The cost of Renewable Energy Guarantees of Origin (REGO) certificates has skyrocketed in recent years, but organisations can protect themselves against further price hikes. Our latest blog post explains….
REGOs: a quick explainer
In the UK, REGO certificates have long been the mechanism for certifying energy as renewable. They are issued to renewable generators, one for every MWh of power, to prove their green origin.
They are frequently sold separately from the energy itself; a supplier might get its energy from a mix of sources and then buy REGOs from green generators to match it. This can be cheaper for the supplier than buying the energy and REGO together from the same renewable generator. The key thing is that the supplier’s end-of-year accounting shows that every unit of energy sold as renewable was backed up by a REGO.
Why are REGOs so expensive?
Not so long ago, suppliers could buy REGOs for just 20p a certificate, making renewable energy tariffs a cost-effective option for businesses wanting to go green. This price jumped to 66p in 2021… and in the past couple of years, the price has shot up, hitting a record high of £20 in October 2023.
There are several reasons why. One is the rising demand for green tariffs (from both businesses and households) and corporate power purchase agreements (CPPAs). Both require REGOs – and the law of supply and demand means that REGOs are getting more pricey.
Amidst this rising demand, there have been some bumps in the road when it comes to building new renewable generation assets. The UK has ambitious targets for renewable generation: 50GW of offshore wind and 70GW of solar by 2030. But the offshore wind strategy was blown off course in 2023 after a catastrophic tendering round received zero bids. The government is now attempting to correct course by increasing the maximum price for projects and reshaping the Contracts for Difference system to do better in future.
The setback for the most recent funding round has still slowed down the creation of new green generation capacity in the UK. And this means fewer REGOs available than might have been predicted.
And then there was Brexit….
Before Brexit, the UK’s system for labelling a unit of green energy was harmonised with the EU system. Suppliers had the choice between using UK-sourced REGOs or importing Guarantee of Origin (GoO) certificates from the EU. But the UK government no longer accepts GoOs as valid, so suppliers can only source their certificates from UK generators. This contributes to the supply shortage.
Will REGO prices fall?
The price of REGOs may fluctuate in future, but the days when they cost just a few pence are almost certainly gone for good.
But the good news is, you don’t need to accept the price that you are given by your supplier.
At Sustainable Energy First, we’ve been proactive in trying to manage this cost for our customers, and we can now supply REGOs from alternative sources – often at a lower price.
Are you purchasing REGOs separately or are they included in your energy supply?
If you have REGOs in high volumes, the savings can be significant.
To explore more or to understand how you can manage this challenging green energy related cost, get in touch.
