Insights and News /

14 April 2021

Renewable tariffs in the UK: what makes a tariff green?

Vladimir Parail

Vladimir Parail
Director | Economic advisory | London

Over a third of households in Great Britain (GB) could be on electricity tariffs marketed as green. However, many households are confused about what it means to be on a green tariff. 

There are two main ways GB electricity retailers source renewable energy: either directly through power purchase agreements (PPAs), with accompanying certificates of origin, or from the wider wholesale market, purchasing certificates separately to certify that power as renewable. The purpose of certificates is to verify the origin of renewable energy, whereas PPAs are contracts to purchase energy directly from generators.

Using data provided by a number of suppliers, this article explores differences in how suppliers justify the tariffs they market as green, and draws out the economic implications for financing of renewable generation and the green transition.

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