energy

‘Green’ consumer energy deals under scrutiny over climate credentials


UK ministers are to examine how renewable electricity is marketed, as fears rise among regulators and some suppliers that households are being misled about energy deals being advertised as ‘green’.

An increasing number of energy providers, including British Gas, Eon, ScottishPower, Shell Energy, Bulb and Octopus, promise 100 per cent renewable electricity to all customers or market-specific green tariffs.

However, bodies including the regulator Ofgem and the Energy Ombudsman are concerned about whether suppliers are making it clear enough to consumers what backs up their claims.

Some companies, including Chippenham-based Good Energy, strike direct contracts with renewable energy generators to match the electricity they supply to customers. Others buy cheap ‘Regos’ — renewable energy guarantees of origin certificates — or European equivalents to support their marketing.

In the UK, Ofgem issues power generators with one Rego per megawatt hour of eligible renewable electricity produced. These certificates are also traded on a secondary market where suppliers can buy them for as little as 10p each, especially during periods such as summer when solar or wind power has an oversupply.

Suppliers who buy their electricity on the wholesale market, where the provenance is unknown, can then submit the Regos, or European certificates which are also redeemable in the UK, to Ofgem. This means they can legally market certain tariffs, or all of their services, as 100 per cent renewable.

The UK business department plans to issue a call for evidence for a review as more energy companies capitalise on growing public concern around climate change. It called for “greater transparency . . . to ensure consumers can make informed decisions over their energy supplier’s green credentials”.

One price comparison website, comparethemarket.com, said 81 per cent of households that used its services last year switched to a green energy tariff, compared with 43 per cent in 2019.

Suppliers such as ScottishPower and Good Energy that strike direct contracts to underpin their green tariffs claim certificates do nothing to increase the share of renewables in Britain, especially if suppliers buy European certificates.

By contrast, direct contracts with renewable generators — known as power purchase agreements — are often used by developers to secure finance to build new solar or wind projects, they argue.

“Suppliers are using this label of 100 per cent renewable because then can, it’s easy,” said Kit Dixon, policy manager at Good Energy, adding: “It amounts to mis-selling in our eyes.”

Andrew Ward, chief executive for UK retail at ScottishPower, is considering making a complaint to the Advertising Standards Authority about the marketing of 100 per cent renewable energy deals. “There’s been a huge misleading of customers in the UK,” Ward says.

Ofgem says it has concerns about “the transparency of green tariffs” and it “may not be clear enough for consumers to understand” the difference between “what they think they are buying in comparison to what they are actually buying”.

Matt Vickers, chief executive at the Energy Ombudsman, which resolves disputes between suppliers and customers, said it’s “good to see more and more energy suppliers offering green tariffs, but it’s vital that green claims can be backed up”.

Consumer group Which? produced a report in 2019 that claimed many renewable deals amounted to “greenwashing”.

But suppliers that use certificates insist the system is not corrupt as they correspond to units of green electricity that are generated. Because almost all electricity is added to the grid, regardless of its provenance it is not possible to trace the energy generated from one particular source to a home or business.

One supplier which asked not to be named argued opponents often use it as a “way of justifying how they are overcharging their customers for green energy”.

Hayden Wood, chief executive of Bulb, which markets its energy as 100 per cent renewable, said: “We’ve always been transparent about our fuel mix, which is 100 per cent renewable. We recently signed around 30 new PPAs with small, family-run businesses. And we buy REGOs where the governance is strong and we know that the certificates support renewable generators in the UK.”

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