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OVO’s Fake Renewable Claims

April 4, 2018

By Paul Homewood

 

 

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https://youtu.be/0ItpotxmU8Q

 

I think all of us in the UK have probably seen this advert from OVO Energy in the last few weeks, which claims to promise customers that all of their electricity will come from renewable sources.

Of course, as OVO themselves readily admit this cannot literally mean that each home only gets renewable energy. That would be silly, as their website makes clear:

Even if you’re paying for 100% renewable electricity, no supplier can guarantee that the electricity coming into your home is from a renewable source. That’s because it all gets pooled in the National Grid – dirty and green alike.

Think about the National Grid like a motorway where cars (electricity) come on at different junctions (various sources) and leave at different exits (homes and offices). Once electricity is in the grid, there’s no way of knowing where it came from.

However, when you choose renewable electricity, you make a positive contribution by putting more ‘green’ cars on the ‘energy motorway’ – and help us to progress towards a cleaner, greener future.

These ‘green cars’ are essentially certificates (REGOs and GoOs) that we buy on your behalf. So although it’s not possible to know whether the electricity that ends up in your home is from a renewable source – we can guarantee that every unit you use will be replaced on the network by a unit of renewably sourced electricity.

[REGOS are] certificates to prove that we’re getting our electricity from renewable sources when we say we are.

Ofgem, the energy regulator, gives out one REGO (Renewable Energy Guarantee of Origin) certificate per megawatt hour (MWh) of renewable electricity that we supply. The same goes for GoOs (Guarantees of Origin) but these come from European participants in the Association of Issuing Bodies.

https://www.ovoenergy.com/green-energy

I don’t have a problem with that. But, more to the point, they cannot even guarantee that they are buying enough renewable electricity to match their sales at every hour of every day.

All they claim to do is buy in enough over the course of the year to balance their books.

This, of course, is a common scam amongst green energy suppliers. But there is one other aspect of their website advertising that is even more misleading. Let’s look again at this statement:

“We can guarantee that every unit you use will be replaced on the network by a unit of renewably sourced electricity

I can only see one way in which this can be interpreted – that if you don’t sign up for this offer, every unit you would otherwise use would come from a non-renewable source.

In reality, even if OVO went bust tomorrow, all of this renewable power would still in all likelihood be sent to the grid, and sold on the market.

OVO are effectively saying that every new customer signed up will lead to more renewable electricity being generated, which is a nonsense because there is only a finite amount of renewable capacity.

 

There is a second misleading statement as well:

These ‘green cars’ are essentially certificates (REGOs and GoOs) that we buy on your behalf

In fact, as OFGEM explain, all electricity suppliers have an obligation to buy these certificates:

The Renewables Obligation (RO) places an obligation on licensed electricity suppliers in the UK to source a proportion of their supply to customers from eligible renewable sources.

Although OVO may buy in more ROCs than the OFGEM obligation, because they are buying in a greater proportion of renewables, they are also selling the surplus back to the market, as their Annual Accounts make clear:

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https://beta.companieshouse.gov.uk/company/06890795

 

In short, OVO are doing nothing that other energy suppliers are not already doing.

Last year, the cost of subsidising renewable energy was estimated at £8.4bn. With renewable output amounting to 98.8 TWh, this works out at an astonishing £85/MWh.

If OVO’s customers had to pay their full share of this, I doubt there would be many left!

For anyone at risk of being beguiled by OVO’s green credentials, I would also advise they take a close look at the Annual Accounts.

Despite increasing customer numbers, the company is still mired in losses, with another £16.8m disappearing down the plug hole in their latest set of accounts for 2016.

Losses accumulated since the launch in 2009 now total £83m.

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The only thing keeping OVO afloat at the moment, apart from bank loans, is what is innocuously termed “Deferred Income”.

In fact this is funded from upfront payments from customers:

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As I understand it, money owed to customers in the event of an energy supplier going under is guaranteed by OFGEM.

But I certainly would not want to take the risk.

19 Comments
  1. April 4, 2018 5:58 pm

    The blind leading the blind. Or variations there upon.

  2. Harry Passfield permalink
    April 4, 2018 6:02 pm

    The only thing keeping OVO afloat at the moment, apart from bank loans, is what is innocuously termed “Deferred Income”.
    In fact this is funded from upfront payments from customers

    In other words, a Ponzi scheme. Another Madoff in the making.

    • Hivemind permalink
      April 5, 2018 2:59 am

      Technically, no. A Ponzi scheme is a specific type of fraud. This is a genuine (if bad) trading company. Of course, if I was a director, I would be asking about the risks of trading while insolvent.

    • Gerry, England permalink
      April 5, 2018 10:00 am

      No, all the small suppliers do it to fund their operation. Paying up front is not illegal – do you not pay your car insurance at the start of the year? The small suppliers do live close to the edge and I was with GB Energy when they went down. Everything transferred to Co-op Energy, including the tariff which did surprise me. After the contract period ended Co-op were charging more so I switched. What small suppliers might do is put up your direct debit for dodgy reasons to increase their cashflow. They will always undercut the big 6 as they are not required to fund the warm home scheme.

  3. J Martin permalink
    April 4, 2018 6:59 pm

    If other suppliers are marketing similar eco energy packages, they could all be selling the same eco energy, selling the same thing twice. So if x GW of so called renewable energy enters the system in the course of a year but the total eco energy promises of the suppliers add up to say 3 times X, then they are being less than honest.

    In any case the only real eco energy in the UK comes from nuclear and some hydro. Wind and solar do not pay back the energy invested in them, and Drax won’t break even with coal for 40 years at least.

