[Guest feature] Is switching to a green electricity tariff a good thing to do?

How do you know if the energy powering up your appliances is green energy? And, can green tariffs really help play their part in getting us to 100% renewable energy? It’s an issue we’ve spent a lot of time thinking about, so here’s our thoughts.

Where we are, and where do we need to be?

The world is on a precipice. We have roughly a decade to avert catastrophic climate change, and our progress in cutting emissions right now is too slow. 

Here in the UK, around 40% of our electricity is already sourced from renewables, compared with just 7% in 2009. Great progress, but government forecasts estimate that this will rise to only 52% by 2025. This needs to be 100% and as fast as humanly possible. Can green tariffs help this happen?

What is a green tariff?

Firstly, let’s clarify what a green tariff is. When you’re on a green or renewable electricity tariff, your supplier promises that, however much electricity you use in your home, the same amount of renewable electricity will be put into the National Grid.

How do you know it’s green energy?

Here’s where it gets more complicated. You can’t point at a wind farm and know that the electricity it produces will be supplied to your home. Most renewable electricity goes into the National Grid, where it’s jumbled up with electricity from other sources, just like streams feeding a big pond. When we take electricity out of the pond, it’s a mish mash of energy from lots of different generators – both clean and dirty. 

So, how can we prove that a renewable electricity tariff is actually sourced from renewable energy?

To solve that problem, the government gives renewable generators a certificate for every unit of clean electricity they put into the National Grid. These certificates are known as REGOs (which stands for ‘Renewable Energy Guarantees of Origin’). 

Your energy supplier can buy REGOs from generators to prove that every unit of electricity you take out of the National Grid is matched by an equivalent unit of green electricity going into the grid. (They then have to ‘retire’ the REGO to make sure no-one can claim the same unit of green power twice.) 

Are there different types of green tariffs?

Not all green tariffs are the same. Green tariffs vary depending on how the supplier buys their green energy. Suppliers have three choices:

1.     Build your own

First, they can build their own renewables generation. Ecotricity and Good Energy have been pioneers in this area. This is arguably the greenest option as buying electricity from a supplier who purchases their energy directly from clean generators channels your spending directly to the renewables industry. However, in the UK this is not widespread and it’s often expensive to do this at scale.

2.     Buy direct

Alternatively, suppliers can enter into contracts directly with the generators of renewable electricity. This usually involves committing to buy a certain amount of electricity at a set price for a set number of years. When suppliers buy electricity in this way, the REGOs and the electricity are sold together. This is arguably the next greenest option, but can be relatively expensive due to the lack of flexibility and locked in prices.

3.     Wholesale

Most UK suppliers currently buy their electricity through wholesale markets. Wholesale markets aggregate demand, which gives access to lower prices. They also allow both suppliers and generators to sell surplus capacity, helping to balance the system. All of this improves efficiency and reduces costs for the end user. 

When you’re on a renewable tariff and your supplier buys their power through the wholesale markets, they have to buy their REGOs separately, directly from renewables generators. That way, they can demonstrate that the electricity they’re selling to you is matched by clean electricity that has been put into the grid. Most suppliers in the UK use this approach for buying green energy. This is mainly because it delivers green energy at lower cost to customers.

How can households and businesses switching to green tariffs help us get to 100% renewable energy?

There are many things outside of green tariffs that dictate the pace of renewable deployment in the UK. Government policy and the commercial attractiveness (and stability) for renewable generation companies to put up more wind and solar farms are big drivers.

Green tariffs are not the silver bullet to speed up our transition to renewables. However, here are a few ways that switching your energy tariff can make a difference:

1.     Demand can drive supply

Basic laws of supply and demand. If 100% of electricity consumers can be persuaded to buy renewable electricity, then it follows that 100% of supply will have to be from renewable sources. This is the fundamental principle that underpins everything we do at Big Clean Switch. Our goal is to get every home and business onto a renewable electricity tariff.

If every home and business in the UK was on a REGO-backed tariff, all of the electricity going into the pond would have to be clean. This makes REGOs a useful tool in transitioning the UK to a 100% renewable electricity mix. Although not outright the absolute greenest option, the REGO backed wholesale green tariffs that most suppliers in the UK offer, are making it possible for millions and millions of homes who would otherwise be unable to afford green tariffs to demonstrate their demand for clean electricity. This is important if we’re to achieve the speed and scale of change we need. 

2.     Divestment

Moving the money you pay for your energy bills from a supplier who is rooted in the fossil fuel industry (British Gas for example) to a renewable energy supplier can, and is, disrupting the finances of Britain’s biggest energy companies. The Big 6 suppliers in the UK have all been losing customers at a staggering rate. This has caused two of The Big 6, Scottish Power and Eon, to mover over to supplying 100% renewable electricity to all their customers in the last year. They ultimately see supplying green energy as a way to retain customers and make money. The decisions that these big energy companies make can definitely put us on track for a 100% renewable electricity system sooner.

3.     Signals it sends

Did you know that just under half (around 45%) of all households in the UK are on renewable electricity tariffs? This really does show that people want green energy. This can be used to send signals to politicians about the public’s desire for renewable energy and ultimately, influence the government and businesses regarding their decisions about where the UK’s energy comes from.

Given it only takes 5-10 minutes to switch, why wouldn’t you play your part in nudging us faster towards a 100% renewable electricity system?

DISCLAIMER: Featured image courtesy of LKABMinerals.

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