,’ we appreciate the transparency and honesty that Ecotricity and Good Energy provides their customers. They collectively acknowledge that carbon-offsetting isn’t a long term solution, but whilst they’re working on producing market volumes of green gas, it is a better option than not.

We appreciate that learning how to adopt sustainable lifestyle choices is a little tricky and can often be confusing. So from our research, we’ve put together our top 5 tips to go green with your energy tariffs:

• If you can, avoid switching to or relying on companies that rely on REGO’s, and instead check out companies who provide investment tariffs (such as Ecotricity or Good Energy). These companies invest their customers’ money into developing renewable energy, ultimately helping to serve more people and expand their consumer base. Good for business, good for consumers, good for the planet.
• Question your energy provider and always do some research before you switch. Greenwashing is everywhere!
• Share what you learn with you friends and family so they can also make informed decisions and benefit too.
• If you do decide to switch, be careful not to get caught out by cancellation clauses and excuses from your current provider. You may need to wait—make sure you make the right decision for you.

We’re no energy experts, but the road ahead seems pretty clear. If you have any other tips, knowledge or advice you’d like to share with us, then we’d love to hear it!

You can share your thoughts and perspective by emailing callum@ubuntustudio.co.uk. Whilst we can’t reply to every message, we do read them all.

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