Is it time to switch to green energy? How green firms compare

Published by Helen Knapman on 27 March 2017.
Last updated on 27 March 2017

When it comes to switching gas and electricity, how much you’ll pay and the standard of customer service are likely to come top of your checklist. But what about going green by picking a tariff that gives back to the environment?

Energy is generated in a number of different ways. Gas is mostly imported from gas fields in the North and Irish seas, from pipelines from the Continent, and from Liquefied Natural Gas (LNG) shipments, according to Energy UK, the trade body representing energy providers.

Meanwhile, burning fossil fuels, such as natural gas, coal, and oil, generates the majority of our electricity. However, burning fossil fuels to generate electricity emits carbon dioxide (CO2), which is a contributor to global warming. There is also a concern that one day these resources will run out, particularly given expected growth in global energy demand.

As a result, the UK’s total energy usage must include at least 15% from renewable sources by 2020 under the EU’s Renewable Energy Directive. According to the EU’s most recent figures from February 2017, which covers 2015, the UK had yet to hit this target.

The UK’s Energy and Climate Change Committee also warned late last year that the UK will fail to meet its renewable targets on its current course and adds that leaving the EU “renders the status of the 2020 targets uncertain”.

When Moneywise questioned the government about this, a spokesperson for the Department for Business, Energy & Industrial Strategy, told us: “The UK is the third best country in the world for tackling climate change and is progressing in line with the Renewable Energy Directive, having exceeded our first two interim targets.

“The UK government played a major role when the world came together last year in Paris to reach the ambitious deal to reduce global CO2 emissions. Less than a year later, the landmark [Paris] Agreement has been ratified by the UK as a sign of the continued commitment to climate action.”

But we don’t need to leave the future of the planet up to the government. Consumers can take matters into their own hands by voting with their feet when choosing their energy tariff.

And households aren’t adverse to change. Energy switching hit a six-year high in 2016, with 7.7 million gas or electricity switches taking place, according to energy regulator Ofgem. Of those who switched, 47% moved to small and medium suppliers.

So given this seeming appetite for getting the best from our bills, is now the time to consider going green?

The lowdown on green energy 

Green energy is another word for energy created from renewable technology. These harness natural resources, such as the sun, wind, water and biodegradable waste, food waste, and animal manure. The term ‘brown energy’ has also been coined, referring to energy produced from polluting sources, such as oil or coal.

However, picking a green tariff doesn’t technically mean your home is supplied with green energy. The National Grid supplies energy into our homes (unless you use heating oil). But renewable energy providers match every unit of energy you use with the equivalent renewable unit, which they buy on your behalf and put back into the National Grid.

Aled Stephens, expert with the Energy Saving Trust, explains: “Changing energy supplier doesn’t change the power that comes into your house, nor does it mean you have to change any cabling or infrastructure. However, the tariff you’re on determines how much of your bill goes towards certain generators.

For example, if you choose a standard energy tariff, the likelihood is that your money will be split between a range of electricity generators, including fossil fuels such as coal, oil and gas fired stations, nuclear plants, as well as some renewable developments due to energy providers’ obligations.

“By choosing an energy provider that only offers 100% ‘green’ tariffs, you can be assured that the money you spend on energy will only go back to renewable generators, such as those that only use hydroelectric, wind, and solar.”

Cutting your carbon footprint

The pros for going green are self-explanatory. Energy supplier Good Energy states that people can halve their ‘carbon footprint’ by switching to its 100% renewable electricity and carbon-neutral gas tariff, for example.

Peter Haigh, managing director of Bristol Energy, says: “Renewables are essential in the fight against climate change and, as they are sustainable, they help to ensure a safe supply for future generations.” Chris Russell, managing director for Tonik Energy, adds: “Someone once said:

‘I’d only buy my energy from a plant I’d be willing to live next to’ and we think that’s spot on. If you can’t tolerate it in your back garden, then you shouldn’t tolerate it full stop.”

How green are these providers?

Ofgem requires providers to prove their green electricity credentials by supplying it with ‘Renewable Energy Guarantees of Origin’ certificates. (There are no such rules governing gas production, but providers have to give information to customers, which is “complete, accurate and not misleading”.)

They also have to make it clear that tariffs have extra benefits to the environment above and beyond existing subsidies, obligations and schemes. But there are a number of factors to watch out for:

1. Check what percentage of the tariff is renewable. Only one supplier we spoke to – Green Energy – says it is 100% renewable when it comes to both gas and electricity. Most green tariffs are 100% renewable for electricity, but are unlikely to offer renewable gas or will only offer a small percentage. This is largely due to the cost of producing ‘green’ gas. See the table below for a full comparison. 

2. Rather than offering renewable gas, some providers may say they’ll offset the CO2 emitted via other means. Octopus Energy, for example, plants enough trees to offset CO2 emissions, while Good Energy carries out work to reduce deforestation in Asia. Although this is commendable, it doesn’t technically mean their gas is green.

3. Energy providers use different sources to generate renewable energy. So bear this in mind if you prefer a certain type of renewable energy. See the table below for a full comparison. 

4. Some firms with green tariffs also provide non-renewable energy in their other tariffs. Bristol Energy, Octopus Energy, and OVO Energy all sell nongreen or partially green tariffs, for example. You’ll need to decide if you’re comfortable with this.

5. Some green providers don’t cater for customers with pre-payment meters.

 

Will a green tariff cut my bills?

While green tariffs have typically been more expensive in the past, prices are starting to fall. Fiona Bond, sales manager at LoCO2, says: “People may deem renewable energy too costly but prices are generally falling, making it more affordable.”

Doug Stewart, chief executive at Green Energy, adds: “It’s not the cheapest form of energy. However, since Green Energy UK started up in 2001 we’ve seen the signifi cant premium reduce, and we’re now able to compete with the cheaper ‘brown energy’ suppliers.”

The tables, below, indicate that a typical household would only pay £46 more a year on the cheapest green tariff compared to the cheapest brown tariff – that’s still an annual saving of £221 compared to a typical ‘Big Six’ bill.

 

How to switch to a green provider

Energy prices vary depending on how much energy you use and where you live. Ofgem-approved switching websites Energyhelpline and uSwitch enable you to filter your search by green tariff to find out which tariff is best for you. Not every comparison site offers this option.

To check customer service before switching, use TrustPilot.com. Remember, green tariffs are no substitute for energy effi ciency.

The Energy Saving Trust says you should do whatever you can to cut your energy usage before considering a green tariff.

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Thanks so much for this

Thanks so much for this article - a really helpful prompt about what to look for and consider as I've gone green in the past and while I've "lapsed" it's something I'm thinking of returning to.

One query would also be, should I be able to ask current suppliers the carbon footprint of my supply in order that I could potentially look at an offset myself which, as you say, is not as good as 100% green but better than now and may give me a wider choice of suppliers.

Hi Nikki,

Hi Nikki,

I'm glad you found the article helpful.

In answer to your question; according to energy regulator Ofgem, under government rules suppliers have to detail information about their electricity fuel mix and the carbon impact of supplying energy on customers bills.

Best wishes,

Moneywise Helen

 

Great - thanks for your reply

Great - thanks for your reply!