How to pick a green electricity deal for your home

Picking a ‘green’ electricity supplier is far from easy.  There are now many options available ranging from 'dark green' to 'light green' to distinctly 'brown'.  Understanding what’s best for you can take a lot of research to separate confusing sales messages from reality.  In this article we try to help you through this maze.  The article was written in July 2011 - we will try to keep it up-to-date but it is a fast-moving area and things can change that could impact on our views below.

Over the last decade there has been a rapid increase in the number of green electricity packages available to households.  These are available from both 'the big six' energy companies in the UK (we describe these here as ‘conventional suppliers’) and from smaller independent energy companies.  Together the 'big six' conventional suppliers meet 99% of the energy demand from UK households - their position is dominant.  Many of the smaller independents can provide you with an electricity tariff based on a mix of different sources like nuclear, fossil fuels and renewables.  Others can supply you with 100% renewable energy.  We look at the current state of play and how to work out the greenest deal for you.

Can I get 100% renewable electricity out of my sockets all the time?

No, not unless you are “off-grid” and have control over how your energy is generated.  You could install a range of renewable energy technologies in your property like solar PV panels or a micro-wind turbine.  These could generate a significant amount of your own green energy.  But it’s highly unlikely you would be able to generate all the electricity you need at exactly the time you need it.  You would still need ‘grid electricity’ as backup. 

Grid electricity is generated using a mix of technologies and supplied direct to your socket. You can’t control the source of your electricity.  Generation from fossil fuels, nuclear, wind farms, hydro power plants and other technologies is transmitted across the UK and beyond to match demand with supply. Renewable energy is part of this mix.  When you switch on the lights at home, chances are you will be using electricity from your nearest major electricity generator – this could be a gas-fired or nuclear power station or a local wind farm.  Currently, only 6.8% of electricity in the grid is sourced from renewables – the government has set an ambitious target to grow this to 40% by 2030.

There's a useful discussion of the issues around our energy mix on the Co-Operative Energy site at http://www.cooperativeenergy.coop/good-with-energy/our-energy-mix.

So how do I get a green electricity deal?

There are a wide range of packages available to help consumers support renewable energy development through electricity bills.  Some can be described as ‘light green’ others ‘dark green’.

There are often two elements that are offered as part of a green package.  The first is a green electricity supply tariff.  Energy suppliers offering a 100% renewable energy tariff will guarantee to ‘match’ the generation of renewable electricity (either from renewable energy sources they operate or by buying renewable energy from third parties) with the electricity a consumer purchases. The second element is a green fund where a premium is paid by the consumer to support renewable investments, and for example to offset carbon emissions.

Here are the main ‘green’ options from listed in order of what we consider to be dark green (1) to lighter green (4):

(1)   Use an energy supplier that deals exclusively with the trading and supply of 100% renewable electricity.  We're only aware of one in the UK - Good Energy.  You can then guarantee that your payments are being used to support a renewable energy company.

(2)   Use a 100% renewable electricity tariff from an energy supplier that is deeply committed to environmental credentials and supports renewable energy – see for example ‘New Energy Plus’ tariff from Ecotricity or Green Energy UK’s ‘Deep Green’.

(3)   Use a renewable energy tariff from a supplier where a significant component of its energy is from renewables and there is a strong environmental commitment from the supplier – see for example Loco2 Energy’s ‘Pocket’ tariff or Ecotricity’s ‘New Energy’ tariff.

(4)   Use a green energy tariff from a conventional energy supplier, for example SSE’s OPlan tariff or NPower’s Juice.

You can view the fuel mixes of all energy suppliers on www.electricityinfo.org and http://www.fuelmix.co.uk/supplier_ranking.htm.

What about the green options from the big six energy companies?

Concerns have been raised around whether packages from conventional energy companies can truly be described as ‘green’.  Some companies are greener than others (although this rather depends on your stance on whether low-carbon nuclear is actually ‘green’).  Compared with smaller suppliers, in absolute terms these companies offer much greater generation of renewable electricity and greater investment in renewables. The leaders appear to be ScottishPower, Centrica and SSE.  However none of the conventional energy suppliers support more than 11% of their total energy mix from renewables  (see http://www.fuelmix.co.uk/supplier_ranking.htm) – for most of them their supply mix is dominated by electricity from fossil fuel sources although, given the volume of customers they service, this is perhaps not that surprising.

Energy companies are also required by law to source a proportion of their energy from renewables – this is known as the ‘Renewables Obligation’.  The proportion increases each year.  But there are concerns around what they are pro-actively doing as part of their corporate strategy verses the minimum increase they are obliged to do by law.  So how much of the green energy being sold to green tariff customers is actually over-and-above what is purchased or generated as a result of their legal obligations? It's not clear.

The Renewables Obligation mechanism allows for the sale of certificates to those utilities who are unable or unwilling to generate renewable energy themselves. So a further concern has centred around whether this renewable energy generation was being ‘bought’ twice by green energy customers signed up to different utilities. Some utilities have historically offered to voluntarily ‘retire’ their certificates so they can’t be sold on to fill someone else’s green energy gap.

As a result of all this confusion Ofgem, the industry regulator, has brought in a voluntary certification scheme for suppliers offering green electricity deals launched last year. The Green Electricity Supply Certification Scheme requires that:

• the renewable electricity bought by consumers must be matched by renewable generation;
• additional benefits will be delivered through a green fund to support carbon offsetting and/or energy efficiency work; and
• there will be independent verification and auditing.

The bigger question remains – can companies dealing primarily with ‘brown’ sources of electricity generation really be considered to be as ‘green’ as a companies that primarily trade and supply electricity generated from renewable sources? We don't think so.

So which supplier and tariff should I go for?

