What is a green energy tariff?

This article will investigate green tariffs and how beneficial they are.

Table of Contents

How do they work and how expensive are they?

Even though you may select a green tariff for your office, it will still be connected to the National Grid just like the café across the street on a standard tariff. The National Grid relies on a selection of renewable and non-renewable, as well as imported, energies as shown in the graph below. 

Image credit: National Grid ESO

Click here to see what the Grid is using at this very moment. Green tariffs cannot alter the state of the Grid itself but offer customers an alternative.

What is that solution? 

Well, instead of directly supplying an office, the energy company monitors the customer’s energy usage per hour and supplies the National Grid with an equivalent amount of renewable energy. Instead of buying renewable energy for their home, the customer is spending money for that energy to be put onto the grid. 

Energy companies can offset emissions by investing in carbon offset projects. More information on offsetting can be found here

How green are they?

There are concerns that the green credentials are being exaggerated so that energy companies can push energy tariffs as a product. Click here to read more on how to detect greenwashing.

In order for energy companies to offer green tariffs, they must have a certificate called a Renewable Energy Guarantee of Origin (REGO)

What is a REGO?

These REGOs are given by the market regulator to the generator (for example, wind farm or hydroelectric plant) of the renewable energy and are then up for sale along with the energy itself. One Renewable Energy Guarantee of Origin Certificate is tagged to each megawatt-hour of renewable energy generated which is about the equivalent to the amount of energy used by 330 homes in an hour.

The issue is that these REGOs can be bought cheaply in a completely separate market without the need to buy the actual energy derived from wind or solar. Companies have the ability to exaggerate their support for renewables, buying the certificate and not the green energy.

What are the best green energy suppliers for businesses?

A useful asset to investigate how these REGOs are being used is by using this link where you can register and access a database of which REGOs have been bought by various companies. From our research, we have found that Ecotricity and Good Energy are the best suppliers to use. This is largely due to their transparency about how their sustainable energy is generated. Below is a table with a few options. 

CompanyDoes it offer non-renewable tariffs?Are its green tariffs 100% sustainable?Does it offer green tariffs for SMEs?
Bristol Energy
British Gas
Bulb
Ecotricity
GE
Good Energy
Octopus Energy
Shell Energy

There is an indirect correlation between companies which also offer non-renewable products and those which have 100% sustainable tariffs. It seems smaller companies like GE offer more sustainable products than traditional providers such as British Gas. 

Image credit: Unsplash

Are green tariffs more expensive?

Costs incurred through offsets can often make green tariffs more expensive than cheaper standard fixed-term tariffs. However, this cost relies on the cost of offsetting projects as well as of renewable energies themselves. As legislation and technology develop, these will become cheaper which will be reflected in the costs of the tariffs. 

In terms of reducing carbon emissions for your business, the cost of a green tariff could be weighed against generating your own renewable energy through solar panels for example. 

Another route to reduce carbon emissions is investigating the energy efficiency of your building or office. Direct action such as better window insulation might be more cost-effective and impactful. 

Key takeaways:

  • Green energy tariffs are becoming more popular and greenwashing is a concern regarding this rise. These are new products and the green credentials of different options are variable. 
  • Compare different green tariffs not only with competitors but within your own energy costs in the present as well as the future. 
  • Carry out extensive research into the characteristics of green tariffs offered and look out for exaggerated sustainable credentials. 

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