Not all green tariffs are created equal 2
I recently wrote about how some suppliers use a loophole in the rules to market supposedly ‘green’ tariffs without even having to contact one renewable generator. This blog builds on the last one, so if you haven’t had a chance to take a look at the last installment yet, it’s worth reading Green Tariffs and REGOs before this one. This post sets out another way that some suppliers can suggest they’re offering a green tariff, but without actually going out and buying any extra green power when a new customer signs up to their green tariff.
A number of energy suppliers know that owning renewable generation assets like wind and solar farms makes excellent commercial sense, and so have invested in their own renewable sites. They then buy some of the electricity they need for their customers from these sites, alongside power from other, non-renewable, generators like coal and gas power stations. This means that there is some green power in their fuel mix, and the rest is ‘brown’ (a term used for fossil-fuel power).
They then use the green certificates, called REGOs, from their generation sites to show how much of their power is coming from their renewable sites – REGOs are explained in the first part of this blog series.
Account balancing of renewable electricity
The confusion starts when these suppliers decide to start offering ‘green’ tariffs, but instead of offering a truly green tariff like Good Energy does, they do it by means of a clever accounting trick. Instead of building any new generation, or signing contracts with any renewable generators to buy more renewable power, they just take some of the green power out of their standard tariff, and reallocate it to their green tariff customers; this just makes their brown tariff browner. This means that these suppliers can state that their green tariffs are backed by their own renewable generation sites, but for each new customer that signs up to their green tariff, the supplier doesn’t actually have to go and buy any additional green power. What’s more, because this is so cheap and easy for suppliers to do these tariffs often have low price tags, meaning they can use this trick to lure in unsuspecting environmentally conscious consumers.
Diagram time… take a look at what happens when a new green tariff customer signs up to ‘Generic Power Ltd’, a fictional supplier which has a standard brown tariff, alongside its green tariff.
Although of course any investment in renewable generation is clearly a good thing for the planet, suppliers using this accounting trick makes it really difficult for consumers to make informed choices about the type of tariff they’re choosing. The take-home message from all this is basically that if a green tariff feels too good to be true in terms of being both cheap and green, then unfortunately it probably is! The best way to make sure you are buying a genuine green product is to sign up to Good Energy.
We commit that for every unit of electricity our customers use, we will buy a unit of electricity directly from a renewable generator. This means that for every customer we sign up, we have to go and buy more renewable electricity. We guarantee that the generator is getting a fair price for their power, and we take pride in selling this power to customers who care that the power they buy is 100% renewable.