Our greenest 5 STARS option is to use the only UK company that exclusively trades and supplies 100% renewable energy  - Good Energy (www.goodenergy.co.uk/).  Good Energy is also certified by Ofgem under the Green Energy Supply Scheme.  They should be able to offer you a supply package wherever you are in Britain.

Our 4 STARS option would be to use one of the 100% renewable energy tariffs from four other independent energy suppliers:

• Ecotricity (http://www.ecotricity.co.uk/)
• Green Energy UK (http://www.greenenergy.uk.com/)
• LoCO2 Energy (http://www.loco2energy.com/)
• OVO Energy (http://www.ovoenergy.com/)

Ecotricity have been around longest of these four and are likely to have significantly more customers.  Using these suppliers means it’s likely that most of your money is going into a company with strong environmental credentials and which is directly motivated to grow the supply of renewable energy. 

Our 3 STARS option would be to use one of the lower priced tariffs from the above 4 companies where the energy comes from renewables plus a mix of other (ideally non-carbon) sources.  These are ideal if the 5 star and 4 star options are too pricey for you in your area.  

Our 2 STARS option is a new entrant into the market - Co-Operative Energy.  It's still early days for them and their figures in terms of fuel mix often don't appear yet on the sites we've mentioned here.  However their ideals, compared with the 'big six' conventional suppliers, are relatively strong - see http://www.cooperativeenergy.coop/good-with-energy/our-energy-source/ for more information about their targets for 20% mix from renewables.

Our 1 STAR option is to go with a specifically green package from one of the big six conventional energy suppliers that encourages them to increase their support for renewables in their supply mix.  They are all fairly similar in terms of the percentage of renewables in their energy mix with Eon at 11%, nPower at 3% and everyone else somewhere in-between according to http://www.fuelmix.co.uk/supplier_ranking.htm?sort=supplierRenewable.  Some of these companies will be putting much more investment into renewables right now than others - trying to distinguish which ones are greenen than others would be a time-consuming and complex task and some of the most useful figures in terms of their commitment to growing renewables may not be published publicly.  SSE are often regarded as the greenest of the 'big 6' energy companies and appear to be heavily focusing their future strategy on renewable energy as a substantial proportion of their energy mix.  If this proves to be true then a sound case could be made for rating them much higher.

Of course, if we based our ratings on absolute numbers ie. total investment of an energy company in renewables and/or energy generation capacity from renewables, some of the 1 STAR companies would go straight to the top of the league table.

Will I pay more for a green deal?

Yes, you are likely to pay a bit more for a green electricity package but not as much as you might think.  Suppliers talk about a 'price premium' that you pay over and above an average price.  According to our calculations if you compare one of our green options with some relatively competitive electricity deals on the market you could pay an extra £10-100 annually (or between 2% and 20% extra on a fairly typical annual electricity bill).   It will obviously depend just how competitively priced other deals are at any specific time.  This puts the additional cost of a green solution into perspective. 

The more ‘cost sensitive’ you are the more likely you are to opt for a cheaper, 'lighter green' deal.  Right now, for example, the Ecotricity New Energy package (of which about 40% of the fuel mix is sourced from renewables) is priced very competively alongside deals from conventional suppliers.

Opting for an independent energy supplier may mean slightly higher bills but, by all accounts, they tend to avoid some of the sneakier sales tactics (see for example http://www.lovemoney.com/news/household-bills/gas-and-electricity/12391/the-sly-energy-tariff-trap?source=1000557) and you may well get better service!

Another approach to consider is to go for the cheapest possible energy deal but use the savings to invest into making your property more energy efficient or even generating your own electricity and heat from solutions like solar PV and solar thermal panels.  If you can change your behaviour to use less energy and, for the energy you do use, the majority of this comes from your own renewable sources, that makes your solution both greener and more economical. 

Better still, switch to a green energy tariff, adopt energy saving measures and consider how you might generate your own electricity and heat from renewables! Over the long-term this will insulate you from anticipated energy price rises.

Which energy switch sites should I use?

If you want to find out what green energy deals are available in your area we would recommend using the Green Energy Marketplace (www.greenelectricity.org). This site will also help you switch to a green (or greener) package.

If you want to compare these options with those from more conventional suppliers then we would recommend using the Consumer Focus pricing tool (http://energyapps.consumerfocus.org.uk/price/).  They also link to other sites that adopt their Confidence Code.  This regulates the practices, and accredits energy switching sites that meet their minimum standards.

Useful online resources

(1)   www.greenelectricity.org – helps you switch to green deals

(2)   www.electricityinfo.org and http://www.fuelmix.co.uk – explore fuel mixes for different suppliers

(3)   http://www.whichgreen.org/ - site set up by Ecotricity to classify suppliers according to their investment in building new sources of renewable electricity

(4)   http://www.which.co.uk/news/2011/05/eon-unveils-green-energy-tariff---but-will-it-make-a-difference-253726/ - Which? report on a new tariff introduced by Eon.

(5) Consumer Focus report - Power at Home: Improving Consumer Access to the Benefits of Micro-generation www.consumerfocus.org.uk/scotland/publications/reports

There are lots of ‘switch sites’.  They all have their own strengths and some can help you compare greener deals with conventional ones.  Read the information on the Consumer Focus site for more detail (http://www.consumerfocus.org.uk/get-advice/energy/confidence-code). There’s also useful information about switching providers and using these ‘switch sites’ on the Money Saving Expert website at http://www.moneysavingexpert.com/utilities/you-switch-gas-electricity.  Here’s a selection of sites we’ve tried:

www.which.co.uk/switch/

www.uswitch.com

www.energyhelpline.com/

www.moneysupermarket.com/Energy

www.gocompare.com/Energy_Switch

www.ukpower.co.uk/

www.simplyswitch.com/

http://energy.lovemoney.com/lovemoney