Pretty much every electricity supplier offers a green electricity tariff. So are they all as green as each other? If not, which is most green? If I switch, am I really using renewable energy? And will they invest my money into building more wind farms and other new sources of renewable energy? I wanted to find out.
Obviously when you switch electricity supplier, it doesn’t affect the actual the power that comes into your home. It all comes from the national grid. But switching your supplier does affect where the electricity on the national grid comes from.
If you have a green tariff, your supplier is obliged to match the power you use by producing the same amount of renewable energy. So by paying a little more for a green tariff, your supplier has to invest in enough renewable energy to meet your demand. So in theory, if everyone in the UK switched to a green tariff, suppliers would be obliged to provide the whole country with renewable energy. Which would reduce the UK’s total CO2 emissions by a third.
So switching to any green tariff is good, right? Well yes. But unfortunately it’s a little more complicated than that. Here’s the depressing bit, but it’s followed by pleasing alternatives so keep reading.
Since 2006, all electricity providers in the UK have been legally obliged to buy a proportion of their power from renewable sources. It’s known as the Renewable Obligation or RO. Catchy eh? In 2006 the RO was 6% and it rises every year until 2010, when it’s 10%. That seems like very good news.
Unfortunately, only about 4% of electricity customers in the UK are signed up to a green tariff. This means that when you sign up to one of the green tariffs offered by one of the big energy companies, all you’re doing is helping them meet their legal obligation. Their obligation is now 9.1%. That means they have to provide over twice the amount of green energy as there are customers paying for it.
So on a standard green tariff you’re not actually creating any new demand for green energy. Or forcing your energy supplier to invest in new wind farms or tidal power or any other form of renewable energy.
And this will always be the case until the number of people signed up to green tariffs is greater than the amount of green power that power companies are legally obliged to supply. Unless the law is changed so that the Renewable Obligation is in addition to the demand from customers on green tariffs, which in my view it should be.
Seems a bit of a swizz eh?
So what are the alternatives? Are there any green tariffs that will help increase the demand and where your money will be invested into new renewable energy? Well fortunately there are companies offering solutions to this problem. Here’s the top three.
Good Energy
Good Energy supplies nothing but 100% renewable energy. It doesn’t actively invest in new renewable energy projects but buys all its energy from small providers. It also – most significantly – retires Renewable Obligation Certificates or ROCs. So what are ROCs?
Electricty providers get one ROC for every megawatt hour of renewable energy they produce. That makes ROCs valuable as they are the proof that energy suppliers have met their legal obligation to supply renewable energy. They get fined if they can’t produce them.
It’s legal to buy and sell certificates. This means that even if a supplier provides its customers with 100% renewable energy, if they sell their ROCs to other energy companies, the overall supply of green energy in the UK will remain the same. And most of them do sell their ROCs.
What Good Energy does is retire 5% of its ROCs so other companies can’t buy them. And the result is that it creates more a little more demand for renewable energy. And therefore, investment in it. Good eh?
So why don’t they retire 100% of their ROCs?
Well ROCs are currently worth over £50 each. Good Energy sells these and use the money they receive to subsidise their tariffs. They argue that if they retired all of their ROCs, their tariff would end up being be far too expensive – over £200 a year for the average household. Which seems fair. Currently Good Energy are the only supplier to provide 100% renewable energy AND also retire ROCs.
Ecotricity
Ecotricity are the only UK energy supplier actively developing new wind farms. If you sign up to one of their tariffs, then your money is being invested in a new source of renewable energy. They claim to have invested over £550 per customer in 2007. They don’t retire ROCs but argue that it’s better to invest the money they receive from selling them into new renewable projects.
Green Energy
Green Energy have two tariffs. Their dark green one provides 100% renewable energy. The light green provides 20% renewable energy and the other 80% from providers credited with producing energy very efficiently where they convert excess heat into energy. They don’t retire ROCs. But they intend to invest 50% of their profits in renewables.
Unfortunately all of these tariffs are more expensive which at a time of rising fuel prices perhaps makes them less attractive. Good Energy (the most expensive) is significantly more expensive than other providers. However, the difference works out at less than the price of a pint of beer per month. And signing up to one effectively reduces your carbon footprint by around a third. This is far better value than any carbon offset scheme and has the advantage that the carbon doesn’t need to be offset in the first place.
In my mind, the extra couple of quid is almost like one of the good causes that I give to on a monthly basis. It’s also worth noting that The Energy Saving Trust reckons that the average UK household could cut its energy use by a third by becoming more efficient and reduce their bills by an average of £250. More on that in my next post.
So we’ve switched to Good Energy. It’s debatable as to whether the best way to stimulate demand for renewables is to retire ROCs or invest the money you make from selling them in new sources. ROC retirement seems to be what many experts are currently suggesting is best, which is why we plumped for Good Energy. However, either option seems worth a couple of extra quid to me.
Switching was dead easy, only requiring us to fill in a form and give a meter reading. If you want to compare how much each of the tariffs would cost you, switchandgive.com will tell you. And if you do switch, they give their affiliate commission to a charity of your choice. Which is an added bonus. Go on, switch.
eco curious 