Sep 28, 2022

How green is your electricity tariff?

A green electricity tariff can be labelled ‘green’ if some or all units of electricity purchased are ‘matched’ by units of energy generated from a renewable energy source. It can be difficult to separate a reliable green tariff from a greenwashing tariff as identifying where the electricity was sourced can be a challenge [1].

Energy companies use Renewable Energy Guarantee of Origins (REGO) certificates to prove the source of electricity to Ofgem for their Fuel Mix Disclosure (FMD) report. The FMD report is the requirement on all electricity suppliers in Great Britain to disclose to their customers the mix of fuels used to generate the electricity supplied annually [2].

The issue with this however is that sometimes these REGO certificates are purchased separately from the unit of electricity. It’s a murky world, but this is our understanding and it’s not to be taken as legal advice.  REGOs are assigned to every MWh of renewable energy generated BUT the certificate and the unit of electricity do not have to be sold together which allows some suppliers to claim they are selling renewable energy when they aren’t. This happens as some companies will purchase renewable energy when it is the cheapest unit of electricity and sometimes decline the purchase of the REGO. These surplus REGOs are then therefore available to be sold separately to other suppliers who can ‘match’ them to the units of energy they sell and claim to have a ‘100% renewable’ tariff.

One way to verify a ‘green’ tariff is to ascertain if the REGO certificate came directly from generator via a mechanism called Power Purchase Agreement (PPA) which never separates the REGO from the original units of generation. A PPA is a long-term contract under which an energy supplier agrees to purchase electricity directly from a renewable energy generator. Beyond PPAs are Corporate Power Purchase Agreements (CPPA) which is a direct contract between your business and a renewable energy generator through an energy company who will supply your electricity. Some energy companies offer PPAs and/or CPPAs, information regarding these will be on the energy suppliers’ website.

In 2019 Which? [4] produced an article regarding green energy tariffs which includes a table breaking down some energy suppliers’ green credentials (based on an Energylinx snapshot), providing information on which suppliers:

  • Consistently generate enough renewable electricity themselves to match customer use or buy the equivalent directly from generators.
  • Generate some renewable electricity or buys some directly from generators
  • Does not exclusively offer 100% renewable tariffs or that neither generate renewable electricity nor buy any directly from generators.

This research concludes that to ensure you are purchasing renewable electricity you need to ascertain if your electricity supplier is either producing their own renewable electricity or buying directly from the renewable energy generators, if this is not the case the tariff likely relies on REGOs to be considered ‘green’.

Nevertheless, reducing demand remains the best way to progress to a sustainable future.  If you need advice on carbon assessment and/or reduction in your buildings, please get in touch.

[1] Energy Saving Trust

[2] DECC Report

[3] CSE – Green Electricity Tariffs

[4] Which? How green is your energy tariff?

Image credit: Gustavo Quepón via Unsplash


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