The UK Government said it will review how energy retailers market “green” electricity tariffs to consumers, amid concerns that some are overstating how environmentally friendly their products are.
Nine million British households are now on green tariffs, with over half of all new electricity tariffs launched now badged as “100% renewable” or “green”.
Energy companies are able to market tariffs as “green” even if some of the energy they supply to customers comes from fossil fuels, as long as this is offset by purchasing enough certificates called Renewable Energy Guarantees of Origin (REGO) to cover their customer base.
REGOs determine the proportion of electricity that energy companies source from renewable electricity generation.
Options being explored include looking at whether the system around these certificates needs to be changed, as well as whether suppliers need to provide clearer information to households about their green tariffs, including type of renewable energy used (such as wind or solar), where the renewable power was generated and when.
The government is also publishing a separate call for evidence on third-party intermediaries in the retail energy market, such as price comparison sites, auto-switching services, and non-domestic brokers, with around half of households using them when engaging with the energy market.
These types of businesses operate outside of the retail market rules, and ministers will seek views on whether a general regulatory framework is needed.
Energy minister Anne-Marie Trevelyan said: “Millions of UK households are choosing to make the green switch and more and more of our energy comes from renewables.
“But I want people to know that when they sign up to a green tariff, they are investing in companies that make a conscious choice to invest in renewable energy.
“Part of that is ensuring companies are being as transparent as possible on where their power comes from.
“That way, every family in Britain can rest assured their choices are helping to contribute to our world-leading target of eliminating our contribution to climate change by 2050.”
Nearly two-thirds (62%) of UK energy consumers say their purchasing decisions are influenced by how eco-friendly an energy tariff is.
However, 75% believe suppliers should be open and transparent about their tariffs, including how much of their renewable energy they buy from other companies.