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UK ministers have launched an investigation into how energy suppliers market renewable electricity deals, following criticism that many companies are guilty of “greenwashing”.
Nearly 9m households are on deals branded as “green” or as providing “100 per cent renewable electricity” as energy suppliers tap into growing customer demand to limit their contributions to climate change.
But consumer groups such as Which? have previously voiced concerns about the transparency of such deals, warning that households are at risk of being misled about environmental claims.
Some energy companies that market 100 per cent renewable deals, such as Chippenham-based Good Energy, strike agreements directly with green power generators including solar and wind farms to match all of the electricity they supply to customers.
Many others buy electricity from the wholesale market, which could come from any source such as gas-fired power stations or coal, and then back up their marketing claims using certificates that can be bought for as little as 10p each.
In the UK, the energy regulator Ofgem issues renewable energy generators with one such certificate for every megawatt hour of eligible clean electricity produced, but these “renewable energy guarantees of origin certificates”, or Regos, can then be traded cheaply on a secondary market.
Energy suppliers that purchase certificates can legally market their deals as “100 per cent renewable” as long as they submit enough of them to represent their supply to Ofgem.
Defenders of the system say it is not greenwashing because the certificates correspond to units of green electricity that are generated in Britain or Europe. They also argue that almost all electricity generated in Britain is added to the grid, regardless of its provenance, and it is not possible to trace the energy from a particular source to households.
However, critics such as Good Energy and ScottishPower have branded many so-called green deals “fake”, arguing that purchasing certificates on a secondary market does not help the growth of clean electricity generation in Britain. In contrast, direct agreements with power generators help wind and solar developers to finance projects.
The government said its review would consider whether the system was “suitably transparent” and the rules concerning what could be marketed as a green energy deal remained “fit for purpose”.
“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,” said Anne-Marie Trevelyan, UK energy and clean growth minister. “Part of that is ensuring companies are being as transparent as possible on where their power comes from.”
Keith Anderson, chief executive of ScottishPower, said the review was “important and timely”. He added: “To meet the challenge of net zero we need consumers to have confidence that their green electricity tariff is supported by renewable energy and is helping investment in more green generation in the UK.”
Emma Pinchbeck, chief executive of Energy UK, which represents energy suppliers said: “Consumer confidence in new services and products is an essential part of our transition to a smart, flexible and low-carbon energy system. So we would welcome more transparency over green tariffs which could allow consumers to make more informed choices.”
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