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Energy explained

A look at how the energy industry is changing

Burbo bank

The energy industry is getting greener. When Bulb started, 1% of UK households were on renewable tariffs. Now that number is 30%. We’re really pleased more people are talking about what it means to be with a renewable supplier now. In this post, we unpack the world of green energy and explore what it could look like in the future.

Bulb’s electricity is 100% renewable

If you’re wondering how electricity can be renewable when suppliers don’t change pipes or wires into your home, you wouldn’t be alone. We sometimes get asked this when members switch to us. So here’s the thing - energy suppliers don’t deliver electricity directly to your property. Unless you produce your own energy using solar panels, everyone gets the same electricity from one big melting pot. The pot is filled with electricity based on the choices of suppliers, working on behalf of their customers. So for example, as you’ll see in the diagram below, from April 2019-2020, this melting pot of electricity was made up of 39% natural gas, 38% renewables, 17% nuclear, and 4% coal. National Grid owns the national electricity transmission network. From there, six other companies own distribution networks, which take electricity and deliver them to your home. Those are the pylons and wires you see up and down the country.

Energy suppliers buy energy on your behalf. Because of the electricity ‘melting pot’, in practice, this means no energy supplier can guarantee whether an electron that is helping to boil your kettle was made by a wind turbine, or a coal plant. This is a good thing. It’s more efficient for us all to use the same ‘pot’ of electricity, and means networks can use the most local form of electricity. They don’t have to transmit it over long distances, which would be inefficient, and create more carbon emissions.

Non-green suppliers will buy electricity from non-renewable sources, like gas. And green energy suppliers like Bulb buy electricity from renewable sources. This ensures money from your energy bills goes to renewable generators. The more people choosing to switch to green tariffs, the more money goes towards green generators. This helps make the grid greener over time.

Bulb UK's fuel mix v. UK fuel mix
In the UK, 100% of our electricity is renewable, sourced from wind, solar and hydro. We don’t buy any electricity from biomass or landfill gas. Data is for the latest fuel mix disclosure year, April 2019-2020. Sources: BEIS Energy Trends, 2020 and Bulb’s UK fuel mix,

There are two ways to buy renewable electricity (and we do both)

Imagine you own a wind farm. You can choose to sell the power you make in two different ways. One is through a contract, known as a ‘Power Purchase Agreement’. The other is selling on to the ‘wholesale market’, which means you’re guaranteed to be paid the price of electricity at the moment you sell it.

Because you own a wind farm (a type of renewable electricity) you also have a second product you can sell. This is called a Renewable Electricity Guarantee of Origin certificate (or ‘REGO’), which is awarded to generators by the energy regulator, Ofgem. A REGO verifies that one unit of renewable electricity was made and put into the National Grid. If you owned a coal plant, you wouldn’t get any of these. Since generators choose to sell their products in both of these ways, at Bulb we choose to buy them in both these ways, too. This means every unit of electricity we buy can be traced back to a renewable source, whilst helping to provide more value to renewable generators.

And here’s where it gets a bit more technical (bear with us). At Bulb, we have PPAs with generators around the UK. But at the moment, there isn’t yet enough renewable electricity in the whole of the UK to provide electricity to all of our 1.7 million members through PPAs all of the time. This is because we can’t choose when the sun shines (to produce solar power) or when the wind blows (to produce wind power). With 1.7 million members, we can’t yet match their demand second by second. For that, we’ll need storage solutions, and new, smart technology (which we’re building) to balance the grid.

In future, we’ll increase the amount of electricity we source from PPAs. But at the moment, tariffs that provide energy from 100% PPAs aren’t affordable for millions of people. These tariffs are exempt from Ofgem’s price cap, which is designed to keep energy affordable. We don’t think anyone should be left behind in the race to net zero. So as well as providing green energy, we, and other larger suppliers install energy efficiency measures in low-income households, and help people with their energy bills through the Warm Home Discount. We want to make green mainstream, and we’ve fuelled an enormous growth in the demand for renewable energy.

We think it’s good that people are talking about where green energy comes from, and we’ve been asking price comparison websites to include information on green tariffs for several years. But we don’t think it’s as simple as PPAs are ‘good’ and REGOs are ‘bad’. The reality is that there are many ways to be green, and the debate about PPAs and REGOs is just one part of that.

We think there are other parts of the debate that aren’t being talked about. For example, we don’t buy electricity made from biomass, high impact hydro, or energy from waste. We don’t believe that’s renewable. You can read more about why in our electricity sourcing policy.

Some suppliers buy REGOs in summer when they’re cheaper, and use them to justify renewable tariffs in the winter. We don’t do that. We also don’t buy REGOs from overseas. We buy UK certificates from UK generators. We’re the only energy supplier with a target to reach net zero emissions across our entire business operations by 2030. And we’re the only large supplier to be a B Corp, which means we adhere to rigorous standards around sustainability, showing how business can be a force for good. We think the test of whether an energy supplier is green should go beyond individual tariffs, and look at how they operate their entire business for all their customers. We want to ensure green energy is affordable for and accessible to everyone.

100% carbon neutral gas through offsetting and green gas

As well as renewable electricity, we also provide 100% carbon neutral gas to all our members. We’re one of the biggest buyers of green gas in the UK: last year 3% of the gas we supplied was green gas made from renewable sources. But the market is still small, with only enough to meet around 1% of the UK's total gas demand. So we offset the emissions from the rest of the gas we supply by supporting carbon-reduction projects around the world. We’ve been offsetting the emissions from our non-green gas we supply since March 2019. You can find out more about our carbon neutral gas and we’ll share more about our offsetting partners soon. Ultimately we think the UK will move away from gas entirely and use electricity to heat our homes and further support the transition to net zero.

We’re one of the biggest buyers of green gas in the UK. And we offset the emissions from the rest of the gas we supply by supporting carbon-reduction projects around the world, including the Gola rainforest. Gola’s trees help lock away 41 million tonnes of CO2 a year.

Technology is transforming the way we use energy 

While it’s important to talk about how green energy is produced now, we believe the best way to reduce carbon emissions is to reduce the amount of energy we use today. We know it might sound a bit surprising coming from an energy company, but we want to help people use less energy. So we’re building smart energy technology to help our members manage and reduce their energy use.

When people understand how much energy they use, they’re more likely to use less. We install smart meters, which help people see their energy usage and costs in real-time through their In-Home Display, Samsung SmartThings, or the Bulb app

Bulb app energy usage
We show our members how much energy they're using through the Bulb app

We’ve also introduced a Smart Pay As You Go (PAYG) product that gives access to affordable renewable energy to prepay customers and allows people to track their usage and top up from the convenience of their mobile phones.

Our new technology for EV owners allows them to automatically charge their car cheaply overnight, when demand on the national grid is lowest. From the Bulb app, EV owners can also monitor their charging costs and compare them to a petrol or diesel vehicle. We’re trialling home battery technology with our members, and we’re looking at how EV batteries can be used to store energy generated at home, helping to balance the grid by taking more homes off-the grid during peak hours. We also pay members for the renewable electricity they generate at home through solar panels. And our Carbon Calculator helps people work out their carbon footprint and take steps to reduce and offset it.

We’ll also see huge changes in the way renewable energy is produced in the UK and around the world between now and 2050. You’ll see batteries that help balance electricity supply, more people generating electricity at home, and changes to the way we heat our homes, with better insulation, and using heat pumps instead of gas boilers. At Bulb, we’re developing technologies to accelerate the country’s journey to net zero and help our members lower their bills and carbon emissions.

Header image photo credit: Ørsted