Electrical Storm
Katy Brown unpicks the available UK mainland green electricity tariffs,
with the exception of those tariffs which only claim green credentials through
carbon offsetting.
Since April 2002, all UK electricity suppliers have been obliged by the government
to source an increasing amount of the electricity they sell from renewable sources.
The level is 9.1% for 2008-2009 rising to 15.4 per cent in 2015-2016 and remaining
at that level until 2026-2027, although the Department for Business, Enterprise
and Regulatory Reform is currently in consultation over this and has set out
proposals for attaining 30-35% of our electricity from renewable sources by
2020.(4)
Domestic, industrial and commercial customers all pay for this through their
electricity bills with the cost amounting to £600 million in 2005/06 rising
to £1 billion in 2010, equivalent to £7 and £10 per household
respectively.
Most green tariffs available will claim to supply 100% green electricity, but
this does not necessarily mean that by selecting one of these tariffs your supplier
will do anything more than meet its legal obligation. It may simply apportion
the green electricity it is already obliged to supply to its green tariff customers.
As the number of households signed up to green tariffs (although growing),
remains low at under 2%, (Ethical Consumerism Report 2007) the demand created
by the government through the obligation is much greater than the demand of
green electricity consumers. It is important therefore that those who do choose
green tariffs are guaranteed that they are signing up to something that really
does encourage their supplier to go beyond their legal obligation, especially
if it involves paying extra.
Demand vs Supply
There is debate within the industry over which consumer approach is more effective
at increasing the amount of electricity generated from renewable sources within
the UK. Good Energy is the best example of a company focussing on creating demand,
by selling 100% renewable-generated energy to all of its customers and then
retiring 5% of the associated Renewable Obligation Certificates (ROCs, explained
later in this report) from the market, over and above its legal obligation.
Ecotricity meanwhile focusses on increasing supply, pledging to spend a pound
on building new sources of green electricity for every pound its customers spend
on their bills. Ecotricity does not retire ROCs, instead it sells them enabling
the company to invest in new renewable energy capacity. Ecotricity argues that
this is better because there is a shortage of ROCs i.e. not enough green energy
is being produced, so investing in capacity is more important than creating
additional demand.
ECRA's response is that both are valid practices and have a place in the market.
A recent report by the National Consumer Council found that Good Energy's tariff
was the only one to receive three unqualified ticks against it's own criteria,
and that it was probably the closest consumers would get to 'a green energy
supply pure and simple'.(1) It found that the supply aspect of Ecotricity's
New Energy Tariff meanwhile did not offer anything additional, although it did
state that the company's commitment to investing any profits back into its wind-farm
business and other research could offer some additional environmental benefits.
Ecotricity's New Energy Plus Tariff did not exist when the report was written
but can be checked against the NCC criteria on the Tariff Comparison
Table below.
Independent Accreditation
Working out what the different green tariffs actually offer can be very confusing.
Ofgem has recently published proposals for updating its green supply guidelines
which place increased emphasis on transparency, ensuring that green claims are
verifiable. Ofgem states that the new guidelines ‘will help customers understand
whether, if they sign up to a green tariff, this leads to any action by the
supplier that will benefit the environment, rather than just repackaging activities
that customers are already funding.’
Ofgem has set a deadline of September 2008 for suppliers to sign up to these
new green supply guidelines and has also proposed an independent accreditation
scheme to give customers assurance that a green tariff comes with environmental
benefits. It plans to appoint an independent body which will, by the end of
2008, accredit green tariffs. Suppliers will be able to achieve gold, silver
or bronze accreditation for green tariffs but to do so they must provide clearer
information on the extra environmental benefits they offer.
Is it worth it?
According to the NCC report, even the tariffs that go beyond their legal obligations
will only save a relatively small proportion of an average household’s
CO2 emissions, a mere six percent. This is a significant proportion but small
nevertheless. According to the BBC Bloom website, giving up meat could save
15 times as much CO2 as switching electricity tariffs!(2) Neither DEFRA nor
the Carbon Trust consider green tariffs as ‘zero carbon’ at present
and advise organisations to calculate emissions from renewable tariffs using
the average electricity emissions factor for the UK.(3)
Alternatives
Friends of the Earth changed its campaign strategy after the introduction of
the renewables obligation to concentrate on encouraging consumers to reduce
their energy consumption and consider investing in their own micro-renewables.
