REGOs Rising – the rising cost of renewable energy guarantees of origin
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. Although it is worth stating that recently some REGOs have been as high as £20 per MWh.
From a relatively low base of less than £1 per MWh just two years ago (that’s less than 0.1 pence per KWh), it’s now pushing £11 per MWh on average. That’s a 1000% increase in two years and nearly 1.1 pence per KWh. To put that into context, the rate of the Climate Change Levy (CCL) for electricity is 0.775 pence per KWh. Prior to August 2021, some suppliers offered REGO certificates at no additional fee.
What is causing REGO prices to increase so much?
There’s no one thing responsible for the increase, but a combination of the following:
Supply has been a main driver for the increase. As of April 2023 OFGEM no longer recognises EU Guarantees of Origin (GoOs), meaning that they can no longer be used to verify renewable supply in the UK increasing the demand for UK REGOs.
The growing demand for renewable tariffs across the domestic, industrial, and commercial sectors means more suppliers are bidding against each other for REGOs so the price gets pushed up.
Increased requirement to evidence environmental and sustainability claims with advertising in line with ASA guidance.
End-of-year purchasing by suppliers to meet their obligations – see our RO Mutualisation article for more on this.
Will the price of REGOs continue to rise?
With the increasing demand for REGOS, experts are expecting their price to continue to rise for the foreseeable future. However, if the UK has ideal weather conditions, e.g. windy weather, more REGOs can be generated, which might ease the pressure on pricing, although not to the levels we last saw back in 2021.
So there you have it, a brief explanation of what REGOs are, why businesses choose them and why we’re seeing continuing increases.
This article was last updated November 2023
Authors: Chris Bennett, Pricing Manager
More From EnergyIntel
back to energyintel How can energy management software help make better investment decisions? Being a business leader means you have to make important decisions [...]
back to energyintel Managing Energy Positions: What an Energy Trader looks for When it comes to securing an energy contract, a key consideration is [...]
back to energyintel Navigating UK Business Energy and Carbon Reporting Obligations - A Checklist for Compliance With the UK government’s ambitious net zero [...]