More than half (52%) of UK consumers expect a renewable electricity supplier to send energy direct from wind and solar farms into their homes
Research commissioned by Good Energy has shed light on the confusion over what constitutes ‘renewable’ when it comes to energy. The findings of a survey conducted by YouGov* found that whilst over 8 in 10 (84%) of the UK consider ‘renewable energy’ to be important to them, 58% do not have a very good understanding of what it actually means.
The most common misconception is that a renewable energy supplier should provide electricity from renewable sources direct to people’s homes. The notion, held by 52% of consumers, indicates a fundamental and widespread lack of understanding of how the National Grid works.
In contrast, 48% believe that a renewable energy supplier should be encouraging more renewable energy sources contributing to the National Grid, something which some renewable suppliers do not do at all, whilst others only do to a degree.
The research paints a picture of confusion in a market in which there are a growing number of renewable energy providers, indicating that many are failing to be fully transparent with consumers.
Ofgem’s Renewable Energy Guarantee of Origin (REGO) scheme provides certificates for each unit of electricity generated by a renewable source. However, these certificates can be purchased without the energy they are associated with, essentially independent of their origin, at very low cost, which several suppliers are taking advantage of in order to offer low cost ‘renewable’ tariffs which do not encourage any additional renewable energy generation. This is leading to a perception that you no longer need to pay more for 100% renewable electricity, yet customers are unaware of how their energy bills go back into funding renewable generation.
Good Energy conducted some industry research asking suppliers which provide a ‘100% renewable’ electricity tariff how they do so, and found the following:
- Company A: Owns and operates its own wind and solar farms, from which it sources around a third of its energy. The rest is from the National Grid, with cheap REGO certificates purchased separately in order to call it ‘renewable’.
- Company B: Purchases 20% directly from renewable generators, with the REGOs to show for it. But the remainder is REGO only.
- Company C: Offers a ‘100% renewable electricity’ tariff with a £5 a month (£60 a year) premium, promising to buy the REGO certificates to account for your usage. Purchasing the REGO certificates to cover an average household’s annual usage costs about 47p.
- Company D: Focuses on a digital strategy to drive costs down for customers, and offers ‘100% renewable electricity’ as an additional benefit. But admits 100% of its electricity is covered by REGO certificates purchased independently of the energy, stating ‘we’re a retailer, not a generator’.
Juliet Davenport, founder and CEO of Good Energy, said “There are some positives to take out of our research, not least how many people value the importance renewable energy. We’ve seen a big surge of interest in the market in the last two to three years, which is great, but it’s also why it’s so important that people know what they’re buying and investing in.
“You choose a renewable energy provider because you want to make a difference in combatting climate change. We don’t believe customers would be happy if they knew that their ‘100% renewable’ tariff was making effectively zero impact on renewable energy generation, and by extension any efforts to move towards a cleaner, greener future.
“This is also against a backdrop of reduced government support, which is translating into a huge drop off in renewable investment with figures from Bloomberg New Energy Finance showing a massive decline of 56% in the UK in 2017. Consumer demand is growing for renewable energy, but that’s not going to drive clean energy growth if the ‘renewable’ tariffs they’re buying are simply allocating their use against what’s already on the grid.
Good Energy is committed to providing 100% renewable electricity to customers by buying the equivalent amount they use from a network of over 1,400 generators across the UK using power purchase agreements (PPA), actively investing in and supporting the growth of the UK renewable energy market. www.goodenergy.co.uk