Explained: Green energy tariffs

In the first three months of 2020, almost half of the UK’s electricity came from renewable energy according to the latest Government figures.

This latest record shows the genuine progress being made towards green energy targets with recent research from National Grid even suggesting the UK’s electricity could be carbon negative by 2033.

Many people are now looking to do their bit for the environment by switching their home to a green energy tariff.  In this blog, we’ll look beyond the label and highlight a few pitfalls to avoid when switching to green energy tariffs.

What are green energy tariffs?

As we look to reduce our carbon footprints, green energy tariffs are becoming increasingly popular. Recent research from Which? found more than half of the energy tariffs available in the market claimed to be green compared to just 9% three years ago.

A green energy tariff is when a supplier pledges to match some of the electricity you use with renewable energy. The supplier then feeds this energy back into the National Grid. This helps the environment as more people choose a green energy tariff, there is a greater proportion of renewable energy in the overall power supply.

It is important to note that unless you have your own electricity generator or solar panels, you will still get your energy from the National Grid, so it’s not completely renewable just yet.

What are the different types of green energy tariffs?

When looking to switch to a green energy tariff, remember to check the supplier’s fuel mix. Some green tariffs use 100% renewable energy while others use a proportion of renewable and non-renewable energy.

Ofgem requires suppliers to show where their green energy comes from by producing Renewable Energy Guarantees of Origin (REGO) certificates. These certificates prove the energy provided to the National Grid comes from renewable sources.

There are three ways energy suppliers can obtain their REGO certificates:

  1. Generate their own renewable energy
  2. Purchase renewable energy directly from generators
  3. Buy unused REGO certificates from other suppliers

Be careful if it’s the third option as some energy suppliers claim to provide entirely renewable energy but may only purchase unused REGO certificates from other suppliers without directly funding any renewable energy.

Which type of green energy tariff is most common?

Many energy suppliers buy electricity on the wholesale market and purchase REGO certificates for their renewable tariffs. These firms typically don’t generate renewable electricity or buy any directly from generators. This means they are the least environmentally friendly of the green tariffs.

Approximately 15 suppliers buy their renewable energy directly from generators. Buying directly benefits the environment as it provides a source of income to renewable generators to ensure they are financially viable. The suppliers who purchase renewable energy directly include Bulb, Octopus Energy and Sainsbury’s Energy. However it is still important to check the details. With some of these suppliers, green energy only accounts for a proportion of the overall energy they supply to the National Grid.

Another handful of suppliers own energy generators such as solar or wind farms to produce their own renewable energy. This allows the suppliers to ensure their power is as green as possible. Of these, Good Energy and Ecotricity have received recommendations from both The Energy Saving Trust and Which? as environmentally friendly suppliers.

Ecotricity’s energy all comes from wind or solar power. The company also says it makes around a fifth of its electricity itself. The rest of its energy is bought directly from other green generators.

Good Energy also owns solar and wind generators. The company sources all its energy from renewables, including local farms who generate their own green power and sell the excess to Good Energy.

How can you tell if your energy supply is green?

Ofgem has ensured that suppliers must clearly signpost the type of energy used for each tariff. Your supplier should also tell you what sources of energy are used in the tariff such as solar, wind or coal. This information should be easy to find on a supplier’s website or on your energy bill.

What other environmental factors should you consider?

In addition to generating renewable energy or purchasing it from generators, suppliers may do other things to support the environment. This includes making donations to green community projects, funding tree planting or participating in carbon offsetting programmes.

Energy supplier Bulb donates £2 per switch to Trees for Cities. Good Energy also funds a PhD scholarship programme in renewable energy. It is certainly worth looking at the other green commitments made by suppliers before choosing your new tariff.