  4. HotScot permalink
    April 4, 2018 7:09 pm

    Thank God I’m not alone.

    Talk about an offensive and misleading advert. I rarely watch TV these days (Rugby & Motor racing excluded) but have had this crap thrust upon me. It might be OK for the congenitally moribund populous that laps up this drivel, but like most of us on this site, I’m appalled the ASA allow such misleading adverts.

    The only consolation is that the advert begins with the phrase “I don’t believe in climate change” (paraphrasing) before the shot slowly pans across stricken white goods on a beach, lapped by waves, before finishing on the ultimate of wasteful white goods, a gleaming wind turbine.

    The irony is so palpable it’s painful.

  5. April 4, 2018 8:16 pm

    I disagree with Paul on a few things
    but first the small print on the Ovo TV ad,and in the newspaper ads must break fair contract rules cos it’s visible for so little time, or so small you can’t read it.

  6. April 4, 2018 8:39 pm

    Paul says “OVO are effectively saying that every new customer signed up will lead to more renewable electricity being generated,which is a nonsense because there is only a finite amount of renewable capacity.”

    Nope, Ovo are idiots but they do seem to try to make contracts with Renewable Subsidy Mafia corps , so they are genuinely increasing pseudo-renewables above the level the gov stipulates

    It would not surprise me in the least if Ovo cheated by buying certificates on your behalf AND sold them on aswell .
    They’d get away with such double accounting, cos these days all you have to do is be on the lib/left side and you can get away with stuff.

    So Ovo claim 100% renewable via certificates
    So what about from regular suppliers ? 47% ! is their Renewable Obligation
    “2018-19 £47.22 0.468%”
    https://www.ofgem.gov.uk/publications-and-updates/renewables-obligation-ro-buy-out-price-and-mutualisation-ceilings-2018-19-ro-year
    Imagine switching to Ovo say it pushes your £1,000 bill up by £X hundred
    Actually for you old bill £470 was renewable , and £530 wasn’t
    So making that last £530 renewable… costs you an extra £X hundred

  7. Paddy permalink
    April 5, 2018 6:22 am

    I haven’t seen the advert , nor do I wish to, so therefore have not watched the clip, with the result that my blood pressure is (relatively) normal.

  8. Phoenix44r permalink
    April 5, 2018 7:40 am

    I’m not sure they are “afloat” – and the balance sheet doesn’t show any loans.

    The deferred income has to be offset against costs before it can be cash to pay suppliers, and the current assets are only £80m against current trade liabilities of £113m. There doesn’t seem to be any actual equity either, and the whole thing is balanced by £8mifintangible assets – perhaps worthless trademarks and stuff like that – and deferred tax of £14m which is probably worthless.

  9. Coeur de Lion permalink
    April 5, 2018 8:11 am

    Ponzi?

  10. realist10 permalink
    April 5, 2018 12:53 pm

    “I think all of us in the UK have probably seen this advert from OVO Energy in the last few weeks, which claims to promise customers that all of their electricity will come from renewable sources”.

    “Of course, as OVO themselves readily admit this cannot literally mean that each home only gets renewable energy. That would be silly, as their website makes clear:”….

    “This, of course, is a common scam amongst green energy suppliers.

    Paul, Possibly Ecotricity is yet another of these types of renewable energy suppliers, who fall into this category as well?

  11. realist10 permalink
    April 5, 2018 2:12 pm

    Renewable energy supplier “Bulb” like OVO as well…..

    “Renewable IS unstoppable, nice one Ovo”…

    “We saw Ovo’s new campaign this week. We really liked it and wanted to say nice work. So, nice work Ovo, and Uncommon, the agency that made that ad”.

    “Not enough people switch to renewable energy, so everything that helps people switch is great. Let’s get as many people as possible to go green”.

    “If you haven’t seen it yet, here it is”.

    “As more people switch to a 100% renewable electricity, more renewable generation will need to be built. So we all make a difference when we switch. Click here to find out how renewable your supplier is: http://electricityinfo.org/fuel-mix-of-uk-domestic-electricity-suppliers/

    To see Bulb’s list “Here’s a quick list of all the 100% renewable suppliers”

    click https://bulb.co.uk/blog/renewable-is-unstoppable-nice-one-ovo

  12. jim permalink
    April 5, 2018 4:40 pm

    Electricity suppliers who have no generation interests are purely a billing and risk management operation. To manage the risks they face they need to have deep pockets. None have, which is why this is a mugs game, they all go bust, it is inevitable.

  13. It doesn't add up... permalink
    April 6, 2018 8:57 pm

    Do they buy their green certs out of UK generators, or do they simply do like the Dutch, and buy them from any country with a surplus to sell, such as Norway? If the latter, then their claim to increase green generation is false.

    • April 8, 2018 6:40 pm

      Yes Could be outside UK
      “Renewable Energy Guarantee of Origin (REGO) certificates issued by the energy regulator, Ofgem
      * or Guarantees of Origin (GoO) issued by the relevant European issuing body that are members of the Association of Issuing Bodies (AIB). *
      Every unit of renewable electricity generated in Great Britain is given a REGO Certificate and every unit of renewable electricity generated by members of the AIB is granted a GoO. For each compliance year,

      we buy certificates to prove that we supply renewable electricity to our Green Electricity Add-On Customers. The purpose of the certificate is to prove that energy was produced from renewable sources. ”
      https://www.ovoenergy.com/terms/green-energy-add-on
      I don’t understand how they can claim to be 100% renewable on their ads , and then offer an upgrade to 100% for £5 extra
      Their website homepage offers you 33% renewable or 100%

      https://www.ofgem.gov.uk/environmental-programmes/rego/about-rego-scheme

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