Green energy tariffs explained

The UK aims to be carbon net zero by 2050. In other words, by then any pollutants we release into the atmosphere should be counteracted by carbon-offsetting and across-the-board green energy tariffs.

It may seem an ideal that’s just not feasible considering we’re in an energy price crisis, but that’s no reason to dismiss what is, after all, the future.

What is 'green' energy?

Green energy sources don’t emit harmful gases and other noxious substances, unlike fossil fuels such as coal, oil, and by-products such as petrol and diesel.

Instead of polluting the atmosphere, land or seas, green energy leaves no harmful by-products and is naturally replenished. Wind farms and solar panels are the most well-known examples of green energy sources.

Renewable energy

Renewable energies, which are included within the ‘green’ umbrella, differ from pure green solutions. They emit pollutants, but measures are taken to neutralise the environmental impact.

For example, burning wood produces carbon dioxide (CO2) during the burning process, but renewable energy suppliers offset the CO2 produced through environmentally-friendly schemes.

What are green energy tariffs?

Electricity is electricity regardless of whether it comes to you via a green energy tariff or not. At the end of 2021, 43% of all electricity distributed through the National Grid came from wind, solar, bio-energy and hydroelectric sources. The rest came from fossil fuels.

Green energy tariffs make use of both green and renewable energy, meaning the 57% of electricity that currently comes from CO2-emitting fossil fuel is offset. Also, a greater proportion of supplier profits are reinvested in green energy production projects.

The focus on electricity doesn’t mean there’s no such thing as a ‘green’ energy tariff that offers gas. Indeed, some suppliers offer a ‘green’ gas option as a standalone or dual fuel tariff. With these tariffs the supplier offsets the carbon dioxide produced through gas extraction and distribution via schemes such investing in more efficient biogas production sites.

What are the sources of green energy?

There are several sources of green and renewable energy, including solar, wind and water.

Fortunately for us, the UK is blessed with an abundance of a couple of these, and gets enough sunlight to make the other an important contributor to green energy.

Here’s a breakdown of the main sources of green energy:

Wind power

Wind power is the most prominent source of green energy, contributing 26% of the UK’s total electricity output at the end of 2021. There are 2 types of wind power - onshore and offshore wind farms, which generate 12% and 14% of energy, respectively. Electricity is produced when airflow causes powerful turbines to rotate.

Solar power

Solar power generates electricity by capturing energy stored in the sun’s rays when they hit solar panels. The panels can be found anywhere from vast arrays in fields to the roofs of commercial and domestic properties.

According to the National Grid, solar power is the fastest growing form of green energy. It was contributing 1.8% to the Grid at the end of 2021, but is expected to make more of an impact due to technological advances. This has already seen output rise by 24% in a year.

If you're concerned about the cost of installing solar panels, you can use a service like Solarplanet to compare solar panel installation quotes in your area.

Hydropower

Hydropower contributes around 2% to the National Grid by converting the kinetic energy held in water into mechanical energy. It does this by using pipes fitted with turbines, which spin at a rate of knots to generate electricity. Hydropower plants serve rivers, reservoirs and dams.

Tidal power

Wave and tidal power is an offshoot of hydropower, being treated as a separate green energy source from hydropower due to the challenges facing pioneers in this field.

Being an island nation, the UK is ideally suited to explore this kind of green energy source. For a start, the UK has around half of Europe’s tidal energy resource.

Also, waves are far more predictable than wind power and tend to be stronger in the winter months, when power demands are highest. According to the government, this type of green energy could contribute up to 20% of the UK’s electricity demands.

Bioenergy

Bioenergy plants process organic matter.

This includes:

• Wood
• Vegetable crops
• Agricultural waste
• Human waste
• Food products
• Vegetable oils
• Animal fat

Some matter is burned to produce electricity, while others generate gas through what’s known as anaerobic digestion. This is where micro-organisms consume the matter, producing a biogas that’s rich in methane and CO2.

Bioenergy contributes almost 13% to the green energy table.

Geothermal energy

This form of green energy can be captured by tapping into superheated water and steam found in natural springs below the Earth’s surface.

Although it’s been used as a source of energy for millennia, spawning towns such as Bath, the potential of geothermal energy is in its infancy. This is because drilling to gain access to springs is still too expensive.

Are green energy tariffs more expensive?

Green energy tariffs rise and fall in line with conventional energy tariffs because they’re reliant on the National Grid to deliver the electricity.

Fixed-rate green or standard deals can be cheaper than variable rate packages, primarily because suppliers are keen to lock customers into a contract lasting a year or so, rather than risk you jumping ship.

Green energy tariffs may have an edge over standard energy tariffs due to the government’s net zero pledge.

This commitment has seen standard energy tariffs attract additional fees, such as the climate change levy, to support ecological initiatives including green energy.

Lower green energy production costs

Technology also plays a role to play in keeping the cost of green energy down. Renewable energies are not as expensive to produce when compared with the high cost of mining and processing coal, oil or gas.

It may cost a sizable sum to build renewable energy plants, but once they’re up and running subsequent outlays are lower. This is because they tend to use a readily-available renewable source of energy, such as sunlight, waves or wind.

How do I know if my energy is green?

The easiest and most reliable way to tell whether your energy is green is to check your electricity supplier’s Renewable Energy Guarantee of Origin certificate (REGOs).

Suppliers are required to share their REGO certificates with customers as part of the Fuel Mix Disclosure. This legal requirement details what share of the energy provided through the tariff comes from renewable sources.

How much might I save if I switch to a green energy tariff?

With energy prices so high, and rising, it’s unlikely that you're able to switch to a green energy tariff until the market stabilises again.

It could be a different story if you’re currently on a variable green energy tariff. This is because your present energy supplier may no longer be the cheapest on the market, even if they were when you switched to them. In this case you could pay a lot less by going elsewhere.

But it's a good idea to wait to search the market for the cheapest green energy tariffs available when more energy deals become available.

Does it cost to switch to a green energy tariff?

When the energy market has stabilised and you're ready to switch, if you have a variable rate tariff, it shouldn't cost you a penny to move to another tariff. However, you can expect to pay an exit fee of £30 plus to leave a fixed term tariff early.

It’s not usually worth switching if you’re on a fixed tariff, unless your rate is so far above what the competition is offering that it would cost you more to stay put.

How do I switch to a green energy tariff?

Given the rising price of energy, we can't compare energy deals right now. But you can sign up with us to be switch ready and we'll contact you as soon as energy deals become available again.

All you need to do is enter a few simple details about your home address, and we can handle the rest.

When energy deals do become available and you're ready to switch, you just need to spend 5 minutes answering some questions on the comparison page. Then select the best deal from the results page and enter your payment details. To ensure the switching process runs as smoothly as possible have the following information to hand when looking to compare tariffs and switch:

• The name of the bill payer
• Your full postal address
• Your email address and phone contact number
• The name of your current energy supplier or suppliers, if you’re looking to switch to a green dual fuel tariff
• Your latest bill, detailing the amount of energy you use
• An up-to-date meter reading
• How you pay for the energy you use, and how you’d like to pay with a new supplier

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