Are some green tariffs greener than others?
It was my birthday last week and my friends took me out to see the Lego movie (it is lots of fun, very clever and faintly subversive).But, as we waited to see the film my brain was picked.Being their friendly resident energy expert they quizzed me gently on energy retail competition.
So in the foyer, as we got our 3d glasses, I sounded off about effective retail competition or lack of.I did my PhD on the technology choices available for meaningful retail competition.In any other markets, say the one for washing machines, you weigh up the cost of machines, what you want from yours, their reviews and recommended machines.They are pretty much all different so your choice is meaningful.
Electricity on the other hand is a different product.You connect up your appliance to the power socket and the same electricity flows out wherever.You are connecting to the mains, with electricity that comes from power generated from all the stations connected to it – be they powered by gas, coal.nuclear, wind or other renewables – from UK generators or, thanks to interconnectors, from abroad.
The price of the power in your bill is made of a number of elements – with generation being the main one.So you are supporting nuclear power when you pay your power bill – regardless of your personal views about that option.
Retail competition gives you the illusion of having a meaningful choice.
So how do you measure the success of retail competition?There is no new way to generate electricity so connecting to the Grid system is the best and cheapest option.If you use switching rates then, some believe, retail competition can be deemed a success although there is that pesky problem of tariff complexity.And that, politicians believe, is easy to fix.
Not so say others such as Greenpeace and Ed Matthew director of Transform UK.He describes the tariff reform proposals as a ‘red herring’ and is leading a public campaign to use the money from carbon taxes, i.e. the European Emissions Trading Scheme and the Carbon Floor Price, to be recycled back to households to make their homes super energy efficient – a radical way to cut energy bills.
Matthew says that the government’s tariff move distracts from another measure that could lower energy bills – better insulation.Boring but true.
But my friends are well off and want to do more to help the planet than just insulate their home.
So should my friends switch to a green tariff?Will that make any difference?Well some tariffs are greener then others.Energy companies have a legal obligation to buy some of their power from renewables (using Renewables Obligation Certificates (ROCs)).
So should my friends switch to a green tariff?Will that make any difference?Well some tariffs are greener then others. Energy companies have a legal obligation to buy some of their power from renewables (using Renewables Obligation Certificates (ROCs)). However, there are two companies that do far more – Ecotricity and Good Energy* and they would provide a better bet for my friends and those that want to do more to enable a low carbon transition.
* This blog was updated on 13th March to correct a sentence on the approach taken with ROCs between these companies.
Dominic Maclaine is an EPG Associate and used to be the editor of New Power before he sold the business. He conducted PhD research into electricity supply competition in the UK and Norway at SPRU. He was previously the editor of the monthly newsletter Power UK published by Platts (and previously the Financial Times). He is currently writing a book about recent developments in the UK electricity market, to be published by Routledge.