All companies covered here, with exception of Utilita will buy back electricity
you generate at home. Initial outlay is expensive but you may be eligible for
a grant to help you with this (see Links.)
Price
The bottom line is that switching to the new technology required to move away
from a fossil fuel based economy may be costly, but this has to be offset against
the external costs to society of fossil fuel sourced energy, through the potentially
devastating implications of its high climate impact.
With energy prices going through the roof, many consumers may feel that they
have no option other than to look for the best deal. In general, green tariffs
with premiums can be expected to offer greater environmental benefits than those
without.(5) However, if you have never switched electricity supplier before,
you may find that you can even sign up to one of our most expensive Best Buy
green tariffs and save money too. There are many internet energy price comparison
sites, and green.energyhelpline.com
is one dedicated solely to green tariffs.
| TARIFF
|
Average quarterly bill (£)
|
| EDF Energy Green Tariff
|
89.50
|
| ScottishPower Green Energy H2O
|
90.80
|
| SSE Better Plan
|
93.00
|
| ScottishPower Green Energy Fund
|
93.60
|
| SSE RSPB Energy
|
99.00
|
| Juice Green Energy
|
101.30
|
| Npower National Trust
|
101.50
|
| British Gas Future Energy
|
107.00
|
| E.ON Energy Go Green
|
108.50
|
| Green Energy Pale Green
|
109.00
|
| Ecotricity New Energy
|
110.30
|
| British Gas Zero Carbon
|
112.00
|
| Utilita Planetsaver 1
|
115.50
|
| Green Energy Dark Green
|
119.30
|
| Good Energy
|
125.60
|
Price research is based on a typical annual consumption of 3300KWh.
The Big Six – Still Generating Climate Change
The WWF last year published its third annual UK ranking report of the 'big
six' energy suppliers, 'UK Power Giants: Generating Climate Change'. Its overall
conclusion was that the major UK power companies are still failing to meet the
challenge of climate change. Centrica came top of the league for tackling carbon
emissions and promoting energy efficiency. Scottish Power came second followed
by E.ON UK and Scottish and Southern with RWE npower and EDF Energy showing
the least progress in addressing climate change issues. It also published a
sister report 'UK Power Giants: Talking Climate Change' which included information
on existing renewable capacity and targets, the results are included on the
tariff comparison table under the 'Investment in renewables
column' Both reports can be downloaded from the WWF website (see Links).
Regulatory Alternatives
An analysis carried out by The European Commission found that the UK’s
Renewables Obligation was the most expensive and least efficient method of support
for increasing renewable generation. Friends of the Earth and Greenpeace have
called for the UK to adopt a feed-in tariff, which has proved successful in
Germany, whereby the government guarantees a long-term premium payment for electricity
generated from renewable sources and fed into the grid. FoE believes there is
an urgent need for the Government to introduce such a scheme to support expansion
of smaller scale and decentralised renewable electricity schemes including domestic
and commercial micro-generation, on-site renewable technologies, and community
owned renewable electricity schemes which are particularly neglected in current
UK policy and are key for a low carbon energy economy.(6)
Carbon Offsets
In May 2007 (Issue 106), we wrote about Carbon Offsets in detail and explained
how the products were largely unconvincing. Some electricity tariffs are packaged
up with carbon offsets these days - for example British Gas’s Zero Carbon
Tariff. We have ignored those ‘green’ tariffs based solely on carbon
offsetting for this report and we have not sought to provide information about
them otherwise. In January 2008 a TV ad by British Gas, which mentioned its
‘Zero Carbon’ tariff, was found to be misleading by the Advertising
Standards Authority.(7)
Equipower, a company not included in this report as the ‘green tariff’
it offers only involves carbon offsetting, offers an alternative in that all
of its tariffs, supplied by Scottish & Southern Energy, are marketed along
the principle of ‘social justice’ - all consumers pay the same unit
rate, so that those on pre-payment meters aren’t penalised. The company,
founded to tackle social injustice problems with a bias towards those on low
incomes and stewardship of resources, bases its ethos on those of the Christian
gospel. (www.ebico.co.uk)
For information call Equipower on 0800 458 7689 .
