Switching to an effective 'green' electricity tariff

Last updated Wednesday 2 July 2008

Be selective when you switch

Supporting a bona fide supply of renewable electricity can offer huge reductions in CO2 emissions. But are all 'green' deals what they seem?

You might think switching to 'green' electricity means your supplier will provide you with zero-emissions electricity from renewable sources like solar, hydro and wind power rather than coal and gas. In reality, it's more complicated. So complicated that it's hard to tell if your extra money would make any difference whatsoever. In fact, some green tariffs do little more than help power companies meet their legal obligation to make 9% of their electricity from renewables.

You'll be glad you hear someone's looking into this messy situation. Industry regulator Ofgem is conducting a high-level review of green tariffs, to be published in the coming months. So is there any point in signing up before then?

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Photo: Switching to an effective 'green' electricity tariff

Saves up to 100 kg of CO2 a year

149 Bloomers are doing this

CO2 reduction 1 out of 5

Cheapness 2 out of 5

Popularity 3 out of 5

Cost 30 - 40

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In this article:

What is it?

A green tariff is, in theory, one where some of your money pays for an energy provider to add extra units of electricity from renewable sources to the grid. In reality, tariffs can be labelled 'green' if a company supports a broad range of environmental projects that may or may not reduce carbon.

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How will it make a difference?

Our emissions from 'brown' electricity - electricity generated by burning fossil fuels - are a big contributor to climate change. In fact, electricity generation accounts for a third of the UK's climate impact, and Britain's biggest power station pumps out more CO2 in a year than the 100 least-industrialised nations combined - so there’s no question we should do something about it.

But given the complexities of tracking whether your money goes into extra green energy generation or not (see "What’s the debate?"), it's difficult to say how much of a difference switching to a green energy tariff makes - if any. A report by the National Consumer Council (Reality or Rhetoric: Green Tariffs for Domestic Consumers, 2006) claims that even the better green energy tariffs are far from carbon neutral - in fact, giving up meat (if you could bear the thought) could save 15 times as much CO2 as switching electricity tariffs.

Signing up to a green tariff sends a message to your power provider that you are concerned about your impact on the climate, and that may be a good thing in itself. Whether it will actually change anything in the short term is debatable.

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What's the debate?

Your extra money doesn't really buy extra renewable energy

If you switch to a green tariff today, the power supply to your home will still come from the same mix of traditional and renewable sources. But, some suppliers will add one unit of electricity generated from renewable sources to the grid for every unit of electricity you use. Sounds reasonable so far, so why the reservations?

Well, what if your supplier already provides more green energy than is requested by their customers? All they'd have to do when you switch tariff is notionally include the electricity you use under their existing renewables supply. That means your individual demand may not have caused any additional renewable electricity to be generated. Sounds a little less appealing, doesn't it? And it gets even more slippery.

By law, 9% of energy generated by any power company in 2008/09 must come from renewables - known as the 'renewables obligation'. Each unit of renewable electricity generated gets a 'renewables obligation certificate' (ROC). But companies that exceed the 9% quota can sell their extra certificates. That allows companies falling short of their quota to buy their way out of trouble without adding capacity to the renewables supply.

How does that affect you? Say your supplier, Company A, is exceeding their quota and they sell a bunch of ROCs to a competing company, B. Rather than paying to support renewable electricity generation, it now seems more like you're bailing out a different company that's not pulling its weight.

However, there are some companies that hold on to some of their excess ROCs instead of selling them. 'Retiring' certificates in this way makes it harder for other companies to meet their renewables quota without actually increasing capacity for green energy generation. The company retiring them is sacrificing income in the process. The most effective green tariffs, then, may be those offered by the companies retiring the highest number of ROCs.

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What's stopping me?

