Green energy tariffs to be investigated over concerns suppliers are exaggerating their environmental benefits
A review into green electricity tariffs is to be launched by the government following concerns energy suppliers could be exaggerating their environmental benefits.
Ministers will consider whether energy firms need to provide clearer information to households about their green tariffs, including the type of renewable energy used, such as wind or solar, where the renewable power was generated and when. The government will also look into whether the rules around which tariffs can be defined as ‘green’ are suitable.
Currently, all power – regardless of how it’s been sourced - is fed into the same grid, so energy suppliers use certificates called 'Renewable Energy Guarantees of Origin (REGO)' to account for and track the amount of renewable electricity generated. Suppliers can get these certificates either due to the green energy they produce themselves, because they own their own wind farm, for example, or they can buy them from a green energy producer, known as a generator.
But some say this system is controversial because REGO certificates can also be sold to suppliers via a secondary market. In this scenario, the supplier technically hasn’t bought green energy directly from producers, so there's no extra investment in green energy, but the supplier can still say their tariff comes with 100% renewable electricity.
At MoneySavingExpert.com, we're in the process of reviewing how we rank suppliers that offer green tariffs (and have been for a few months now), as we've similar concerns.
Nine million households are now on green tariffs
In addition to its green electricity tariff review, the government will also publish a separate call for evidence on third-party energy services, including price comparison sites and switching services. These services currently operate outside of green energy rules, so ministers intend to seek views on whether formal regulation is needed.
It comes after it was found that nine million British households are now on green tariffs, with more than half of new electricity tariffs deemed green or 100% renewable. According to a YouGov poll, almost two-thirds (62%) of UK energy customers say their decision on whether to purchase a tariff is influenced by how eco-friendly it is, while three quarters (75%) believe suppliers should be open about their tariffs, including where their energy comes from.
MoneySavingExpert.com has asked the government when its review will formally start and how long it expects it will take and we’ll update this story when we know more. In the meantime, if you’re looking for more info on green tariffs, see our Cheap Green Energy guide.
What does the Government say?
Anne-Marie Trevelyan, minister of state for clean energy and growth, said: “I want people to know that when they sign up to a green tariff, they are investing in companies that make a conscious choice to invest in renewable energy. Part of that is ensuring companies are being as transparent as possible on where their power comes from.”
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