OVO to end use of renewable energy certificates over greenwashing concerns
OVO Energy will stop investing in renewable energy generation of origin (REGO) certificates, stating that this approach is not reducing energy sector emissions in the real world and risks misleading consumers.
Instead, it will redirect investment into smart metering, energy efficiency improvements in customer homes and schemes whereby customers receive money off their bill for shifting energy use away from peak periods.
The changes form part of a new ‘Path to Zero’ customer plan, unveiled by the energy supplier today (18 April).
OVO worked with Cornwall Insight in the development of the plan, commissioning its researchers to investigate whether REGOs are delivering the growth in renewable electricity generation and the emissions reductions benefits which consumers perceive them to.
To conclusion is that REGOs are no longer increasing the amount of green energy on the grid and, as related costs increase, these are passed onto consumers at a time when prices are already sky-high. While they did help to kick-start renewable energy deployment when they were first introduced in the 1990s, Government subsidy schemes remain the main driver of additionality.
Cornwall Insight found that 81% of consumers believe that a REGO-backed tariff supports more renewable generation capacity to come online. It also found that nine in ten homeowners misunderstand that REGOs effectively ‘offset’ their high-carbon electricity use, believing instead that their property is directly served with 100% renewable electricity.
With this discrepancy between perceived and actual impact in mind – and with customers seeking out ways to save on energy costs amid the ongoing price crisis – OVO has elected to end investment in REGOs and to reallocate the funding.
In a speech today, OVO’s chief executive Raman Bhatia is expected to say: “Greenwashing is a luxury no one can afford. By making this change we’ll save consumers money and reinvest in true green energy, and we hope others will follow our lead.”
Funding previously allocated to REGOs will be redirected to smart metering and to offering all customers home energy improvements, such as radiator reflector foils. OVO will also increase its provision of energy advice to customers, training additional representatives to visit homes and assess energy efficiency after first launching this free service in late 2022. It will also train more staff to install heat pumps, solar and electric car chargers, with a new £10m commitment.
Additionally, funding will be increased for OVO’s ‘Power Move’ initiative, which rewards customers for avoiding the use of energy-intensive appliances during peak periods of demand. In doing so, they reduce pressures on the grid. Through trials of the scheme this winter, customers collectively saved £150,000. It bears noting that Power Move is separate from the Ofgem-backed Demand Flexibility Service, which OVO also participated in.
Additional ‘green’ features will still be available as optional add-ons for customers. These include electric vehicle charging infrastructure and specific tariffs, home solar and energy storage systems, and renewable energy backed by more robust guarantees than REGOs.
To this latter point, OVO is advocating for a new kitemark to recognise green energy deals that are actually resulting in additionality and in carbon reductions. The UK Government did start work to weed out greenwashed energy tariffs in 2021 but this work appears to be on hold.
Kitemarks, OVO is arguing, could build trust in energy companies’ green claims across the board. Cornwall research has found that 68% of energy consumers do not believe marketed tariffs offering for greener energy are always genuine offers.
Beyond energy companies, an OVO spokesperson told edie that a kitemark would have “knock-on implications” for the sustainable business movement, given that many businesses currently rely on REGO-backed tariffs to reduce their Scope 2 (power-related) emissions.
OVO notably use its announcements today to call on the Government to bring forward “system-wide” practice reforms, stating that improving home energy efficiency and pioneering low-carbon energy solutions cannot rest solely on the shoulders of the private sector.
The Climate Change Committee (CCC) last year warned that currently policies will only likely deliver around one-third of the emissions reductions the UK is legally committed to delivering by 2050. Building energy efficiency and low-carbon heat were noted as areas particularly rife with policy gaps. While the Government did publish a swathe of green policy paperwork last month, the jury is out on whether these updates will result in any more rapid decarbonisation in these areas.
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