The EU Renewables Directive
This came into effect in September 2001 and set a renewables target for Member
States of 10% by 2010. It also required them to make sure a mutually recognisable
guarantee of origin associated with all electricity generated from renewable
energy sources is issued on request. This takes the form of the Renewable Energy
Guarantee of Origin (REGO). Since our last report another EU directive has come
into effect which means that electricity suppliers must inform customers of
their overall fuel mix at least once a year through their bills, statements
or promotional material. Although suppliers may disclose the fuel mix of an
individual green tariff, they must also present the company’s total fuel
mix as well. See the fuel mix disclosure table for the overall fuel mix of the
companies covered in this report.
Fuel Mix Disclosure Table
| Company
| Coal %
| Natural gas %
| Nuclear %
| Renewable %
| Other %
| CO2 emissions (kg/kWh )
| Nuclear waste (g/kWh)
|
| Good Energy
| 0.0
| 0.0
| 0.0
| 100.0
| 0.0
| 0.000
| 0.0000
|
| Green Energy
| 0.0
| 68.0
| 0.0
| 32.0
| 0.0
| 0.136
| 0.0000
|
| Ecotricity
| 23.8
| 22.8
| 25.9
| 24.1
| 3.3
| 0.316
| 0.0029
|
| Utilita
| 33.0
| 39.0
| 21.0
| 4.0
| 3.0
| 0.460
| 0.0025
|
| Centrica
| 18.0
| 56.0
| 20.0
| 4.0
| 2.0
| 0.382
| 0.0022
|
| EDF
| 47.0
| 29.0
| 17.0
| 5.0
| 2.0
| 0.540
| 0.0018
|
| Powergen (E.ON)
| 42.0
| 36.7
| 14.2
| 3.6
| 3.5
| 0.530
| 0.0020
|
| npower/RWE
| 44.0
| 37.0
| 13.0
| 3.0
| 3.0
| 0.543
| 0.0015
|
| Scottish Power
| 55.2
| 36.7
| 1.0
| 6.8
| 0.3
| 0.630
| 0.0001
|
| Scottish & Southern
| 30.6
| 57.8
| 0.8
| 10.2
| 0.6
| 0.489
| 0.0001
|
| UK average
| 29.36
| 38.3
| 11.29
| 19.27
| 1.77
| 0.4027
| 0.00131
|
From electricityinfo.org, based on the fuel mix for the year 1 April 2006
to 31 March 2007 except for Utilita which is based for the year 1 April 2005
to 31 March 2006.
Comparing the Tariffs
The tariff comparison table, under the ‘percentage from renewables’
column shows what proportion of each of the tariffs on offer comes from renewable
sources as well indicating when this is merely part of the company’s legal
obligation. Annotations also indicate if any of the electricity comes from old
large-scale hydro-electric power plants which doesn’t qualify as renewable
under some government policies as it is not considered ‘new’ renewable
supply.
Fund Based Tariffs
Some of the tariffs on the Tariff Comparison Table involve contributions being
made to a ‘green fund’. The ‘fund’ column gives brief details
of the different fund-based tariffs. Contributions are deducted from a customer’s
bill at a fixed rate or in the form of a premium. Suppliers often contribute
by match funding or as a separate donation. Funds can be used to amass capital
to build future renewable supply capacity while some provide grants for community
or other off-grid renewable projects including energy efficiency, awareness
raising and even land acquisition to mitigate the effects of climate change.
Others are dedicated to other environmental causes. While funds can have a positive
beneficial impact, measuring and comparing the extent of that impact of funds
is not easy.
Renewables Obligation Certificates
A renewables obligation certificate (ROC) is generated for every megawatt hour
(1000 kW/units) of renewable electricity produced. Generator companies sell
the ROCs to suppliers, usually with the associated electricity, who can then
present these certificates to Ofgem to demonstrate that they have met their
legal obligation. Some companies produce more than their legal obligation of
renewable energy, and therefore have an excess of ROCs while others produce
less. Those that don’t supply the required amount of renewable electricity
can buy certificates from other companies in order to meet their obligation.