Pub Fact

  • 64 per cent of people polled in a recent survey would consider switching to a green energy tariff
  • Only one per cent of energy consumers in Great Britain are signed up to a green or carbon offset tariff
  • 7 of your electricity bill in the year 2005/06 - regardless of what kind of tariff you have - helped the supplier to meet its legal renewables targets
  • More than half of the UK's counties do not have wind turbines - including Derbyshire, Surrey, Warwickshire, West Midlands, West Sussex and Wiltshire
  • The UK produces 200 times less solar power and 10 times less wind power than Germany
  • Even the best green energy tariffs are four times less effective at reducing CO2 than recycling
  • Each kilowatt-hour of electricity we use generates half a kilogram of CO2
  • Britain's largest power station, Drax, and is the single biggest polluter in the nation and ranks 23rd in CO2 emissions globally
  • Consumption of electricity increased between 1990 and 2007 by 25%, but overall emissions from electricity generation have decreased by 12 per cent
  • Britain enjoys 40% of Europe's total wind resource
  • In 2005, the UK fuel mix came from coal (33 %), gas (29%), nuclear (18%), oil (1.3%), and other (6%)

"It's too confusing. And it sounds like I might just be wasting my money."

The picture should soon become clearer. Ofgem is currently updating its guidelines to suppliers on green tariffs and helping to set up an independent accreditation scheme responsible for scrutinising suppliers' green claims.

"It's too expensive!"

Some green energy tariffs cost no more than the standard alternative, but others can cost you 12 to 40 more per year, according to the British Wind Energy Association. But it may be that the dearer tariffs are doing more good. Try Consumer Focus for advice.

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How do I do it?

Armchair environmentalists, rejoice! You can do this one over a cup of tea:

  • When choosing a tariff, make sure the company supplies energy from renewable sources (described as 'Green Source' on the Consumer Focus website) rather than just buying offsets to compensate for generating brown electricity
  • The most effective tariffs are from companies that hold on to - or 'retire' - the highest proportion of their extra ROCs. Consumer Focus will identify them for you
  • Avoid companies that buy offsets rather than increasing the capacity of renewable energy generation
  • Once you have found one, call for a contract
  • Take a meter reading on the day your supplier changes

But it's also worth bearing in mind, that there are other ways to cut your emissions from domestic electricity use. As things stand, reducing the amount of electricity you use, or investing in solar water heaters, biomass boilers or ground source heat pumps can be a far more effective way to cut emissions from electricity than switching tariff.

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Comments

Alan, Leeds 2009-04-14

We are with JUICE which is via Npower. Green peace recommended it, so is that ok?

Breadon, Pershore 2008-08-15

Have been doing this for some years now and use an electricity supplier that retires ROCs. However, for reasons given above, am becoming disillusioned and may give it up. Be aware that, if you use gas and decide to use a 'green' electricty only supplier it can be a double wammy. Gas tarriffs included in 'dual fuel' deals tend to be substantially better. Have also invested in a tax efficient fund investing in creating new renewals. See better than 'donating equity' to a foreign supplier to do the same.

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Glossary terms used on this page
Carbon neutral
A business or a process is described as carbon neutral if it doesn't add to the net amount of CO2 in the atmosphere. This can be achieved either by emitting no CO2 to begin with - by using only renewable energy, say - or by 'offsetting' emissions (a controversial issue) which means compensating for emissions by another action which might reduce atmospheric CO2, such as planting trees. In practice, it is impossible for a person to live in an entirely carbon neutral way because even if you cut out energy consumption derived from fossil fuels, most products and services people rely on will have embodied emissions.
Renewable energy
Renewable energy comes from natural sources that can be replenished and not permanently depleted - such as biomass, hydro-power, geothermal heat, solar power, wind power, and wave and tidal power - and most of which do not produce CO2emissions. They are unlike fossil fuels, which took millennia to form and cannot be replenished.
Renewables obligation
A renewables obligation is the legal requirement for UK energy providers to source a certain percentage (currently 8%) of their energy from renewable sources. They are awarded renewable obligation certificates (ROCs) to demonstrate that they have done so.

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