Green business tariffs are increasingly asked about, usually because a tender, a customer questionnaire or a carbon report has prompted it. The question nobody answers plainly is what you actually receive for the premium. The honest answer is certificates, and that is more useful than it sounds and less than it is often made to sound. Here is how it genuinely works.
The short version
- Electrons are not labelled. You get the same mix off the grid as everyone else.
- What you buy is certificates, called REGOs, matched to your consumption.
- That is legitimate for carbon reporting, and it is what scope 2 reporting is built on.
- It does not necessarily add new renewable capacity, which is the fair criticism.
- Not all green tariffs are the same, and the difference is worth asking about.
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Why your electricity is not actually green
Start with the physics, because it clears up most of the confusion.
Electricity from every generator, wind farm, solar array, gas plant, nuclear station, goes onto the same grid. Once there, it is indistinguishable. There is no separate set of wires carrying renewable power to customers who paid for it. Whatever tariff you are on, the electricity arriving at your building is the national mix at that moment.
So when a supplier sells you a green tariff, they are not routing different electricity to you. They cannot. What they are doing is accounting.
What a REGO is
A REGO, a Renewable Energy Guarantee of Origin, is a certificate issued for each megawatt hour generated from an eligible renewable source. It records that the generation happened and what produced it.
Suppliers making a renewable claim must hold enough certificates to match the renewable electricity they sell, checked retrospectively. So if you buy 100 MWh on a green tariff, the supplier must retire 100 MWh of certificates against it.
The important structural point: certificates can be sold separately from the electricity itself. A generator can sell its power to one party and its certificates to another. So holding REGOs does not necessarily mean your supplier bought power from that wind farm. It may mean they bought certificates on a market.
This is not a scandal, it is a design decision. The system exists so renewable generation can be tracked and claimed without needing physically separate wires. It works for accounting. It just does not mean what most people assume when they picture their building being powered by a wind farm.
Why it still matters for reporting
Having been sceptical above, here is the genuine case for it.
Corporate carbon reporting distinguishes between emissions from energy you generate yourself and emissions from electricity you buy, the latter being scope 2. Market-based scope 2 reporting is built on exactly this certificate system. If you need to report lower scope 2 emissions, a REGO-backed tariff is the recognised mechanism for doing it.
That matters in practice when:
- You are tendering and the questionnaire asks about renewable electricity.
- A larger customer is asking about their supply chain, which is increasingly common.
- You report emissions under any framework that uses market-based scope 2.
- You have made a public commitment and need something defensible behind it.
In all of those, a green tariff is doing a real job. It is answering a reporting question with the instrument the reporting framework recognises.
The fair criticism
The substantive objection is additionality: does your buying a green tariff cause any more renewable generation to exist?
Government-commissioned analysis has concluded that a customer choosing a green tariff is unlikely to materially change how much renewable energy is in the national mix, because that generation would have happened anyway. The same work noted that many companies selling renewable electricity are not doing what customers assume, with some buying directly from generators or building their own capacity while many do not.
Ofgem's own research has found that customers have low understanding of what makes a tariff green, and that a number of tariffs carrying environmental claims are not certified at all.
So the honest summary: a REGO-backed tariff is a legitimate reporting instrument and a weak lever for changing what gets built. Both things are true, and a supplier implying the second is overstating it.
Questions worth asking
Not all green tariffs are equivalent, and these separate the serious ones.
- Is the tariff backed by REGOs, and for the full volume? If a supplier cannot answer this clearly, stop there.
- Are the certificates bundled with the power, or bought separately? Bundled means the supplier bought the electricity and its certificates from the same generation. It is a stronger claim.
- Do you have power purchase agreements with named generators? This is the strongest answer and some suppliers can give it.
- Are any certificates from unsubsidised generation? A reasonable proxy for whether the purchase supports projects without other support.
- What exactly can I state in a tender or report? Get it in writing, since you will be asked to stand behind it.
- What is the premium? Worth knowing what the claim costs annually.
What makes a bigger difference
If the aim is lower emissions rather than a reporting line, the uncomfortable truth is that a green tariff is rarely the biggest lever available.
- Using less. Unglamorous and more effective than any tariff. Monitoring often finds significant waste outside operating hours, which our post on IoT energy monitoring covers.
- Generating on site. Solar on your own roof is genuinely additional in a way a certificate is not.
- Shifting when you use it, which matters more on a half-hourly supply where the carbon intensity of the grid varies hour to hour.
- Fixing the obvious, heating and cooling fighting each other, lighting in empty areas, equipment left running.
A green tariff and the above are not alternatives. But if someone is choosing between them, the order above is the honest one.
Need a green tariff that stands up to a tender?
Tell us what you need to be able to claim and we will find a tariff that genuinely supports it, with the evidence in writing. We will also tell you plainly if a cheaper standard tariff plus a conversation about consumption would serve you better.