cheap green energy

Cheap green energy

How to help the planet and your wallet

Attitudes and behaviours are changing and many are opting to go greener. In normal times, switching to a green energy tariff is easy, and can also save you money. Yet right now the energy market is in crisis, with no deals meaningfully cheaper than the energy price cap – including green tariffs. What's more, some of the green energy claims made by suppliers are now under scrutiny. This guide explains what green energy is and why it is a hot topic for debate right now. 

Green energy tariffs investigated over concerns suppliers are overstating environmental benefits 

The Government has launched a review into green electricity tariffs following concerns energy suppliers could be exaggerating the environmental benefits. Currently, energy suppliers use certificates called 'Renewable Energy Guarantees of Origin (REGO)' to account for and track the amount of renewable electricity generated.

But some say this system is controversial because REGO certificates can be sold to suppliers via a secondary market. Where this is the case, 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.

 

This guide is all about green energy tariffs. For more tips on how to cut your energy bills and reduce your usage, see our other related energy guides...

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What is 'green' energy? The five need-to-knows

Previously, many energy firms offered cheap green deals as a way to attract new customers, meaning most could still make huge savings on energy bills with a 'greener' tariff. The current energy crisis has seen all cheap deals – whether green or not – pulled from the market.

Cheap green tariffs should hopefully make a comeback when wholesale energy prices (what providers pay) start to fall again. Here's what you need to know to help you choose the right green tariff when that happens.

  1. Green energy is generated from renewable sources such as wind and solar, or when providers pay to offset carbon emissions

    green energy is renewable

    When we talk of 'green' energy, we mean generating electricity using the likes of hydro, solar, wave or wind power that do not deplete the Earth's resources – which is why it's referred to as 'renewable'.

    Meanwhile, renewable gas mainly comes from the less common method called 'anaerobic digestion', which involves the breaking down of biodegradable material - or from provider's paying to offset any carbon emissions from producing the gas you use. 

    This is opposed to using fossil fuels to generate gas and electricity, which results in harmful carbon emissions, mainly involving the extraction and burning of oil, gas or coal.

    While some may consider nuclear 'clean' in comparison to the burning of fossil fuels, it's not renewable and tends to not be included in green energy. Plus, it's a controversial topic.

    So if you buy a 'green' energy tariff, what does it actually mean?

    There are a few terms to get your head round to understand how 'green' your tariff is.

    • Renewable electricity. While your energy won't all be green, your supplier will buy enough renewable electricity from the network to match your use, so the net effect of you using a 100% renewable supplier is as if all your energy was renewable. It also encourages more renewable investment.

      However, there are some concerns the current system allows suppliers to overstate the environmental benefit of the electricity they supply – see below for for full info. 

    • Renewable gas. Like with electricity above, your gas won't all be green, but your supplier will put the amount you use back into the network as renewable gas.

    • Carbon offsetting. This isn't actually renewable, but it is green. What firms do is simply 'offset' the effect of 'dirty' gas by paying to plant more trees, which aims to balance out the negative impact of your usage.
  2. 'Green' gas is much harder to generate and isn't widely available

    Green gas is much harder to generate than renewable electricity, so it's much less common in energy tariffs.

    Most that offer it promise to cover just 10% of usage – though we've seen suppliers offering anything from just 6% to 25% of your usage. Only one supplier currently offers 100% fully renewable gas – Green Energy UK.

    This is why some suppliers may instead offer 'carbon offset gas', promising to plant more trees or invest in forest conservation to nullify the carbon emissions that come from supplying you gas.

    Quick questions

  3. When you switch to a 'green' tariff, your energy will still be a mix of 'clean' and 'dirty' power – but you're still helping the environment

    Even when you switch to a green tariff – one that promises 100% renewable electricity, or some renewable gas – the energy flowing into your home doesn't change. That's because we get it from the nationwide network that's fed from multiple sources.

    When you go for a green tariff, your supplier will buy enough renewable energy to cover what you use to fund future production, or it invests in schemes to offset carbon emissions produced from the energy you use, such as planting trees.

    There are concerns some suppliers 'greenwash' their tariffs

    There are concerns that the way suppliers buy renewable energy – through what's known as Renewable Energy Guarantees of Origin (REGO) certificates (see the quick question below for more info) – has led to some overstating the environmental benefits of their tariffs. 

    These certificates account for and track the amount of renewable electricity generated. Suppliers can source these certificates from 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) directly when purchasing green electricity. 

    Certificates can also be sold to suppliers via a secondary market, which is why some say this system is controversial. 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 from 100% renewable electricity.

