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Green tariffs explained

This green tariffs buyers' guide outlines the different types of green tariff available.

As well as getting the cheapest energy deals, you might want a green one – a tariff that uses energy from renewable sources.

When you compare energy tariffs with us, you can choose to see only green tariffs (although the good news is that all energy companies have to supply at least some of their energy from green sources anyway).

What is green energy?

In practice, green tariffs refer to electricity only. Gas is a fossil fuel so it's not a green fuel, as once burned, it can't be replaced.

There are several types of green energy:

• Solar power – converting the sun's energy into electricity.
• Wind power – using wind turbines to generate electricity.
• Hydroelectric power – using the flow or water from rivers or dams to generate power.
• Tidal/wave power – using the energy in sea water movement to create energy.
• Biomass – burning natural materials to create electricity.

So what is a green electricity tariff?

A green tariff does not mean that the energy coming into your house is directly generated from these sources.

It will often mean that the supplier matches your demand against the creation of energy from a renewable source.

But it might, instead, mean that the supplier invests in a wind turbine, or in projects to offset household CO2 emissions.

Green tariffs come in three main types. Some suppliers offer tariffs of each kind.

Green source tariffs

With these tariffs, for every unit of electricity you buy, your supplier will guarantee to buy a set amount from a renewable generator that uses one of the types of energy listed above.

Green fund tariffs – renewable energy

The supplier doesn't buy renewable energy directly. Instead, they support the construction of renewable sources, such as a wind farm, that creates renewable energy.

Green fund tariffs – other types

With this type of tariff, the supplier will support environmental causes, research projects, or make a donation to 'offset' the impact of your CO2 emissions.

Who offers green tariffs?

Only green tariffs

Some companies only offer green tariffs. These include:

• Good energy
• Green Energy UK
• Ecotricity

Green tariffs as an option

Others offer green tariffs as an option, including big names like:

• British Gas
• EDF Energy
• E.ON
• npower
• Scottish and Southern Electricity
• ScottishPower

Green tariffs are likely to cost slightly more than standard ones.

Understanding green tariffs

As a consumer, a green tariff is just like any other one. But the environmental claims are harder to understand and assess – which might be why only one per cent of us use a green tariff.

Electricity suppliers already have to buy a certain proportion of renewable energy – this was 9.1%in 2008-09 and is set to rise each year. However, there is a mechanism that allows them to pay money not to meet this target.

Green tariff rating schemes will be good news

So far, there has been no independent way to assess tariffs to see just how green they are.

So sometimes it's been hard to see whether a green tariff means more renewables are used than would have been used anyway.

However, there's good news on this front.

Ofgem, the energy market regulator, will let you see at a glance how green tariffs are when you compare electricity prices.

Green tariffs brought to you by LowerMyBills from Experian

The LowerMyBills buyers' guide to green tariffs was created to help you understand the different green tariff types for electricity – the sources of green energy, types of green energy tariff, and suppliers of green energy tariffs- giving you the information you need to choose the right green tariff for you.

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