By Paul Homewood
I think all of us in the UK have probably seen this advert from OVO Energy in the last few weeks, which claims to promise customers that all of their electricity will come from renewable sources.
Of course, as OVO themselves readily admit this cannot literally mean that each home only gets renewable energy. That would be silly, as their website makes clear:
Even if you’re paying for 100% renewable electricity, no supplier can guarantee that the electricity coming into your home is from a renewable source. That’s because it all gets pooled in the National Grid – dirty and green alike.
Think about the National Grid like a motorway where cars (electricity) come on at different junctions (various sources) and leave at different exits (homes and offices). Once electricity is in the grid, there’s no way of knowing where it came from.
However, when you choose renewable electricity, you make a positive contribution by putting more ‘green’ cars on the ‘energy motorway’ – and help us to progress towards a cleaner, greener future.
These ‘green cars’ are essentially certificates (REGOs and GoOs) that we buy on your behalf. So although it’s not possible to know whether the electricity that ends up in your home is from a renewable source – we can guarantee that every unit you use will be replaced on the network by a unit of renewably sourced electricity.
[REGOS are] certificates to prove that we’re getting our electricity from renewable sources when we say we are.
Ofgem, the energy regulator, gives out one REGO (Renewable Energy Guarantee of Origin) certificate per megawatt hour (MWh) of renewable electricity that we supply. The same goes for GoOs (Guarantees of Origin) but these come from European participants in the Association of Issuing Bodies.
I don’t have a problem with that. But, more to the point, they cannot even guarantee that they are buying enough renewable electricity to match their sales at every hour of every day.
All they claim to do is buy in enough over the course of the year to balance their books.
This, of course, is a common scam amongst green energy suppliers. But there is one other aspect of their website advertising that is even more misleading. Let’s look again at this statement:
“We can guarantee that every unit you use will be replaced on the network by a unit of renewably sourced electricity”
I can only see one way in which this can be interpreted – that if you don’t sign up for this offer, every unit you would otherwise use would come from a non-renewable source.
In reality, even if OVO went bust tomorrow, all of this renewable power would still in all likelihood be sent to the grid, and sold on the market.
OVO are effectively saying that every new customer signed up will lead to more renewable electricity being generated, which is a nonsense because there is only a finite amount of renewable capacity.
There is a second misleading statement as well:
These ‘green cars’ are essentially certificates (REGOs and GoOs) that we buy on your behalf
In fact, as OFGEM explain, all electricity suppliers have an obligation to buy these certificates:
The Renewables Obligation (RO) places an obligation on licensed electricity suppliers in the UK to source a proportion of their supply to customers from eligible renewable sources.
Although OVO may buy in more ROCs than the OFGEM obligation, because they are buying in a greater proportion of renewables, they are also selling the surplus back to the market, as their Annual Accounts make clear:
In short, OVO are doing nothing that other energy suppliers are not already doing.
Last year, the cost of subsidising renewable energy was estimated at £8.4bn. With renewable output amounting to 98.8 TWh, this works out at an astonishing £85/MWh.
If OVO’s customers had to pay their full share of this, I doubt there would be many left!
For anyone at risk of being beguiled by OVO’s green credentials, I would also advise they take a close look at the Annual Accounts.
Despite increasing customer numbers, the company is still mired in losses, with another £16.8m disappearing down the plug hole in their latest set of accounts for 2016.
Losses accumulated since the launch in 2009 now total £83m.
The only thing keeping OVO afloat at the moment, apart from bank loans, is what is innocuously termed “Deferred Income”.
In fact this is funded from upfront payments from customers:
As I understand it, money owed to customers in the event of an energy supplier going under is guaranteed by OFGEM.
But I certainly would not want to take the risk.
via NOT A LOT OF PEOPLE KNOW THAT
April 4, 2018 at 12:36PM