Article: REGOs Rising
The cost of REGO’s are increasing, but before we get into why let’s start with what a REGO actually is, or its full title, Renewable Energy Guarantees of Origin.
REGO certification was designed to provide energy consumers with transparency on how much of their energy comes from renewable generation. This makes them a good way for businesses to demonstrate their sustainability commitments by choosing a renewable energy contract that has REGO certification.
Businesses who opt for a renewable energy contract can choose whether or not to purchase the REGO certification. It’s worth noting that we only provide renewable energy contracts with REGOs because without one you can’t prove where your energy was sourced. Making any sustainability commitments or proof of compliance difficult to back up.
In most instances, an additional fee is required in order to obtain REGO certificates. Since last year, this fee (which is measured per megawatt hour (MWh)) has seen continual increases.
REGO Price Increase
The below chart shows the growth of average REGO prices being offered by a variety of suppliers and demonstrates just how much REGO prices have increased.
From a relatively low base of less than £1 per MWh just one year ago (that’s less than 0.1 pence per KWh), it’s now pushing £8 per MWh on average. That’s a 1000% increase in one year and nearly 0.8 pence per KWh. To put that into context, the rate of the Climate Change Levy (CCL) is 0.775 pence per KWh. Prior to August 2021, some suppliers offered REGO certificates at no additional fee.
Why the Increase?
There’s no one thing responsible for the increase, but a combination of the following:
The growing demand for renewable tariffs across the domestic, industrial and commercial sectors.
Rebounding energy levels as COVID-19 restrictions eased.
Relatively low levels of electricity generated from renewable sources during the summer of 2021.
Increased requirement to evidence environmental and sustainability claims with advertising in line with ASA guidance.
The expectation that EU Guarantees of Origin (GoOs) would no longer be accepted for Fuel Mix Disclosure (FMD) purposes in GB after Britain’s exit from the EU.
End-of-year purchasing by suppliers to meet their obligations – see our RO Mutualisation article for more on this.
So there you have it, a brief explanation of what REGOs are, why businesses choose them and why we’re seeing continuing increases.
Authors: Chris Bennett, Pricing Manager
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