Energy retailing’s dirty, not-so-little secret has come under renewed scrutiny, with two prominent power providers uniting in a call to banish ‘greenwashing’.
In their joint statement ‘Come Clean on Green’, renewables generators Scottish Power and Good Energy say Ofgem’s regulations need tightening, outlawing still permitted practices whereby wholesalers and retailers disguise the origins of supposedly low-carbon power. REGOs – renewable energy guarantees of origin – need to be made more truthful and transparent, so as to regain lost credibility, the pair say.
Consultancy Baringa last month published analysis claiming as much as one-third of electricity marketed as ‘low carbon’ or renewably sourced is in fact anything but.
The analysts reported how an over-supply in what is, in effect, a market for REGO certificates, has led in some cases to double-counting of the true amount of carbon-free power being traded.
“In the UK in 2020, one REGO could be purchased for approximately 50 pence”, Baringa noted. “This means that for suppliers who exclusively use REGOs …., the ‘100% green electricity label’ currently costs approximately £1.45 per customer”.
“For some smaller generators producing energy under the feed-in-tariff scheme, the financial reward of REGOs may not be enough to outweigh the administrative burden” Baringa concludes. Peverse incentives are thus created.
Drawing on the research, ScottishPower and Good Energy have called on D-BEIS and Ofgem to stiffen legal requirements on supply licencees.
Retailers who purchase EU-based energy certificates are currently exempted under UK regulation from what the two suppliers assert is a fair proportion of ancillary costs, such as network access.
No tariff should be classed as ‘green’ which is not based on a PPA from a recognised low-carbon generator, they demand.
In June The Energyst reported how Good Energy locked horns with Ovo, over claims made by the larger supplier for the eco-friendliness of its offerings.