OVO Energy has called out the use of Renewable Energy Guarantees of Origin certificates (REGOs) as greenwashing as it abandons the scheme in favour of a new system of tariffs which it claims will directly support renewable energy and decarbonisation.
OVO introduced its new plan at an event at the Tate Modern in London, hosted by Friends of the Earth, Cornwall Insight, Ethical Consumer and Energy Saving Trust to an audience largely sharing its opposition to the current policy framework.
Ofgem is the administrator of the REGO scheme in Great Britain on behalf of the Department for Energy Security & Net Zero, and in Northern Ireland on behalf of the Northern Irish Utility Regulator (UR).
Along with many industry experts, OVO Energy has said that the REGO scheme is an excuse for greenwashing. OVO chief executive Raman Bhatia said in a statement that, “It’s time to expose our industry’s dirty secret and face some hard truths. In the past, energy suppliers have used marketing propositions such as ‘100 percent renewable tariffs’ to demonstrate their environmental bona-fides to consumers. But these tariffs, and the complicated REGO (renewable energy guarantees of origin) system that sits behind them, aren’t fit for purpose anymore.
OVO is abandoning this system in favour of a kitemark system which it claims identifies which tariffs directly support renewable energy and decarbonisation. New research from Cornwall Insight shows that these REGO-backed tariffs do little to support the production of new renewable energy generation projects.
Stephen FitzPatrick, OVO’s founder, introduced the event and talked about the progress made by his company since it was founded in 2009. Following the publication of its Plan Zero in 2009, FitzPatrick said that since the plan was launched, the UK has not made as much progress as he had hoped on reducing carbon emissions. Government policy, he said, had just not been that effective at incentivising renewable generation and energy saving.
Raman Bhatia, who was introduced by FitzPatrick, said that OVO senior management often listen to customer calls to understand what their customers need. Last winter, people were struggling to heat their homes, and one week, every call he listened to was a customer in distress.
“We played those calls to people at the Treasury”, Bhatia said, and the government then announced the removal of the poverty premium from prepay meters from July 1 in the March budget. Bhatia underscored that this had been one of OVO’s proposals.
Bhatia said OVO had been thinking about what its role was in making decarbonisation work. He said customers are often confused about how to make the right green choices because the price signals are missing. REGOs in their current guise provide no incentive for new energy generation projects. OVO would therefore invest in energy experts who can give their customers advice on reducing their energy consumption, give away free energy efficiency kits and give every customer a smart thermostat.
OVO launched their Power Move demand flexibility scheme last October, beginning with a trial of the service for around 7,000 users. This trial revealed that the UK could save £95.4 million if households switched to using energy at off-peak times. The trial shifted 164,179kWh out of peak times during the winter period, saving customers £150,000.
Bhatia announced that Power Move would now be available to every customer, and that they were also launching a smart tariff for EV charging. He also said that OVO would like customers to switch from gas boilers to air source heat pumps, and would be working to create 20,000 green jobs to plug skills gaps in the sector. Bhatia recognised that OVO’s carbon footprint was still in the region of 15,000,000 tonnes a year, mostly from gas purchases, and that the company needed to do something about this.
Robert Buckley from Cornwall Insight joined a panel of contributors to discuss OVO’s plans. He said that his company had been researching REGOs since 2005 and that they had never called forward new renewables generation. He struck a note of caution on OVO’s overall plans, saying that he had heard a lot from companies about what they will do to tackle the climate crisis, and he would wait to see what the companies would deliver.
The announcements were also welcomed by others such as Good Energy chief executive Nigel Pocklington. Good Energy published a report in 2020 saying that renewable energy tariffs backed by REGOs amounted to greenwashing.
However, Brian Horne, senior insight and analytics consultant from the Energy Saving Trust, said that “We shouldn’t overlook the need for government action – we have mapped energy crisis hotspots where housing is poor. We can’t wait for energy companies to do this; those communities can’t afford to invest in insulation.”
The kitemark scheme which will replace REGOs will help people to understand the true environmental impact of different tariffs, OVO said, and the company will subsidise Power Purchase Agreements to get new renewable generation projects onto the grid.
Several participants spoke of the government not doing enough. Mention was made of the need to shift green levies off electricity onto gas, obstacles to creating new onshore wind projects, and the need for the government to tackle the skills shortage. OVO say that they are engaging with the government, especially over the need to help speed up adoption of smart meters, which it is unrealistic to expect people to opt into without incentives.
OVO’s abandonment of the REGOs scheme will put pressure on the government to reform it, but it seems clear that energy companies like OVO and Octopus are competing to respond to customer demand for reducing energy usage.