    The Government has launched a review into how energy suppliers market 'green' electricity tariffs due to these concerns. We've also been reviewing how we rank suppliers that offer green tariffs for our Cheap Energy Club, due to similar concerns.

    Quick question

    • As you're not getting renewable electricity pumped into your home directly, there's a reliance on your supplier buying enough renewable energy to cover whatever you use from the national network.

      It does this through a scheme called the Renewable Energy Guarantees of Origin (REGO), run by the regulator Ofgem.

      This scheme tracks the amount of energy being generated and pumped into the mix. Every time a certain amount of renewable energy is generated, it issues a certificate to whoever generated it. Suppliers then buy these certificates, and the energy, from these generators to prove how much they are buying.

      However, as mentioned above, there are concerns that these certificates are being traded in a 'secondary market', meaning no direct investment for generators.

  4. If you want to go green, it's more about the tariff than the supplier

    When looking for a green tariff, you can't just go by supplier as even firms with 'green' in their name may have a non-renewable tariff.

    So you need to check your tariff – look for terms like renewable electricity, renewable gas and carbon offset gas.

    Yet even tariff-by-tariff there are different shades of green. Some simply offer 100% renewable electricity. Some will do that and throw in some renewable gas or carbon offset gas. Others will even invest in or own their own solar or wind farms on top of this. So do check.

  5. There is a fully renewable electricity and gas tariff – but it's super expensive

    If you want the 'greenest' tariff going, it'll cost a whole lot more than just opting for a cheap 100% renewable electricity tariff.

    For a fully renewable tariff, with 100% renewable electricity & gas, we can find just one supplier – Green Energy UK (GEUK). Yet based on a typical household's use, it's £495/year more the energy price cap on standard tariffs over the next 12 months, at £1,772/year. So clearly it is only for those for whom being green is the most important factor.

    Other options include suppliers such as Good Energy and Ecotricity. While not 100% renewable gas like GEUK, these suppliers own and invest directly in wind and solar farms, and often buy their energy directly from renewable generators.

How to compare green tariffs

green tariffs

Due to the unprecedented state of the market, there are no deals you can switch to that are meaningfully cheaper than the price cap right now.

That means it's only worth switching if you want a super-green tariff. But be warned you will pay a huge premium against the price cap – not unusual as you generally always pay more for the greenest deals, but due to the state of the market the premium against the cap is even bigger right now. 

To find out how they stack up for you, use our green comparison in Cheap Energy Club.

Green energy FAQs

  • Ultimately, the best way to save money and help the environment is to use less energy.

    Turning down your thermostat just one degree and putting on a jumper can cut your bills by £80/yr. Other top tips include turning off lights when you leave a room, using energy-saving light bulbs, turning electrical goods off rather than leaving them on standby and making sure the fridge isn't on too high (if it needs to be regularly defrosted then it likely is).

    For more, see our thrifty heat-saving tips, or find out the truth behind 17 energy-saving conundrums in Energy Mythbusting.

  • There are number of benefits switching to renewable energy.

    The key benefit is that it ups the overall demand for energy generated from renewable sources. The more demand there is, the more energy generators will invest in things like solar and wind farms.

    This, in turn, reduces reliance on fossil fuels, which produce harmful greenhouse gas emissions. On the other hand, renewable energy produces very little harmful emissions.

  • If you prepay for your energy, you can still go green – though there's much less choice. To find renewable prepay deals, see How to spot a green tariff & how to get 'em. Just make sure you have 'prepayment meter' selected as your payment method in your Cheap Energy Club account or when registering.

    For more choice, consider shifting to a billed meter if your credit score allows. For how to do this cheaply, see our Cheap Prepay guide.

  • No, unfortunately not – the energy that flows into your home all comes from a national network. Energy from all sources are dumped into the mix, so you can never be sure the energy you're using comes only from renewable sources.

    You can switch to supplies that own and invest in wind and solar firms to help more direct investment in renewable energy. Firms such as Ecotricity, Good Energy and Green Energy all do this.

  • Yes, you can. Even if you get paid for your solar-generated energy – either under the smart export guarantee (SEG), which launched in January 2020, or the previous feed-in-tariff (FIT) scheme, which closed in March 2019.

    Both schemes pay you for the energy you generate, but your SEG or FIT provider doesn't have to be the same as your energy supplier, so you're free to switch. For more info on both schemes, and switching energy with solar panels, see our Solar panels guide.

  •  As well as saving you money on you energy bills, solar panels can also earn you cash. Under a new incentive, suppliers now pay you for any electricity you pump back in the energy grid. 

    For our full analysis, see How much can I save with solar panels?

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