My OVO electricity is 100% from renewable sources so why do global gas prices affect my electricity bill?

Hey there @Buzby !

It’s a bit complicated to answer this one, but the details about OVO’s Fuel Mix sheds some light here. Roughly half of it on the last declaration was from natural gas which has been significantly impacted by price increases on the wholesale market. The prices for electricity and gas in general are closely linked so changes to one will often affect the other in some form. This blog post also helps to explain OVO’s fuel mix a bit further as well.

I hope this helps. I’m only a forum volunteer myself so I can’t speak on behalf of OVO in any official capacity, but I try to double check everything before responding.

OK, I’ve been reading a bit more about the ‘mix’, and think I understand, nearly.

OVO need to supply, say, 100 units of renewable energy to their customers.

They buy, say, 80 units from genuine renewable sources.

They buy the remaing 20 from ‘dirty’ sources.

To comply with advertising 100% renewable, OVO then pay a third party the value of 20 units of green energy which has been generated, and used, somewhere else in the World.

Doesn’t this mean OVO, and their customers, are paying twice for the ‘dirty’ part of the mix ?

And the third party generator gets paid twice !

An alternative way of looking at the energy mix and being able to compare suppliers is to look at the energy mix data each supplier has to provide as part of the ofgem regulations.

This is one of the websites that has collated the information and presented it in a table. 

https://electricityinfo.org/fuel-mix-of-uk-domestic-electricity-suppliers/

I quite like this as it is consistent across suppliers so i personally think easier to compare suppliers over time.

I don't personally particularly like REGOs. I think they can be too confusing for many customers as can be seen from the number of queries that regularly crop up. 

My OVO Account is coming up for renewal and will be a huge increase on what I am paying now. Naively I thought my energy came from renewable sources and therefore would not increase greatly. What am I missing?

This is a great question, @Arty80 and we’ve actually responded to this one recently so I’ve moved your comment over to this relevant thread, check out our advice below:

Let’s break this down into two areas and talk about renewable energy generation first, and then touch on how energy is priced for energy suppliers here in the UK. We’ve got some help from a few different teams to get you OVO’s take on this!

The UK has made great progress to decarbonise the power sector with cheaper and more affordable renewable energy now making up almost half of the electricity generation across the UK. 

Currently, no matter what supplier you use, a home won’t actually run on 100% renewable electricity. Electrons generated by all sorts of technologies, including fossil fuelled power stations, mix together and travel through the electricity grid to the end customer.  Apart from being off-grid and having renewable microgeneration, there is currently no way to put exclusively renewable electricity into a home.

To support your 100% renewable energy tariff, we make sure that the amount of electricity you use is matched with renewable energy generation on the grid through purchasing certificates and from contracting with wind farms directly.

As there aren’t separate markets for green and non-green energy sources, there’s one wholesale price for electricity at any given time. This means that when the cost of electricity produced by burning gas goes up, so does the cost of electricity from renewable sources such as wind and solar.

There’s a few other elements of electricity pricing which can get fairly complex. We’ve touched up this in another related forum thread which you might find interesting, here. More info on this in our latest blog post here, and our FAQs, here.

Hope this helps explain why even renewable energy prices are affected by wholesale gas costs. You might also be interested by this recent AMA thread:

I understand why gas tariffs are increasing so much due to the wholesale price of gas, but why are electricity tariffs increasing so much (around double on the 2 year and 3 year fixed plans I’ve been quoted)?

From my understanding OVO Energy electricity is sourced 100% from renewables so in theory should not be subject to the massive hikes in generation costs caused by the wholesale price of gas increase.

A reasonable question, @Peejay - and I’d agree with everyone @Blastoise186 has outlined.

One thing that wasn’t covered but was discussed on another thread (I sadly can’t find the conversation to share it with you today), relates to how energy is priced. I’m not an energy trading / pricing expert but having spoken to our team on this earlier in 2021, I can recall how mechanisms for the live pricing of energy impacts the overall price per kWh that suppliers pay.

High wholesale natural gas prices therefore do impact electricity prices so long as it’s used to generate some of the national grid’s energy mix. 

Quoting Jess_OVO from another thread on high renewal prices:

“wholesale natural gas prices have been pushed up by many factors.

They’ve been rising across the globe, caused by lots of things – like a slowdown in wind energy, the UK’s relatively low levels of gas storage capacity, and economies switching back on again after Covid-19.

Unfortunately, this is affecting all energy suppliers. You can read more about all this in our blog post here and our FAQs here.

If you are worried about the impact of these price increases there are lots of ways we can help, so do call us if you’re struggling. The Ofgem website outlines helpful resources too. And the following organisations offer brilliant support if you need help with energy-efficiency and bills. 

• Citizens Advice offers free and impartial advice.
• Step Change is a debt advice charity that can give you free help and advice.
• Centre for Sustainable Energy can give you free, tailored advice on saving energy.
• Energy Saving Trust has lots of free practical help with cutting energy waste and bills.”

Think I found the related topic that was mentioned, @Peejay - and have moved your comments over so this should make the thread easier for others to find too.

Check out the Best Answer given above for more details on why renewable electricity prices are also affected by the rising gas wholesale costs.

On a related topic why have your standing charges doubled?

Hi @LordVader1964 ,

I’m Blastoise186, one of the forum volunteers here. I don’t work for OVO myself.

Firstly, may I please ask that you try to keep everything in a single post to help reduce the notification flood for other forum members.

The existing Best Answer on this thread already answers your questions. I’m on my phone right now and can’t respond properly, but I will post a full reply when I get home.

I can also vouch for the fact this is not mis-selling as the entire scheme OVO is using here is fully regulated and managed by Ofgem themselves and is in full compliance with their rules. Ofgem is well aware of many suppliers who make these claims and there’s no sign they have a problem with it, provided the supplier is being honest. I have yet to see any such dishonesty myself and I monitor a lot of suppliers. If you want to know more, I’d recommend searching Ofgem for the Renewables Obligation Scheme.

As for the standing charges, that’s actually better in another thread. But in short, supply costs have shot up in recent months and OVO is merely passing on those costs.

To be honest, if all suppliers were to take on that gesture, it’s highly likely that even more suppliers would have failed over the last 12 months. We’ve already lost around 1/3 of the market since January 2021, I don’t think forcing suppliers to squeeze their profit margins even more would benefit anyone.

The additional standing charges are a cost of supplying the energy anyway, so there’s not really any scope to absorb the cost as a goodwill gesture of any kind, that will simply kill off even more suppliers - and just about every supplier is already “subsidising” pretty much every customer on a Variable Rate Tariff, despite the fact that the Ofgem Default Tariff Cap is not designed nor intended to make suppliers provide subsidies to customers on those tariffs.

As painful as it may be for you as a customer, you should consider whether it’s really fair to make it even more painful for suppliers. More suppliers going down makes the market even worse which ultimately means you lose out as well.

I am indeed a forum volunteer and an OVO member. I just happen to know a lot about this sort of thing as a result of being on here for a while now, which has resulted in me gaining a lot of trust from the community. I don’t work for anyone in the energy industry either.

My writing style may sometimes make it seem like I’m an employee though, which is one of the reasons I often give people a heads up about my volunteer status. All the staff on this forum have tags that help you tell them apart, such as with @Tim_OVO .

I haven’t had an email yet, did it give the night rate increase as well