Renewable Energy: What you should expect
4th October 2017
When choosing an energy supplier, there are certain things that people look out for to help decide from the many options. Many would opt to base their choice on online reviews that scrutinise the company’s customer service or many may simply go with the most established supplier for peace of mind. However, these days, an increasing number of people are basing their decision on the green credentials of the supplier. If you are one of these people, you may need to look a bit deeper to get a full picture of how green the supplier really is.
With many new entrants on the scene, the renewable energy market has now become more competitive with suppliers promising their customers that by choosing them they will be helping the planet with 100% renewable energy. The demand for renewable energy was once attributed to a small sector where you would find the ‘environmental activist’ type, but the appeal is undoubtedly spreading to standard households and the prices for renewable energy seem to be decreasing all the time. However, are some customers being misled?
To be sure you are getting the right product; we have highlighted a few things to look out for when choosing your renewable energy supplier:
1. Fuel Mix
Every October all energy suppliers are obliged to publish their fuel mix. This states exactly where their energy comes from and accounts for all the energy that is put into the grid, so even if you are on a green tariff you need to check your supplier’s fuel mix to gauge how green they really are. You should find any supplier’s latest fuel mix on their website.
2. Renewable Energy Certificates
Any renewable energy supplier will possess certificates that prove that 1 MWh was produced from an eligible renewable source. There are two main types:
- Renewable Energy Guarantees of Origin (REGO)
REGO certificates aim to provide transparency in the market to consumers who want to know where their energy comes from. Administered by Ofgem, they are used by suppliers to meet the Fuel Mix Disclosure in their supply licenses. Whilst designed to provide transparency, it can be misleading as REGOs can be traded and bought, which only serves to prove that the energy was produced, rather than demonstrate that the supplier has had a direct involvement in that generation. REGOs and their European equivalent were described as “more or less virtual” and only “state that somewhere else in Europe, renewable energy has been produced.” by Jorg Muhlenhoof – the Renewables Coordinator at BEUC – highlighting further how consumers could be misinformed.
- Renewable Obligation Certificate (ROC)
The Renewable Obligation is designed by the government to support large scale generators of renewable energy by obligating suppliers to purchase a certain portion of their energy from these generators. For a lot of suppliers including the big six, the certificates represent nothing more than an obligation that they must meet and the certificates serve as an incentive for the generator as opposed to the supplier.
3. Feed-in Tariff (FIT)
A FIT is a tariff designed to allow consumers to generate their own energy, receiving a payment from their supplier for their troubles. Designed to promote investment into small-scale renewable generation, the FIT rewards those who can install technologies such as solar, hydro or wind at their premises. A supplier must be licensed by Ofgem to provide a FIT option, although they are obliged to offer it if they have over 250,000 customers. For those suppliers who have less customers than that, it is an optional scheme which they will opt in to if renewable energy generation is part of their business model. A renewable energy supplier who does not participate will likely be too small to afford the administration costs.
4. Own Generation
The last thing to check for is if a supplier has their own means of generation. With ROCs and REGOs, the incentive has increased for suppliers to purchase energy from renewable sources, but there are suppliers who have actually invested in the development of renewable sites in the UK, further demonstrating their commitment to green energy. Although this is by no means something you should expect, it holds great appeal to the consumers who want to make sure they are doing as much as they can to lower their carbon footprint.
According to our 2015/2016 Fuel Mix, Solarplicity (formerly LoCO2 Energy) is 100% renewable and possess more REGOs from our own generation and third-party generators than we supplied into the grid. We also offer a FIT tariff despite having less than 250,000 customers as the investment into renewable projects – whatever the scale – is important to us.
Be sure to ask your current or prospective supplier for this information so that you are better placed to know how much they are helping the planet.