As the obligation is set at a higher level than supply there aren’t sufficient
ROCs overall to meet demand so some suppliers can’t present the required
number of ROCs. Instead they pay a buy-out price, essentially a fine, to energy
regulator OFGEM (The Office of Gas and Electricity Markets). The money is redistributed
to companies who do comply.
This means then that even the small niche renewable energy suppliers, despite
buying 100% green electricity to meet their customers’ demand, do not necessarily
create ‘additionality’ to the green market (i.e. create demand for
more renewable electricity supply than is required by law), if they sell their
ROCs to other companies to help them meet their obligation.
Climate Change Levy Exemption for Renewables
This is a tax on business electricity users, but users that can prove that
they have used renewable electricity don’t have to pay. This can be proved
by buying ‘Levy Exemption Certificates’ (LECs) from qualifying renewable
energy generators, normally with the associated electricity.
Double Counting
A result of there being three kinds of certificate produced for every unit
of renewable electricity generated is that there is the possibility of the ‘greenness’
associated with it being sold two or even three times.(5) To avoid this happening,
as well as holding the required number of REGOs (Renewable Energy Guarentees
of Origin certificates) to match the electricity sold to its domestic green
tariff customers, suppliers should ensure that they ‘retire’ the associated
Levy Exemption Certificates out of the system, thus proving that they aren’t
selling them on to business customers and profiting twice from the ‘greenness’.
This would cost a supplier on average £17 per year per customer. The tariff
comparison table shows which of the tariffs involve LEC retirement. Thirdly,
to ensure that the Renewable Obligation Certificates associated with the electricity
aren’t simply being sold onto other suppliers who have not met their obligation
and the greenness counted a third time, suppliers should retire out of the system
the ROCs associated with the electricity.(5)
ROC-Retirement
Only four of the tariffs we looked at involved some of the ROCs generated in
producing the green electricity supplied to their customers being retired and
taken out of the market so that they can’t be sold to meet another company’s
obligation. This creates additionality i.e. the proportion of green electricity
supplied under these tariffs is in excess of the 9.1% currently required across
the board by law. It is clear from the tariff comparison table however that
the level of retirement is quite low.
ROCs are currently expensive, the price as at 8 July 2008 was £53.27 per
ROC, so green suppliers are reluctant to retire 100% of the ROCs they generate
and argue that doing so would make their tariffs too costly for their customers.
Given that it would cost suppliers over £200 per household per year this
is very probably a fair argument. By retiring any amount of ROCs above the legal
obligation, suppliers are translating their green tariff customer numbers into
real additional demand in the market. At ECRA we think that ROC retirement levels
are currently the most important measure of greenness in a green electricity
tariff.
Green Tariff Comparison Table
|
Tariff (alphabetical)
|
% from renewables
|
ROC retirement?
|
LEC Retirement?
|
Available to pre payment meter customers?
|
Investment in renewables (from WWF reports)
|
Fund?
|
Buy Back from home generators?
|
Incentives to reduce consumption?
|
| British Gas Zero Carbon |
100%
|
YES 12%
|
YES
|
NO (only available to dual fuel customers)
|
Existing capacity: Low tier/poor performance Renewable
targets: 4/10
|
YES £5 to a green education fund for schools “energy
for tomorrow”
|
Yes
|
No
|
| British Gas Future Energy |
100%(2)
|
NO
|
YES
|
NO (not available to dual fuel customers)
|
YES £2 per month to education fund for schools
“energy for tomorrow”
|
Yes
|
No
|
| Ecotricity New Energy |
24%
|
NO
|
NO
|
YES
|
Increases in customer nos used to secure new investment
in windfarms
|
YES invested in new renewables
|
Yes
|
No
|
| Ecotricity New Energy Plus |
100%
|
NO
|
YES 100%
|
NO
|
YES invested in new renewables
|
Yes
|
No
|
| EDF Energy Green Tariff |
100%(2)
|
NO
|
YES 100%
|
NO
|
Existing capacity: Low tier/poor performance Renewable
targets 1/10
|
YES £28/per customer/year on average to green
fund award grants to community, non-profit, charitable and educational
organisations across the UK. Funds to help cover the cost of renewable
energy technology that can be used to produce renewable energy.
