May 10, 2021

UK regulators call for better transparency on renewable energy supply as concerns emerge on the authenticity of energy sources

2 min read

The United Kingdom administration has vowed to examine how energy producers and suppliers market their energy. This move comes amid claims by regulators that some suppliers mislead consumers by advertising their power as renewable without backing it with proof. Green tariffs have been rising, with top energy suppliers promising to deliver a hundred percent renewable energy. These companies include British Gas, Eon, ScottishPower, Shell Energy, Bulb, and Octopus.

Energy suppliers buy energy directly from green energy producers to convince customers of their credibility. Others purchase cheaper renewable energy guarantees of origin (REGOs) certificates to support their advertisements. But regulators such as the Office of Gas and Electricity Markets (OFGEM) and the Energy Ombudsman state, the suppliers need to show more transparency in their energy source and back it up with concrete proof. OFGEM gives one REGO per megawatt-hour of satisfactory clean energy produced.

REGO certificates can be accessed from secondary sellers where energy suppliers get them as low as £10 each. Suppose an energy seller buys power from a wholesaler with unknown sources. They will purchase a cheap secondary REGO certificate and market their energy as a hundred percent cleans, which is not the case. As many energy companies dance to the rhythm of the renewable energy melody to curb climate change, the department of business in the UK has called for evidence review to keep consumers informed. The administration seeks “greater transparency to ensure consumers can make informed decisions over their energy suppliers’ green credentials.” This initiative will cushion customers against exploitation even as the green energy tariff gains momentum.

According to suppliers such as Scottish Power and Good Energy, who buy their energy directly from renewables producers, certificates or evidence barely impact the share of green energy in Britain since they can be purchased just for the show. Direct buying of power requires a power purchase agreement (PPA). Energy developers use PPAs to get funds to install new solar or wind farms to add to their energy demands.

“There has been a huge misleading of customers in the UK,” says Andrew Ward. Ward, who serves as the head of UK retail at ScottishPower, consider the availability of cheap certificates a threat to smooth transition to clean energy. He plans to register a complaint to the Advertising Standards Authority regarding a hundred percent renewable energy marketing tag.

OFGEM said the transparency of green tariffs is not clear enough for consumers “to understand the difference between what they think they are buying in comparison to what they are actually buying.” On the other hand, the Energy Ombudsman believes “it is good to see more and more energy suppliers offering green tariffs, but it’s crucial that green claims can be backed up.”

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