Hi Tom, the problem with REGOs is that not everything that is labelled “green” is as green as it sounds. REGOs have been trading at 35p/MWh for some time now. They way the rules work is that Ofgem want to see annually that 100% of power on a so-called “green” tariff is backed by REGOs. So a supplier can buy normal (brown) electricity on the power market throughout the year and then simply buy sufficient REGOs on the REGO market to match the power consumed by its customers. So this would typically cost only £1.08 to “green-wash” the power.
Recall that we are ALL, whatever tariff we are on, paying for renewable energy through our bills. About 25% of our unit cost/kWh is paying for the support mechanisms that government has used to encourage new-build renewable generation (Renewable Obligation, Feed-In Tariff and now the Contract for Difference). So in a year, on average, we are paying £125 towards supporting renewables in any case. The government has committed to £9bn/year support up to 2024 for low carbon generation under the Levy Control Framework, this is the total cost of ROCs, FITs and CfD - all of which is clawed back through our bills. So we are all doing a great deal already to support new green generation.
So I don’t think a “green-wash” REGO-backed “green” tariff is adding anything to the picture. Sure the fact that the generator can sell the REGOs helps their business case at little, but the primary income source for a generator has been the subsidy (now only available to large offshore wind farms or very large solar farms and bio plants) and PPA (power purchase agreement) revenues.
Even Ofgem agree that “REGOs do not provide a meaningful amount of support for renewable generation, as the costs are ‘immaterial’” (from the Ofgem Guidance).
So, sorry, we need to look deeper into what the supply company offering the green energy is doing.
Your supplier can fall into the following categories:
- Generates 100% of its customer’s power from its own assets (e.g. Green Energy and maybe now Scottish Power with their new Renewable tariff)
- Generates a proporiton of its energy from own renewable generator assets and buys direct from renewable generators under a PPA and buys the REGO with the power. (e.g. Good Energy, Ecotricity, Octopus Energy)
- Buys all its power under PPAs with renewable generators, buying the REGO with the power (e.g. OutfoxThe Market, Bulb, Engie)
- Buys the power at the cheapest possible price in the market (brown energy), buys the REGOs separately to create a green tariff (many hundreds of offers!)
So, maybe you can consider that any company in the first three categories is going beyond “green-wash”. In fact Ofgem have recognised that three companies are building new assets themselves and therefore are exempt from the price cap (thus allowing them to charge more for their power than the cap, in order to fund new generation): Ecotricity, Good Energy and Green Energy.
Ofgem looked at the following criteria:https://www.energylivenews.com/2019/08/01/ofgem-confirms-permanent-energy-price-cap-exemptions-for-three-green-suppliers/
- By consumers being on the tariff, support is given to generation and production of renewable energy to an extent that is materially greater than that which is brought about as result of subsidies, obligations or other mandatory mechanisms
- The cost to the licensee of supplying electricity/gas by virtue of the tariff is materially greater than the level of the default tariff cap for reasons that are directly attributable to the support that the tariff provides to renewable energy.
So here, you are materially making a difference by your choice of supplier.
I am not convinced that this is the end of the story, however. Because unless you balance the demand with the supply you will have to rely on brown energy to meet the demand. Wind and solar are variable sources and there will be times in the night when there is insufficient wind to meet the demand of customers on renewable tariffs. What can a supplier do? Well, there is hydro, but that is also in limited supply. There is also bio-gas powered generation (anaerobic digestion). Good Energy and Octopus Energy demand-match their purchasing to their customer’s demand by buying wind, solar, bio-energy and hydro - thus trying to match green energy to demand 24/7.
Ecotricity by contrast, cannot do this. Their “vegan” product means that they avoid any animal waste which is what feeds the bio-digesters - they can only buy wind, solar and limited hydro. This means that even Ecotricity will have to buy brown power to meed demand on occasions and buy the REGOs separately.
So you can see that the picture is far from easy and is not as easy as saying “are you on a renewable tariff?”.
The ONLY way to be certain you are reducing your carbon footprint with renewable energy is to be directly connected to a generator: your own solar PV, wind turbine or mini-hydro scheme.
There are new ways (via smart metering) to be effectively connected to a local generator (on the same sub-station voltage as you) so that energy generated can be directly matched to your consumption (Octopus Energy are offering such a scheme). This would be a direct carbon footprint reduction.
When you buy from the grid, it is much harder to argue that you are individually reducing your carbon footprint through selecting a renewable tariff. Maybe we can argue that companies that source 100% of their energy from renewable generation and demand match (like Good Energy and Octopus Energy) are as good as you can get under the current system. The other suppliers who own generators and buy PPAs and REGOs together are the next best. But any that purely “green-wash” are not really helping the grid decarbonise. So it will be a question of asking which supplier/tariff are you on and doing the backgroudn research into whether the supplier meets the criteria.
This article by Good Energy is a good summary: https://www.goodenergy.co.uk/blog/2019/08/01/it-s-a-fact-choosing-good-energy-genuinely-supports-the-fight-against-the-climate-crisis/
Hope this helps,
Alex