Wednesday August 4, 2021

The Renewable Energy Guarantees of Origin (REGO) scheme was designed to provide consumers with transparency about the portion of electricity their suppliers source from renewable generation.

How do REGOs work?

Renewable energy generators are issued with one REGO certificate for every megawatt hour (MWh) of renewable output. This certificate is then sold with an energy contract to prove to the final customer that a share of their energy was produced from renewable sources.

Why are REGO prices rising?

In recent weeks the cost of REGO certificates has increased dramatically, leading to rising renewable electricity contract renewal prices. There are a number of factors driving the increases, including:

  • Lower levels of renewable generation than expected in the UK in the 2020–21 period, reducing the number of REGOs available on the market
  • Higher levels of demand for renewable electricity
  • End-of-year purchasing by suppliers to meet their obligations
  • Uncertainty surrounding the acceptance of European Guarantees of Origin certificates (GoOs) in future
  • Increase in wholesale electricity prices that continue to recover to pre-pandemic levels

These factors mean that customers securing renewable electricity contract renewals are likely to see their prices increase.

Are REGOs used for greenwashing?

REGOs have faced criticism for allowing greenwashing. This is because some suppliers buy power on the wholesale market, which is a mix of all sources including fossil fuels and nuclear. They then separately acquire REGOs to label this power ‘green’. Scottish Power and Good Energy have recently called for regulatory reforms to close these “loopholes” in the market.

Despite these calls for reform, a recent Cornwall Insight’s survey found that 74% of participants felt there had been no improvement in REGOs regulations.

How can EIC help?

The sharpest insights are crucial in today’s volatile markets. We work to ensure that our clients are aware of key market movements and are ready to capitalise on every opportunity.

The EIC Market Intelligence team has extensive knowledge of the electricity and carbon markets and the fundamentals driving them. Interpreting this information is a key component of a successful energy management strategy.

EIC can help your business stay ahead of the curve with market insights and smart procurement so you can make energy management decisions with confidence. To learn more, contact us at EIC today.

Share this Post:

Recent News