Ovo Energy Calls For An End To Industry-Wide ‘Greenwashing’

Ovo Energy has embarked on setting out a new plan this month aimed at decarbonising homes and investing in renewable energy. The energy supplier is calling for an end to the systematic greenwashing in the UK’s energy industry and has proposed a new kitemark system to recognise genuinely green energy deals as well as the creation of the Ovo Green Skills Academy to create 15,000 jobs.

The new kitemark system will help customers identify which tariffs directly support decarbonisation or the generation of renewable energy. Research commissioned by Ovo shows that at the present time 68% of energy consumers do not believe marketed tariffs offering greener energy are genuine offers. With Ovo’s new system only tariffs which fund new green renewable supply would be eligible for the kitemark. 

The research undertaken by Ovo Energy also revealed that 81% of people incorrectly believe that ‘100% renewable electricity’ tariffs help fund new renewable projects when many have no positive effect on the environment at all.

Ovo Energy which took over SSE PLC (LSE: SSE)’s retail wing in 2020 to become one of the UK’s largest suppliers, has said it will no longer invest in Renewable Energy Guarantees of Origin (REGO) certificates, which are meant to clarify that power comes from sustainable sources.

Ovo commissioned Cornwall Insight to investigate the role of REGOs in the renewable energy system in the UK.  The research showed that REGOs provide little to no benefit to renewable energy generation, and rather than help will soon become a drain on customer finances if they are continued to be used. REGOs are starting to become more expensive and nearly £10 billion could be spent on them by 2030.

Ovo Chief Executive Raman Bhatia said:

“It’s time to expose our industry’s dirty secret and face some hard truths. The energy mix that actually flows into consumers’ homes is the same whatever tariff they choose. At best, these tariffs including REGOs run the risk of giving customers a good but misleading feeling about being green.”

Raman Bhatia has warned that without bolder action from the government and energy industry to make homes greener and more efficient, the UK will miss its net zero goals.

He is arguing the case for suppliers to encourage and re-incentivise their customers to improve the energy efficiency of their home, reduce energy usage, and to make the switch from gas to electricity.

Currently, 85% of UK households are heated by gas and the country’s housing stock is among the least energy efficient in Europe.

Ovo Energy says that changing the industry-wide practise of greenwashing could have the effect of refocusing UK efforts on the decarbonisation of UK homes and renewable energy investment. In the long run this could save customers money on their energy bills, using and spending less.  

Ovo currently offers ‘100% green’ tariffs, alongside the likes of British Gas, E. ON and Octopus Energy which claim to source household energy from renewables or otherwise offset emissions.

Ovo Energy is planning to divert investments into domestic solar and wind projects rather than spending on REGOs. The energy supplier has announced plans to scrap the ‘100% green’ tariffs backed by certificates by next month. It’s also asking its rivals to do the same using the argument that energy prices are high because the UK is still dependent on fossil fuels sourced from overseas.

Ovo proposes to focus on decarbonisation of the home and solving the problem of Britain’s coldest and leakiest homes in Europe. Britain’s homes lose heat up to three times faster than other European countries. Ovo recognises that many customers are unable to afford the green technology that would help them cut costs and reduce unnecessary energy usage and that the UK is under skilled when it comes to installing new green technology at scale.

Ovo welcomes the government’s commitment to insulate an extra 300,000 of the country’s least efficient homes but say that this is not addressing the problem nearly fast enough. Improving energy efficiency, including home insulation, and increasing the UK’s renewable energy supply is the only way to lower the cost of energy in the long term and ensure a secure energy supply as well as respond to the threat of climate change.

If renewable tariff certificate practises are changed this will drive savings back into the UK economy which will allow valuable expenditure to be reinvested into decarbonisation and home upgrades such as insulation.

Ramon Bhatia declared his plans at the Tate Modern in London at an event backed by Friends of the Earth, Cornwall Insight, Ethical Consumer and Energy Saving Trust.

He said:

“I am the chief executive of an energy supplier, and I want our customers to use less energy. I want them to pay us less for their heating, lighting, and power each month. And I want us to help get the UK back on track to meet our climate targets, which demand a 78 per cent reduction from 1990 levels by 2035.”

Ovo is going to launch ‘Path to Zero’, a customer plan which will go further than any other energy supplier to help people cut carbon emissions and costs in their homes. The support for customers will include free or heavily discounted low carbon tech like smart thermostats, advice to improve home insulation, free tracking and support understanding energy usage, and being paid for shifting energy use to greener and cheaper times of the day. Ovo plans to provide customers with energy insights, advice on how to reduce unnecessary energy usage, upgrade or improve their boiler, and use energy efficient technology. 

Ovo also announced a new £10 million Green Skills Academy to help the UK deal with the green skills shortage including the creation of 15,000 jobs. Ovo’s aim is to develop a greener workforce by bringing together future skills, education, and apprenticeship programmes in the decades ahead to speed up the installation of thousands of heat pumps, solar and EV chargers in UK homes. 

The need for a national drive towards a decarbonised heating system has never been greater. The latest report from the Intergovernmental Panel on Climate Change (IPCC) has made it clear that fast and significant change is required. The report outlines a ‘climate breakdown’ and calls for a commitment to reach net zero by 2040 rather than a decade later.