Energy firms must stop greenwashing and build a system fit for the future

Raman Bhatia, CEO of OVO. As featured in The Times’ Red Box.

The winter of 2022-23 will be remembered as one of the toughest in our recent history. Now, as we come through the other side, Britain must make long-term reforms that keep the cost of energy down. Consumers should not have to rely on another expensive sticking plaster such as the government’s energy price guarantee.

Often the cost of energy and net zero energy are talked about as two separate debates. But in reality they are two sides of the same coin. Energy is expensive in Britain because we are still too reliant on fossil fuels and thus exposed to high international gas prices. Energy is also costly because we consume too much of it; our homes are the least well insulated in Europe and we use too much of it at the wrong times of day.

So we need to generate more renewable energy here at home – and we need to consume less energy in the first place. The goal is clear. The real question is how we get towards that goal.

A big part of the solution lies with my industry. 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 per cent 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 any more. The energy mix that actually flows into consumers’ homes is the same whatever tariff they choose. And new research we are publishing from Cornwall Insight shows that these tariffs do little to support additional renewable energy generation into the grid.

At best, these tariffs run the risk of giving customers a good but misleading feeling about being green. At worst, they are an active distraction from the real steps we need to make energy greener and cheaper. If we don’t take a new approach then we risk failing to get to net-zero which would be a climate catastrophe.

OVO is prepared to play its part. We are launching our path to zero plan today which is all about practical steps rather than bombastic rhetoric.

We will reduce the demand for energy by helping people in the home, supported by technology such as our award winning energy tracker

We will assist customers with shifting energy usage to greener times of the day. We will launch a fund for developing green skills that will train a generation to install heat pumps; critical if we are to get fossil fuel guzzling gas boilers out of people’s homes.

OVO has also taken the decision to dispense with the outdated REGO system. We will spend the money instead on wind and solar projects that we know will generate the renewables we need. We call on the rest of the industry to do the same.

The government can also step up too. It is time to demystify what a green tariff really means, so that consumers can make informed choices. It should also take measures to accelerate the decoupling of electricity prices from wholesale gas — as well as shifting green levies from electricity to gas, ensuring that the right price signals are in place for customers to reduce their dependence on fossil fuels.

With the crisis of last winter fresh in our minds, we must resolve now to build an energy system that is greener and cheaper. Enough then of greenwashing and marketing ploys. It is time to do the hard yards.