What’s going on with REGOs?

Renewable Energy Guarantees of Origin, more commonly referred to as REGOs, are certificates issued to accredited renewable generators for every MWh of electricity they produce over a year period. The initial intentions of these certificates were to provide suppliers a means to prove the level of renewable generation they received and to avoid the ‘double counting’ of renewable generation on the system. Since their introduction, a new use for the certificates has arisen – providing a method for suppliers to sell tariffs with ‘green’ credentials, like ‘100% renewable electricity’. While initially limited in their usefulness beyond providing proof of green power procurement, they have become an integral part of green ESG criteria/claims across new industries. This combined with a widening consumer base has led to stark rises in their value over the past three years.  

While produced with accredited renewable generation, REGOs do not have to be traded alongside the power that they are generated with and can be traded as completely separate entities – in essence attributing the ‘greenness’ of the electricity to the provision of these certificates rather than generation source from which the electricity was bought from. These certificates were introduced in 2005 alongside an added obligation on suppliers to publish the generation sources of their supplied electricity on an annual basis, known as a Fuel Mix Disclosure (FMD). To prove a certain amount of their generation came from renewable sources, suppliers redeem these certificates to Ofgem within three months of the FMD year end.

When providing their FMD data to Ofgem, suppliers are not mandated to provide REGOs to cover all supply volumes. For any residual generation – generation which is not REGO backed and therefore has no proof of its generation source – they must assume that the electricity was produced in a specific way, with the proportions being set out by the government in their annual Fuel Mix Disclosure data tables. The importance of REGOs grows substantially, however, if the supplier decides to sell tariffs with environmental credentials. In this case, they are required under their supply license to redeem enough REGOs to Ofgem to prove the claimed environmental benefits of the supplied energy under the tariff.

Outside of changed consumer demand for green tariffs, the transition towards net zero has caused REGOs to:

  • Have importance in increasing areas of industry outside of the supplier sphere
  • Grow in demand over the past few years
  • Exponentially increase in price, amid increasing demand and constrained supply.

The information in this blog has been taken from the results of our latest Green Certificates survey. If you would like to keep up to date on developments in the REGO and other green certificate markets, and would like to receive regular insight into market participant’s views on recent and future certificate pricing, demand, and drivers, please reach out to Tim Sowinski at t.sowinski@cornwall-insight.com for more information.

To keep up to date on the implications of changes in the REGO market to wider areas of industry, take a look into our Energy net zero services or contact Ben Reade at b.reade@cornwall-insight.com for more information.

Related thinking

Home supply and services

Reforming Energy Bills: What’s on the Table?

There has been much speculation in the energy industry over what reforms to household energy bills could potentially be introduced, particularly with Ofgem due to announce its Q3 (July – September) 2024 Default Tariff Cap figures on Friday (24th). With so many areas under review, we’ve put together an overview...

Low carbon generation

Latest developments in the TPI space

We recently published our 2023 Annual TPI report which provides an independent review and analysis of the market for TPIs, and the services provided by them. The report also looks at the current challenges and opportunities for TPIs, such as regulatory changes, competition with suppliers, and diversification of services. 2023...

Low carbon generation

Learning curves and the many moving parts of the CfD Auctions

Learning curves are an important part of the toolbox of energy system modelling, representing the benefits of learning by doing and the economies of scale. The learning rate describes how as production doubles capacity cost reduces, so a learning rate of 15% would imply that as production doubles, costs would...

Low carbon generation

Transforming the Energy Market: how change will work for consumers

The past two years have seen rocketing energy prices, as households and businesses grapple with bills far beyond pre-crisis levels. There is no way to turn back the clock, however, we can look to seize the many opportunities to reshape and future-proof the UK energy system, ensuring a brighter future...

Home supply and services

Ofgem strives to improve consumer experiences across both the domestic and non-domestic sectors

Over the last week, a number of anticipated publications were issued by Ofgem that hold the potential to make a significant change to the requirements on both domestic and non-domestic suppliers. The findings of Ofgem’s non-domestic market review were revealed, alongside a policy consultation on the options available to address...

Regulation and policy

Our response to the Spring Budget

Once again, a UK budget has seen some significant energy policy announcements that will stir up conversation and opinion across the country. It also shows how reining in energy prices is seen as key to restraining inflation. The pre-budget announcement to maintain the Energy Price Guarantee (EPG) at £2,500 had...

Low carbon generation

Understanding the evolution of the Irish electricity markets

The Irish electricity sector has undergone significant change in recent years. The Integrated Single Electricity Market (I-SEM) arrangements introduced in 2018 fundamentally transformed the market framework to maximise competition, facilitate electricity wholesale trading, and incentivise the development of low-carbon generation sources. In parallel the physical system continues to evolve rapidly....

Home supply and services

Our response to the publication of the REMA consultation summary

On 7th March the government published the summary of responses received from its Review of Electricity Market Arrangements (REMA) consultation. The responses received showed the industry has expressed strong support (92% agreement) for energy market reform that prioritises decarbonisation, security of supply, and cost-effectiveness. Respondents also agreed that the current...