Renewable energy provider exempted from price cap for supplying 100% green electricity

Ofgem says Good Energy can continue to charge customers a premium because bosses are able to trace all their renewable electricity direct to its source.

Good Energy uses power purchase agreements, which involve buying electricity directly from wind farm and solar generators (Getty/iStock)

Renewable energy supplier Good Energy has won a permanent exemption from the Government's flagship energy price cap, the company has announced.

Regulator Ofgem said the company could continue to charge its 250,000 customers a premium because bosses at Good Energy were able to trace all their renewable electricity direct to its source.

The average cost of a Good Energy tariff is around £1,422 a year - compared with the price cap average of £1,254.

Suppliers who claim to offer “100 per cent green” energy tend to buy the majority of their electricity on wholesale markets, then buy certificates called “REGOs”, which guarantee the equal amount of electricity created from fossil fuels is matched by renewable generation.

However, Good Energy uses power purchase agreements, which involve buying electricity directly from wind farm and solar generators.

Founder and chief executive of Good Energy, Juliet Davenport, said: “Our tariffs genuinely support the growth of renewables and clean technologies. And because our customers have actively chosen to contribute to that support.

“If we are going to tackle climate breakdown, individuals must be empowered to choose to be part of the solution. We know customers want the ability to make that choice, and recently it has been complicated by energy companies taking shortcuts to offer cheap 'green' tariffs.”

Regulator Ofgem had initially given Good Energy a temporary exemption in January when the cap was introduced. This lasted until the end of March, but was extended until September, and was finally made permanent.

Ofgem said the decision was made because it recognised customers on Good Energy's standard variable tariff (SVT) had chosen to be on it, unlike customers who have been on SVTs for several years without necessarily knowing.

Officials added that the support for renewables provided by the extra cash is “materially greater” than “regulatory mechanisms”.

PA