Red bills, green gas
Katy Brown sheds some light on the companies that supply our homes with gas.
You can choose to buy gas from one of the big six suppliers, or from one of the emerging smaller companies, all of which also sell electricity.
The green shoots of green gas
The big development in the gas marketplace for domestic customers concerned about the environmental impact of their energy supply is that ‘green gas’ has arrived. Green gas is biomethane which is a naturally occurring gas produced by the anaerobic digestion (in the absence of oxygen) of organic matter such as dead animal and plant material, manure, sewage, organic waste, etc.
Green gas is still very much in the early stages of coming online: at the moment the only company to supply it to domestic customers is Ecotricity. As with the other small ‘green’ suppliers, you have to first sign up for one of its electricity tariffs before signing up to its gas.
The company is actually sourcing its green gas from outside of the UK – from the Netherlands which is connected to the UK gas grid, and has some infrastructure for making green gas using a waste source from processing sugar from beet. Ecotricity admits that it is “adding some Green Gas to its mix now” and plans to increase this amount to 10% while “we do what it takes to get our first ‘Gasmill’ up and running”. The company says “Our green gas tariff is backed by a small amount of green gas certificates that we have purchased from the continent. There are not yet any official reporting credentials like Fuel Mix Disclosure for gas as green gas injection into the grid is not yet mainstream. Most importantly we promise to reinvest more of our customers’ money in building new sources of green energy than any other energy company in the UK.” This seems to be the same business model as the company used to increase the renewable electricity in its overall fuel mix from 20.2% in 2005-06 to 64.3% in 2011-12.
Good Energy also offers gas to its electricity customers and states the following:
“Because it is a non-renewable source of energy, we wanted to ensure our gas product is in tune with our principles. A percentage of our Gas+ tariff is reinvested in renewable heat projects. Our unique HotROCs scheme provides financial support for households generating their own heat via solar thermal and was a forerunner of the government’s forthcoming domestic Renewable Heat Incentive. That way traditional gas supply is being used to develop newer, more sustainable ways of heating.”
Ovo Energy and Co-operative Energy both offer dual fuel energy tariffs, whereby gas can be purchased alongside electricity to existing customers. Neither company makes any green claims about its gas.
Green Gas Certification Scheme
The Green Gas Certification Scheme (GGCS) tracks ‘green gas’ through the supply chain to provide certainty for those that buy it. Ciaran Burns of the GGCS says that the scheme came into effect in March 2011 in preparation for two plants which were on target to start feeding gas into the grid that year but came up against major technical set backs. However, an anaerobic gas digester at Rainbarrow Farm did manage to become the first commercial plant to feed into the gas grid last year. It provides gas to the Prince of Wales experimental Poundbury development near Dorchester. Ciaran expects 3-4 more plants to come online this year, though he believes these will mainly be used to provide gas for specific projects or transport (there is also a renewable transport obligation now in place). Eventually there may be a surplus for domestic suppliers to offer green gas to their customers more widely, but Ciaran doesn’t think this is likely to happen before next year.
The Green Gas Certification Scheme is linked to the Renewable Heat Incentive (RHI), which requires demonstration that gas is from renewable sources. Renewable Gas Guarantees of Origin (RGGOs – the gas equivalent of REGOs) are issued for each kilowatt hour of green gas produced. Ofgem audits this and the GGCS provides independent accreditation. Sustainability criteria for the RHI don’t exist but the Department of Energy & Climate Change (DECC) is likely to introduce them in due course. Green gas is some years behind green electricity, but hopefully lessons learnt from the development of the renewable electricity market will help the green gas market to development more smoothly and with greater transparency.
Gas tariff price comparison
(ranked by price)
BB = Best Buy
Annual cost based on small flat in Lancaster, 3 people, low energy use (£300-£450 per year), Northwest region (NORWEB), payment method Direct Debit. Standing charge plus unit charge then applied to Ofgem medium annual domestic gas consumption figures for 2011 (16,500 kWh) to calculate a single annual figure.
Results based on a single search of price comparison website www.energyhelpline.com by ECRA on 21/5/13. Prices inclusive of VAT (5%).
Charges may vary for your own circumstances and region.
This product guide is part of a Special Report on the Energy Industry. See what's in the rest of the report.