Ofgem announces new green energy rating system

Ofgem has announced new energy ratings to help consumers understand green energy plans.

Tim Wolfenden, Head of Home Services at uSwitch.com, comments: “At the moment there is no clear definition of what exactly a green energy plan is – which is why clarity is so important. Consumers may be more likely to sign up to a green energy plan if they are better able to understand and compare them on a realistic like-for-like basis. Currently less than 1% of people in the UK are signed up to a green energy plan.

“Up until now, choosing green energy has been a lot more difficult than it needs to be - it is especially hard for consumers to compare plans where price and service are not the primary factors in making a decision. A rating system should cut through the haze to make it a whole lot simpler and clearer.

“It’s also good that suppliers will have all of their plans rated, as it provides a consistent approach and yardstick. It also ensures that any semi-green product that a supplier thought they could “get away with not rating” is provided a rating so consumers can be clear and confident about what they are getting.

“However, if this scheme is to work and consumers are to have confidence in it then it really does need to be mandatory. Otherwise we will see a situation where some suppliers abide with it and others don’t, which will simply confuse consumers even more. Ofgem must maintain control and ownership of this process. If it’s just handed over to the industry further debate and procrastination will creep in.

“Green energy plans are one important piece in the wider environmental jigsaw puzzle. Suppliers still need to encourage customers to take up other energy saving measures, such as home insulation and energy saving light bulbs, too. For those who have never switched electricity provider before, choosing a green energy tariff can save money. But generally speaking the greener you go; the more you can expect to pay – but then saving money is seldom the primary reason for going green.”

Green notes

Key to note with all green energy plans is that, due to the nature of electricity supply, it is impossible to ensure that the electricity a customer receives will be from renewable source because all the electricity generated from the various sources are funneled into the national grid. This is then transported around the country and into people’s homes. Therefore it is impossible to know what source the electricity you use at home has come from.

What green energy plans promise is that they will match a customer’s consumption with renewable energy they supply to the national grid i.e. if a customer uses 20,500 kWh of electricity in a year Good Energy will supply (through renewable sources) 20,500 kWh to the national grid. This in turn means in some way all customers in the UK will be using green energy in some form or another.