‘Come clean on green’ Which? urges energy suppliers

Energy firms risk misleading environmentally-conscious customers with tariffs marked 100 per cent renewable electricity that are not as “green” as they seem, a Which? investigation has found.

Which? analysis of more than 300 energy tariffs found around 40 suppliers sold 100 per cent renewable electricity tariffs, but some of these do not generate renewable electricity themselves or have contracts to buy any renewable electricity directly from generators.

Which? found Green Star Energy, Ovo Energy, Pure Planet, Robin Hood Energy, So Energy, Tonik Energy and Yorkshire Energy all sell “100 per cent renewable” electricity tariffs. But this is solely backed up by Renewable Energy Guarantees of Origin (REGO) certificates, not through generating renewable energy themselves or having contracts to buy it directly from generators.

REGO certificates can be purchased by suppliers from renewable energy generators for as little as 30 to 50p per megawatt-hour (MWh). With the average customer using 3.1 MWh of electricity a year, a supplier could buy REGO certificates to match this usage for as little as £1.55 and state their customer’s tariff is 100 per cent renewable.

Which? is concerned the current system allows suppliers who rely exclusively on REGOs to “greenwash” their tariffs while seemingly doing very little to support new renewable electricity generation.

Worryingly, a Which? survey found one in 10 (11%) people believe energy firms who sell renewable electricity generate some of that electricity and 8 per cent that they generate all of it.

The consumer champion believes that much greater clarity is needed around how “renewable” energy is defined within the industry, and Ofgem should closely examine how firms are marketing these deals and take action if there is a risk of consumers being misled.

Green Star Energy claims to source all electricity from renewable generators, but neither owns renewable generation or has contracts with renewable generators. It purchases REGOs to match customers’ use.

Foxglove Energy states “electricity supplied to your home is 100 per cent green”, but it is impossible for suppliers to guarantee this. It also told us it doesn’t own any renewable generation and buys REGOs for each unit of electricity bought for customers.

First Utility claimed just 3.7 per cent of its electricity was renewable, but when it rebranded as Shell Energy earlier this year, it switched almost overnight to claiming customers would receive 100 per cent renewable electricity - by purchasing REGO certificates to match its customers’ usage. It told us it does also buy some renewable electricity directly from generators, but did not specify how much.

However, there are some providers - including Ecotricity and Good Energy - whose “green” credentials match what some customers would expect, as they generate or have contracts with generators to buy enough renewable electricity to match their customers’ usage. These tariffs are usually pricier. Ofgem recognised this when it exempted them from the price cap on standard and default tariffs, saying that their higher prices are directly due to the support they give to generating renewable electricity.

Which?’s analysis found other suppliers whose parent company generates some renewable electricity or which buy directly from generators, although not enough to match 100 per cent of what they sell. They reach 100 per cent renewable by topping up with REGOs.

Under current Ofgem rules, suppliers which sell 100 per cent renewable electricity must have REGOs to prove it. However, they are not required to generate renewable electricity themselves, nor have contracts in place to buy it directly from generators.

Which? also found many are unclear about how renewable electricity works. While it is not possible to direct “renewable” electrons to specific homes, in a survey of 4,000 people a third (33%) said they expected “green” or “renewable” tariffs to deliver 100 per cent renewable electricity to their homes.

Richard Headland, Which? Editor-in-chief, said:

“As consumers grow ever-more environmentally-conscious, it's concerning that some suppliers appear to be ‘greenwashing’ their energy tariffs, which could risk misleading customers.

“We believe there needs to be greater clarity on how renewable electricity is defined and marketed. People can only make informed decisions about where to buy their energy from if firms are more upfront and transparent about their green credentials.”