If you want to do your part and help the environment, you may be considering switching to a green energy tariff. But what exactly is green energy, and are these tariffs really as “green” as they seem?
What is green energy?
Green energy is any type of energy produced from natural and renewable sources. For electricity, this could include:
Solar sunlight is absorbed by solar panels and converted into electricity
Wind the circulating air turns the blades of a turbine around a rotor that creates electricity
Hydroelectric captures energy from water flowing through a wheel or turbine to generate electricity
Wave captures the energy of waves in oceans, rivers or lakes to produce electricity Biomass: organic matter such as wood pellets or grass clippings are burned, which generates energy
Geothermal the heat created in the earth is harnessed to create electricity
Tide the energy of the tides is converted into electricity.
Green gas, on the other hand, is usually produced by a process called anaerobic digestion. Here, bacteria would break down organic matter such as food, farm waste, or agricultural crops to release biogas.
The biogas is then purified and transformed into biomethane and this is introduced into the national network before being supplied to households.
The process can also produce a solid fuel that can be burned to generate electricity, although this is not as environmentally friendly as other methods due to the emissions produced.
How do green energy tariffs work?
One of the biggest misconceptions about green energy tariffs is that they provide 100% renewable energy in your home.
In reality, the energy provided to your property will be exactly the same as that provided to each property in your neighborhood, regardless of the rate applied. Electricity is produced from a variety of sources, including renewable sources, and all of this is blended into the national grid before it is delivered to homes.
What green energy tariffs mean, however, is that your supplier will match some or all of the energy you use with the amount they buy from renewable sources. This means that the more people who subscribe to a green energy tariff, the more renewable energy should be fed back into the grid, increasing the proportion of green energy in general use.
What rules should suppliers follow when describing tariffs as “green”?
Energy providers are legally required to publish details of their “energy mix” and update it at least once a year. You should be able to find this information on your supplier’s website or on your energy bill.
Publishing this information allows customers to see exactly what percentage of energy produced by their supplier comes from renewable sources and what percentage comes from other sources such as coal, gas and nuclear power.
But while that sounds good in theory, the shocking reality is that some suppliers claim their energy is 100% renewable when in fact it is not produced sustainably at all.
The main reason for this is that suppliers can purchase documents, called REGO certificates (see below), which prove that the electricity is from a renewable source. But they don’t have to buy renewable energy to do this.
So while some suppliers source their energy directly from renewable sources, others simply do not.
In fact, the latest government figures about the energy mix show that only 37.9% of the energy produced in the UK comes directly from renewable methods.
What is the role of Ofgem REGO certificates?
REGO is the acronym for Renewable Energy Guarantee of Origin.
Ofgem (the UK energy regulator) issues a REGO certificate per megawatt hour (MHw) of eligible renewable generation to renewable electricity producers. The purpose of the certificate is to prove that a certain proportion of the total energy production has been produced from renewable sources.
Producers can then sell the REGO certificates to energy suppliers, who submit them to Ofgem to show that much of the electricity they buy comes from renewable sources.
The problem is, these certificates can be sold with renewables, as you might expect, or they can be sold separately. And that means energy providers can buy excess REGO certificates for a small fee without actually sourcing electricity from renewable energy generators.
Suppliers can then offer “green tariffs” to their customers.
This practice means that suppliers can mostly source their supplies from the wholesale market – which will include fossil fuels such as coal and nuclear – and then purchase EMBs to qualify the energy as “100% renewable.”
Critics call this “greenwashing”. There is growing unease in many quarters that customers are in fact being tricked into believing they are supporting environmentally friendly energy production when in fact their energy is coming from traditional sources of fossil fuels.
How can I be sure that my rate is really “green”?
A truly “green” tariff should be one where the supplier purchases 100% of the energy from a renewable generator and / or produces the energy from renewable sources themselves.
Verifying the fuel mixture of the chosen supplier is a step in the process of determining the degree of green of your tariff. But it may also be worth contacting your supplier to ask how they get their energy and whether they buy REGO certificates in this context.
Are green energy tariffs more expensive than non-green tariffs?
Green tariffs were more expensive than non-green plans when they first hit the market. However, growing concern about energy produced from fossil fuels and its impact on climate change has increased the popularity of green tariffs and their price down.
In fact, British Gas says customers on its Green Future tariffs will only pay £ 3 more per month than those on its non-green plans. The most competitive offers usually come from a growing number of challenger brands, such as Bulb, Octopus Energy, Outfox the Market and goto.energy.
The prices of green tariffs will continue to fall as businesses strive to meet the government’s goal of net zero carbon emissions by 2050, and the United Nations Sustainable Development Goals (SDGs) more broadly.
Are green fixed rate tariffs cheaper than variable rates?
As with non-green tariffs, opting for a green fixed tariff rather than a variable tariff could save you hundreds of pounds in energy bills.
With a variable rate tariff, you are not locked into a contract and the price you pay per unit of gas or electricity can fluctuate with wholesale energy prices, with the potential to go down but also to increase.
On a fixed tariff, the price per unit of gas or electricity remains the same throughout the duration of a contractual period generally of 12 or 24 months, so there is no need to worry about price increases. .
While flat rates tend to be more competitive, you may have to pay a fee (on average £ 30 per fuel) if you decide to terminate the contract earlier. But the exit fee will not be charged if you are within 42 days of your fare end date.
How to switch to a green energy tariff?
Switching to a green energy tariff is easy, especially if you use a comparison site. Enter your zip code and a few details into the compare tool, to determine the best deals for you – you can use site filters to focus on green deals. Select a green rate based on factors such as price and exit charges. The energy supplier will then take charge of the switch.
Are there green energy tariffs for businesses?
Some green energy providers, such as Bulb, Good Energy, and People’s Energy, also cater to businesses. You can also compare companies’ rates on comparison sites.