|
Yes
|
Yes
|
| Good Energy |
100%
|
YES 5%
|
YES 100%
|
NO
|
Yes through supporting micro and independent generators
|
No
|
Yes
|
No
|
| Green Energy pale green |
20%
|
NO
|
YES 20%
|
NO
|
50% of profits invested in renewables
|
Company intends to invest 50% of profits from all tariffs
in renewables
|
Yes
|
No
|
| Green Energy dark green |
100%
|
NO
|
YES 100%
|
NO
|
Yes
|
No
|
| Npower Juice |
100%(3)
|
NO
|
YES 83%(6)
|
YES
|
Existing capacity: Low tier/poor performance Renewable
targets: 3/10
|
npower makes an annual contribution of £10 for
every customer to The Juice Fund which assists development of projects
in other renewable energy fields.
|
Yes
|
No
|
| Npower National Trust Green Energy |
100%(2)
|
NO
|
YES 100%
|
YES
|
YESNational Trust £15 to invest in low and zero
carbon initiatives at its sites. The Trust will receive £15 every
year thereafter as long as you remain a customer.
|
Yes
|
No
|
| E.ONGo Green |
100%(4)
|
NO
|
YES 100%
|
NO
|
Existing capacity: Medium tier/average performance Renewable
targets: 3/10
|
No
|
Yes
|
No
|
| SSE Better Plan |
100%(2)
|
NO
|
NO
|
YES
|
Existing capacity: Medium tier/average performance Renewable
targets: 7/10
|
No
|
Yes
|
Yes
|
| SSE RSPB Energy |
10%(5)
|
YES 10%
|
YES 10%(6)
|
NO
|
YES A small portion of the money you spend will be invested
into a fund to invest in new renewable energy projects. SSE also donate
£10 to the RSPB when you sign up and then £5 for every year
that you remain on the scheme.
|
Yes
|
No
|
| Scottish Power Green Energy Fund |
6.8% (06/07 figure )
|
NO
|
NO
|
YES
|
Existing capacity: Medium tier/average performance Renewable
targets: 8/10
|
YES. Pay your combined gas and electricity discount
(£10.50) funds help community based renewable energy projects get
off the ground
|
Yes
|
No
|
| Scottish Power H2O |
100%(4)
|
NO
|
NO
|
YES
|
No
|
Yes
|
No
|
| Utilita Planetsaver1 |
100%(2)
|
YES 5%
|
NO
|
NO
|
None - company focuses on reducing its customers electricity
consumption through energy efficiency measures.
|
No
|
No
|
Yes
|
| Utility Planetsaver2 |
4%
|
NO
|
NO
|
NO
|
No
|
No
|
Yes
|
Notes on table
1 Over and above the legal requirement
2 But only as part of the companies renewables obligation
3 83% from ‘new’ green electricity with the remaining 17% from large-scale
hydro which doesn’t qualify for ROCs or LECs as it is not considered ‘new’
renewable supply
4 Customers are supplied with large-scale hydro which doesn’t qualify for
ROCs or LECs as it is not considered ‘new’ renewable supply
5 10% from ‘new’ green electricity with the remaining 90% from large-scale
hydro which doesn’t qualify for ROCs or LECs as it is not considered ‘new’
renewable supply
6 The remainder does not qualify for LECs
Links
WWF Reports
Grants for installing micro-generators
References
1 National Consumer Council, ‘Reality or Rhetoric? Jan 2007. The report’s
criteria were: 100% REGO backing, 100% LEC retirement and some element of ROC
retirement. 2 http://www.bbc.co.uk/bloom/actions/renewabletariff.shtml 3 www.carbontrust.co.uk
24/7/08 4 http://renewableconsultation.berr.gov.uk 24/8/07 5 National Consumer
Council, ‘Reality or Rhetoric? Jan 2007 6 Friends of the Earth Briefing
Note: What is a feed-in tariff and why does the UK need one to support renewable
energy?April 2008 7 Misleading British Gas ‘zero carbon’ ads banned:
Brand Republic 30-Jan-08 8 BBC News Website Who gets nuclear spoils? Robert
Peston Blog 24 Jul 08 9 2006 report ‘Labour and trade union freedom in
Equatorial Guinea’