Dirty secret behind your ‘CLEAN’ ENERGY DEAL
Eco-friendly tariffs promise to supply 100 pc renewable electricity — but a shocking loophole means the power you pay for might not be so green...
POWER supplier Outfox The Market’s website is plastered with eco-friendly claims. ‘You don’t have to choose between the planet and your pocket,’ reads the marketing copy, adorned with a cartoon image of wind turbines on a green field. ‘Do the right thing. Go green, go clean.’
Like many other cheap energy brands, the supplier is capitalising on a growing appetite for clean, renewable electricity.
Yet closer inspection of the small print shows these green tariffs are no more environmentally friendly than ordinary energy deals. The supplier may purport to offer ‘100pc clean wind electricity’, but the only thing it needs to make such a claim are certificates that cost as little as £1.45 per customer.
To state that a tariff is green, suppliers have to prove they have generated the renewable electricity themselves, bought it from a plant, or purchased a Renewable Energy Guarantees of Origin (Rego) certificate.
The vast majority — including Outfox The Market — choose the last of these options, as it is typically the cheapest and easiest.
Each certificate guarantees that a supplier will match its customer’s electricity usage by investing a similar amount in green energy produced by a renewable generator.
But suppliers continue to source energy from the wholesale market — the National Grid — which uses fossil fuels, all the while claiming to be ‘100 pc renewable’.
Firms are not obliged to reveal how much of their ‘green’ energy comes from the purchase of these certificates, or how much is bought directly from renewable sources.
So customers can think the energy they use is purely green, when it is actually generated from a combination of gas, solar, wind, hydroelectric, biomass and nuclear sources.
Regos — issued by the energy watchdog Ofgem — have come under increasing scrutiny, and earlier this month ministers pledged to clamp down on ‘greenwashing’ firms that exaggerate their eco-friendly credentials.
CONcERNS about greenwashing were highlighted this year in a major report by the consultancy Baringa. Report author Vlad Parail says: ‘People might switch to a green tariff, then feel they can relax about their carbon footprint. In reality, when they buy from a firm backed by Regos, the direct impact a customer has on the environment is very small.’
Energy firm Utilita estimates that three in five customers would take action against their supplier if they had been misled. Some 58pc say they would want to be compensated for the premiums they paid for so-called green energy — meaning firms could be left repaying £144 a year to customers as a result of misleading ‘100pc renewable energy’ claims.
Analysis by Money Mail found that of the 20 cheapest energy tariffs currently available on Uswitch, 14 hold a ‘bronze’ score for green credentials. The remaining six are not even accredited.
To achieve a ‘bronze’, a brand can rely solely on Regos certificates. If more than 42.9pc of its electricity is bought direct from a renewable generator, it gains ‘silver’ status. ‘Gold’ suppliers must prove 100 pc of their electricity is bought in this way. Yet if you look on the cheapest suppliers’ websites, you could easily think you were buying wholly guilt-free energy.
For example, Bulb, which has more than 1.6 million customers, says on its website: ‘We make energy greener — so we help protect our planet. We provide 100pc renewable electricity and
100pc carbon-neutral gas to all our members as standard.’
But according to the Baringa report, 96pc of Bulb’s green power was sourced through Regos certificates last year. Only 4 pc was bought direct from renewable generators.
Utility Point, which offers the fourth cheapest tariff, claims to provide ‘100 pc renewable’ energy.
But its cheapest tariff holds only a ‘bronze’ award from Uswitch.
A Utility Point spokesperson says every supplier provides a mix of fossil fuel and renewable supplies, as green tariffs simply ‘encourage more green generation’.
Bulb points out that some firms rely on annual Rego certificates, which allows them to invest in lots of renewable energy during the summer — when it is most plentiful — to greenwash their winter months, when they are likely to rely almost exclusively on nonsustainable sources. Bulb says its Regos certificates are renewed monthly, to make sure they accurately reflect the energy being consumed in the market.
There is additional confusion as some firms may buy the European equivalent of a Rego, called a Guarantee of Origin (GoO).
This means that when a UK customer pays for a green tariff, they are actually funding renewable energy projects in France or Germany, for example.
continental suppliers cannot reciprocate this investment, as Europe stopped recognising Rego certificates after Brexit.
Doug Stewart, chief executive of Green Energy UK, compares greenwashing to the 2013 scandal when supermarkets were found to be selling ‘beef’ containing horse meat.
He says: ‘If you’re paying 10p for a lasagna, what do you really expect to be in it? The same goes for energy. If a deal is ultra-cheap while claiming to be ‘green’, it probably isn’t that green at all. Regos are currently too cheap to make any significant impact.’
The row follows a sharp rise in demand for green energy. There are now about nine million UK households on tariffs branded as 100pc renewable or eco-friendly. Britain has an ambitious target to fully switch its economy away from fossil fuels by 2050. And at this year’s United Nations climate change conference in Glasgow in November, the UK will be under pressure to show it is cleaning up its act.
Last week, the Government revealed plans to ramp up our hydrogen industry. But this could cause energy bills to rise, as hydrogen is costlier to produce than less green alternatives.
Of the green tariffs that score best under Uswitch’s system, not one appears in the top 20 list of cheapest deals. Scottish Power has seven ‘silver’ tariffs, while British Gas’s Green Future May 2023v2 tariff holds a ‘gold’ status.
But a silver tariff with Scottish Power costs about £1,388 a year — £326 more than Outfox The Market’s cheapest tariff at £1,062.
The Department for Business, Energy and Industrial Strategy (BEIS) is planning a consultation on the Rego system, and Ofgem has pledged to work with it.
An Ofgem spokesperson says: ‘Suppliers must not make unfounded or confusing claims about the energy provided to their customers.’
Outfox The Market was contacted for comment.