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UK government looks to curb ‘greenwashing’ of electricity tariffs

Highlights

Increased transparency over REGOs, green tariffs

Proposes detailing renewable power sources

9 million UK households on green tariffs

The UK government is to review green electricity tariffs over concerns that energy companies could be exaggerating their environmental benefits, the country's energy minister said on Aug. 16.

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The review will study the extent of "greenwashing" in the energy retail sector, the transparency of the current system and whether the rules governing what counts as a "green" tariff remain fit for purpose, the Department for Business, Energy and Industrial Strategy, or BEIS, said in a statement.

Energy companies are able to market tariffs as green even using fossil fuel generation, as long as this is offset by purchasing the equivalent amount of Renewable Energy Guarantees of Origin, certifying the proportion of electricity generated from renewable sources.

BEIS is investigating changes to this system to provide clearer information to customers about green tariffs, detailing the type of renewable energy used, and where and when it was produced.

"Millions of UK households are choosing to make the green switch and more and more of our energy comes from renewables," Energy and Clean Growth Minister Anne-Marie Trevelyan said in the statement.

"I want people to know that when they sign up to a green tariff, they are investing in companies that make a conscious choice to invest in renewable energy," Trevelyan said. "Part of that is ensuring companies are being as transparent as possible on where their power comes from."

BEIS said 9 million households in Britain were on green tariffs, and over half of all new tariffs are labelled as "100% renewable" or "green."

S&P Global Platts assessed non-bio REGOs at GBP2.20/MWh ($3.05/MWh) on Aug. 13.

Market sources said that while the outcome of any review remains to be seen, any tightening of the rules governing REGOs could drive prices up.

"It might be a good step forward to actively chase the right investment in renewables," one source said.

Such a review is "long due" a second market source said, adding that it could push prices higher and introduce more discrepancies between technologies.

The government is also publishing a separate call for evidence on retail market third-party intermediaries such as price comparison sites and non-domestic brokers, BEIS said. These currently operate outside of retail market rules, and the government is seeking views on a potential regulatory framework.

UK solar and wind output in January-July was 40.9 TWh, down 16% on the year, Platts and transmission system operator data showed. UK wind generation was 68 TWh in 2020, with solar accounting for 12 TWh, grid data showed.

Renewables accounted for 42% of power generation in the first quarter of 2021, with renewable generation higher than that from fossil fuels in four of the last five quarters, BEIS said in its first quarter Energy Trends report, published June 29.