The deal from Co-op Energy comes as green energy suppliers race to prove their sustainability credentials amid rising competition for eco-conscious customers and “greenwashing” in the market.
The energy supplier will charge an extra £5 a month over Co-op’s regular tariff to provide electricity from community energy projects and gas which includes a carbon offset in the price.
Co-op, which is operated by Octopus Energy after it bought the business from the Midcounties Co-operative last year, will source the clean electricity for its new tariff directly from 90 local renewable energy generation projects across the UK, including the Westmill wind and solar farms in Oxfordshire. It plans to use all profits to reinvest in maintaining the community projects and building new ones.
Phil Ponsonby, the chief executive of Midcounties Co-operative, said the tariff is the UK’s only one to be powered by 100% community-generated electricity and would ensure a fair price is paid to community generators too.
Customers on the Community Power tariff will be able to “see exactly where it is being generated at small scale sites across the UK, and they know it is benefiting local communities”, he said.
Co-op, which has about 300,000 customers, has set itself apart from a rising number of energy supply deals which are marked as 100% renewable, but are not as green as they seem.
Consumer group Which? has found that many suppliers offer renewable energy tariffs but do not generate renewable electricity themselves or have contracts to buy any renewable electricity directly from generators.
Instead, the “pale green” suppliers exploit a loophole in the energy market by snapping up cheap renewable energy certificates, without necessarily buying energy from renewables projects.
The certificates are issued by the regulator to renewable energy developers for each megawatt generated, but these can be sold separately from the electricity for a fraction of the price.
A survey conducted last year found that one in 10 people believe that a renewables tariff means that the supplier generates at least some of its electricity from its own renewable energy projects.
Ponsonby said the wind and solar schemes that generate electricity for the Community Power tariff “plough the profits they make back into their neighbourhoods or into helping other similar projects get off the ground”.
Greg Jackson, the chief executive of Octopus Energy, said being able to buy locally-sourced clean, green energy is “a massive jump in the right direction” which will help grow the UK’s green electricity capacity.
“Investing in more local energy infrastructure and getting Britain’s homes run by the sun when it’s shining and the wind when it’s blowing can end our reliance on dirty fossil fuels sooner than we hoped,” he said.
“Local people investing in local people means that we can all muck in and put the work in to decarbonise where governments and large companies are slow to.”