Green electricity for business

What a green business electricity tariff is

Electricity from wind farms, solar sites, hydro plants and fossil-fuel stations all flows into the same network, so no business can receive only renewable electrons through the grid. A green or renewable tariff instead means your supplier has matched the electricity you use with renewable generation and can show evidence of it.

The main forms you will see are:

• Certificate-backed tariffs: the supplier holds REGO certificates to match the electricity supplied to you.
• Tariffs linked to specific generators: the supplier buys from named renewable sites and backs that with the REGOs from those sites.
• Power purchase agreements (PPAs): larger users contract for output from a renewable project, either directly or financially. Fidelity Energy lists virtual power purchase agreements (VPPAs) among its procurement services.
• On-site generation: electricity you generate yourself and use on site. This reduces what you buy from the grid rather than changing your tariff.

These differ in how closely they link your money to renewable generation. None is wrong; they make different claims, and you should know which one you are buying.

How green electricity is evidenced: REGOs

The Renewable Energy Guarantees of Origin (REGO) scheme gives consumers transparency about the share of electricity suppliers source from renewables. Key points from Ofgem:

• One REGO certificate is issued per megawatt hour (MWh) of eligible renewable output to the generator.
• Ofgem administers the scheme for Great Britain on behalf of the Department for Energy Security and Net Zero, and for Northern Ireland on behalf of the Utility Regulator.
• The main use is Fuel Mix Disclosure. Licensed suppliers must tell customers the mix of fuels (coal, gas, nuclear, renewable and other) used to generate the electricity they supply, and REGOs evidence the renewable share.
• EU Guarantees of Origin no longer count in Great Britain. The EU stopped recognising UK REGOs from 1 January 2021, and from the disclosure period beginning 1 April 2023 EU Guarantees of Origin are no longer recognised for GB Fuel Mix Disclosure.

REGOs are traded separately from the electricity itself, so a REGO-backed tariff tells you the supplier has bought renewable certificates to match your use. It does not on its own tell you whether your purchase caused new renewable capacity to be built, which is why some businesses look further, at generator-specific tariffs or PPAs.

Fuel mix disclosure: reading the label

Your supplier publishes a fuel mix for the electricity it supplies, and may publish a separate figure for a green tariff. When you look at it:

1. Check whether the figure is for the supplier as a whole or for your tariff.
2. Check the period it covers. Fuel mix is disclosed annually, so it describes a past year.
3. Ask how the renewable share is evidenced: REGOs, and from which technologies and sites if the supplier will say.
4. Ask whether the certificates are matched to your supply or to the supplier's customers as a whole, and whether you can get a statement for your own reporting.

Green tariffs and Climate Change Levy

A renewable tariff does not remove Climate Change Levy. HMRC's exemption for renewable electricity only covers electricity generated from renewable sources before 1 August 2015. Electricity supplied on a green tariff today is charged CCL in the same way as any other business electricity, unless another relief applies, such as a Climate Change Agreement or qualifying use. See Climate Change Levy for business for who pays and the exemptions that remain.

VAT works in the same way as for other business electricity: standard rate unless the use qualifies for a lower rate, as explained on reduced rate VAT on business energy.

Making green claims about your business

If you plan to tell customers, investors or a tender panel that your business runs on renewable electricity, keep the claim matched to the evidence. The Competition and Markets Authority's Green Claims Code says environmental claims must be truthful and accurate, clear and unambiguous, and substantiated. In practice that means:

• Describe what you buy accurately, for example 'electricity matched with REGO certificates from renewable generation'.
• Keep the supplier's statement or certificate evidence for each reporting year.
• Follow your reporting framework's rules on renewable electricity, which your sustainability adviser or auditor can confirm.
• Treat green gas separately: it is evidenced by different certificates. See green gas for business.

Green electricity options at a glance

A PPA is a bigger commitment than a tariff. It usually runs for years, involves its own price risk and needs advice on how it sits alongside your supply contract. Fidelity Energy lists flexible procurement and VPPAs among its procurement services; see flexible energy contracts for how buying in portions over time works.

Questions to ask before choosing a green tariff

• Is the green claim for all of my electricity or a percentage of it?
• Is it backed by REGOs, and are they matched to my supply or to the supplier's customers as a whole?
• Which technologies and generators do the certificates come from, and from which period?
• Will I get an annual statement I can use in my own reporting?
• Is the green option a different tariff with its own unit rate and standing charge, or an add-on to my existing contract?
• What happens to the green element if the contract rolls over or ends?

Ask for the answers in writing. If a quote cannot answer them, that tells you something about the claim.

Who green electricity suits

Green tariffs suit businesses with a sustainability policy, customers or tenders that ask about energy sourcing, or reporting duties that need evidenced renewable electricity. Larger users with steady demand sometimes look at PPAs as well. Smaller businesses usually start with a certificate-backed tariff on a standard fixed rate contract.

To get a green quote, contact us with a recent business electricity bill and your MPAN. We introduce you to Fidelity Energy, which can ask the suppliers it works with for green options, and we help you check what evidence each offer comes with. To compare green offers across suppliers, see our sister site on comparing business energy.