Some of the biggest suppliers are dodging renewable energy costs

Posted in: Energy

Posted on: 09.10.2020

What do you expect when you join a renewable tariff? Please tell us.

We think most people would expect their supplier to use their energy bills to buy renewable energy in the UK.

Last year, Good Energy commissioned a poll which found that 65% of people agreed that “I would choose a green tariff if it supported our move to a new clean energy system”.

We agree, and that’s why we buy our renewable power direct from a community of 1,600 independent, UK-based renewable generators. We also own six solar farms and two wind farms. We’ve done this for 20 years.

However, some suppliers take a different view with a very weak commitment, if any, to grow more renewable energy in Britain.

We’ve done some analysis of the energy market to work out how suppliers are justifying their renewable claims.

Our findings show that some of Britain’s biggest energy suppliers are bulk-buying cheap certificates from outside the UK to ‘prove’ their tariffs are green. What’s more, this practice allows these suppliers to legitimately avoid paying into government-mandated renewable energy schemes at home.

How is this possible?

In previous blogs, we’ve highlighted the widespread problem of greenwashing in the energy market. Take a look here, here, or here.

Recent years have seen a surge in suppliers buying second-hand renewable certificates in the UK without buying any renewable power at all. This is harming the shift to clean energy and holding back the fight against climate change.

Our research has found that some suppliers are very active with this same practice but in other European countries. Last year, the number of European ‘Guarantees of Origin’ in the UK market reached 57.9 million. This is an increase of 41% from 40.9 million on the previous year.

British Gas, the UK’s largest energy company, is the largest user - purchasing 20 million certificates. This is twice as many as anyone else and accounted for 35% of the entire market for the past year. Doing so allows British Gas to say its tariff is renewable, even though they haven’t bought this renewable power in Britain.

Customers should know what they are buying when they join a green tariff. This is a question of being open and transparent.

All suppliers have to pay into government schemes to support more renewable energy in the UK. Buying European certificates on the cheap allows suppliers to avoid these costs for reasons which aren’t clear, and hard to justify.

But dodging costs is precisely what they are doing. Last year, collectively, suppliers were able to avoid paying £126 million towards these schemes, leaving other companies to pick up the tab and reducing the environmental benefit of their own ‘green’ tariffs.

British Gas alone avoided paying over £48 million into schemes to support renewables in Britain.

The first point here is about transparency. Customers should know what they are buying when they join a green tariff. And many people would reasonably expect their bill to go towards environmental schemes in Britain – such as supporting a new wind or solar farm. The regulator, Ofgem, has said that “we expect suppliers to be transparent about what constitutes a ‘green tariff’”. This isn’t clear to anyone.

The second issue is to stop suppliers avoiding paying their fair share towards new clean power. While this practice remains within the rules, it’s a classic case of passing the buck; and worse still it weakens the value of their own green tariffs.  

Please email greenwash@goodenergy.co.uk if you think you’ve been mis-sold a green tariff. Tell us your story.

Read our research note on this issue here.

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