Ofgem to increase monitoring of Green tariffs and put an end to ‘Greenwashing’

What is Greenwashing?

As a way to ‘cash in’ on the movement to make the environment greener and cleaner, many energy suppliers have introduced ‘green tariffs’ that claim that some or all of the energy that a customer uses comes from renewable sources such as solar and wind. Some green tariffs also claim to be nuclear or coal-free.

What’s the issue?

Many of these ‘green tariffs’ have been proven to be misleading and energy suppliers have been accused of being economical with the truth when it comes to telling their customers where the energy is actually sourced from.

There are also concerns from consumer groups that energy suppliers are also taking advantage of an industry loophole that allows them to buy cheap renewable energy certificates in order to match the energy they supply to their customers, thus enabling them to claim they are ‘green’ when in fact they are sourcing their energy from fossil fuel sources.

Data released in 2019 showed that out of 54 green tariffs on offer just 6 were genuinely sourced from 100% renewables. Since then the number of green tariffs being offered by energy suppliers has exploded in number as the government further pushes its green industrial revolution plans.

Also read: Green Energy Tariffs rise in importance for consumers, cost of energy bills remain top concern

What are Power Purchase Agreements?

A Power Purchase Agreement (PPA) is a contract between an energy supplier and its customers where the consumer can generate their own energy and then sell it back to back to suppliers.

The energy purchased will then be sold on to other homes and businesses.

Power Purchase Agreements (PPAs) enable a consumer to earn payments for the energy they export to the grid. 

What does Good Energy want?

Good Energy released it new report on tariffs titled Energy Tariffs: The Problem of Greenwashing and in it the supplier made two requests to the energy regulator.

With the report showing that 65% of customers would be willing to switch to a green tariff in order to help the environment its understandable that more energy suppliers will be looking to provide such tariffs in order to snap up new eco centric customers.

It wants either Ofgem or an independent body to start auditing the environmental claims made by energy suppliers and punishing those that have been misleading with the truth.

 “We expect all suppliers to clearly communicate the nature of the 'green' energy they provide and the source of energy that the customer can expect to receive. Suppliers must not make unfounded or confusing claims about the energy provided to their customers.

‘We are aware of a range of different approaches to offering green tariffs, and different ways in which suppliers explain what they do. We are keen that information provided to consumers on the ‘greenness’ of tariffs is clear on the sustainability benefits, easy to understand and based on honest claims.”

‘Ofgem supports a fair green energy transition, where consumers are not misled. As part of our wider focus, we will step up our monitoring in this area, shine a light on good and bad practice and hold suppliers to account,”  said an Ofgem spokesperson.

Also read: Ofgem to increase monitoring of Renewables Energy Guarentees of origin (REGOs) certificates following Times Investigation

How can an energy supplier ensure they are 100% Green?

Several large energy suppliers have faced criticism for their claims of offering 100% green tariffs. British Gas is just one to have fallen into the critics crosshairs.

First Utility for example claimed just 3.7 per cent of its electricity was renewable, but when it rebranded to Shell Energy in 2019, it switched to claiming customers would receive 100% renewable electricity via the buying of REGO certificates to match its customers' usage.

ScottishPower announced in February that it had launched a new genuinely 100% green tariff as all of the energy is entirely sourced from its own wind farms.

Also read: 100% Clean Energy Tariff To Tackle ‘Greenwashing’

Most energy suppliers aren’t big enough to own their own wind farms so the next best way other than to generate it themselves is to make partnerships and put contracts in place with wind farms and genuine renewable energy generators.

Currently, the Ofgem rules say suppliers that sell 100% renewable electricity must have REGOs to prove it. 

Further Reading

Scottish Power takes on Yorkshire Energy’s customers via SoLR process

Smart Meter Installations rebound strongly and held steady during Lockdown 2.0

2020 could be a record year for fines imposed on energy suppliers

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