Scottish Power fights Greenwashing with Green tariff
Scottish Power wonders if you know how green your green energy really is? Selectra takes a look at the firm’s new 100% green energy tariff. With this new tariff, Scottish Power is aiming to leverage its impressive green energy generation infrastructure to differentiate itself in the crowded UK energy market.
What is Greenwashing and how is Scottish Power different ?
Greenwashing is a practice some firms engage in to rebrand their feeble, non-existent or actively harmful environmental practices as clean, sustainable or low carbon through marketing tricks and branding.B
Big oil and gas companies running ads with stunning footage of animals, beaches, forests and happy people from around the world, all backed by a poignant Louis Armstrong tune and ending with a vacuous statement about just how much Fossil Fuel Inc cares are classic examples.
However, there are more subtle or convoluted forms of greenwashing.
Energy suppliers marketing themselves as “green”, “renewable”, “clean”, “sustainable” or “low-carbon” fall into one of three groups.
Then there is the third category of firms which pay for REGOs (Renewable Energy Guarantees of Origin). It is these suppliers which Scottish Power accuses of greenwashing by “playing games with bits of paper or certificates.”
How is Scottish Power tackling greenwashing?
Scottish Power has announced that all of its new domestic fixed price tariffs will be supplied with 100% green electricity from its own wind farms along with the accompanying REGO certificates.
The firm, owned by Spanish energy giant Iberdrola, was the first UK energy company to abandon fossil fuel burning and switch entirely to generating power from wind. Its wind farms now generate enough electricity to supply 1.5 million average households.
Scottish Power’s retail business purchases the entire energy output of the onshore and offshore wind farms run by its renewables subsidiary by means of contracts known as Power Purchase Agreements (PPAs) and supplies this electricity to its customers.
The company said that customers who sign up for one of its fixed-price tariffs can be sure that the energy is “genuinely renewable energy and not just a result of REGO certificate trading.”
The move is part of Scottish Power’s energy transition to becoming a zero-carbon supplier following its 2018 decision to generate 100% green electricity.
The Big Six provider also announced that it would reinvest some of its profits from the green tariffs into building the next generation of renewable energy infrastructure.
Keith Anderson, CEO of Scottish Power said that with an increasing number of “green” tariffs on the market, it was “important that consumers understand how ‘green’ their tariff is in terms of supporting the UK renewables industry.”
“This isn’t about playing games with bits of paper or certificates. This is the real deal – customers buying energy from renewable sources and helping us to build even more,” he said.
"As well as cleaning up the environment, we want to clean up how green energy is sold. My concern is that too many customers think they’re buying renewable electricity, when all they’re buying is a renewable certificate. Today, we’re calling time on this so-called ‘greenwashing.’”
What do REGOs have to do with Scottish Power, green energy and renewables?
When a UK renewable energy generator produces electricity from a wind turbine, solar panel or other clean energy source and supplies it to the grid, the electricity joins the pool of power supplied by gas, oil and nuclear that’s available for people to use.
Therefore there’s no way to send electrons generated from 100% green energy directly to a particular home or business unless there is a solar panel or wind turbine connected straight to the premises.
So, to support green energy production Ofgem awards REGOs to generators for every megawatt hour (MWh) of electricity they produce.
Suppliers then purchase the renewably generated electricity and can buy the REGO along with it.
Unfortunately, there appears to be little monitoring of certificates trading by Ofgem and a loophole means companies can buy the REGOs cheaply at times of excess production without buying the renewable electricity associated with them.
Regos can often be bought for between 30p and 50p per MWh, which is about only 1% of the wholesale price of electricity.
Unscrupulous suppliers can spend just £1.55 on REGO certificates to cover the 3.1 MWh an average domestic customer would use for a whole a year, then brazenly claim their tariff is 100% renewable, all while supplying only brown (non-renewable) electricity.
Is Scottish Power right to call REGOs “greenwashing”?
It’s fair to say that the greenest tariffs do come from energy suppliers who either own their own renewable generation infrastructure, as is the case with Scottish Power, or from those which purchase green electricity directly from generators along with the accompanying certificates.
However, there is a place for REGOs, for example at times where small independent wind farms or solar plants are contributing more energy to the grid than their owners have currently sold to suppliers.
With REGOs, instead of shutting down their production, clean energy generators can keep the green electricity flowing, thereby minimizing carbon emissions from fossil fuel plants, safe in the knowledge that they can make money back by selling this contribution on to suppliers at a later time in the form of certificates.
That said, it’s clear that Ofgem should be doing a lot more to regulate the REGOs market to ensure a just and transparent system for suppliers acting in good faith. Perhaps REGOs should be priced according to market demand at the time of purchase rather than at the time the electricity was fed to the grid, smoothing out the price differential between times of high supply and high demand.
Moreover, with the worsening climate emergency and the battle to achieve a net-zero carbon emissions economy finally being taken seriously, consumers deserve to know that when they choose a tariff branded as 100% renewable, green or clean energy their hard-earned money is paying for exactly that.