Market Report | March 2024

REGO

  • As we end the Compliance Period and suppliers look to finalise their position for their Fuel Mix Disclosures (FMD), CP22 REGO pricing looks to be steadily drifting downwards to £11-£13.
  • With the Ofgem FMD deadline looming in May, generators should make their REGO submissions as soon as possible to achieve the best price and prevent losing value through certificate expiry.
  • As buyers shift their focus to next year’s compliance obligations, CP23 pricing looks to be slightly increasing, with prices around the £7/8 mark.
  • That said, the overall fundamentals remain unchanged from last month, and prices remain relatively depressed. 3-4 TWh of wind/solar/hydro REGOs are being forward sold at around £7.
  • Due to the reduction in the energy price cap on April 1st, consumers are staying on their supplier’s floating standard variable tariff. This, combined with more wind and solar generation coming online in 2024, means that REGO demand will likely fall and supply will increase.

“REGO pricing continues to slowly drift downwards”

Clare Haigh, Head of Environmental Markets at C-Zero
Clare Haigh
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“2023 RGGOs may have found their floor, but forward RGGOs are of more interest to buyers.“

Clare Haigh
Clare Haigh, Head of Environmental Markets at C-Zero

RGGO

  • RGGO prices may have finally found their floor, with prices around 2020/21
  • Waste certificate prices for 2023 production have levelled off at around the £9 mark and crop circa £4-5 as producers dig their heels in on price.
  • Waste certificate prices for 2024 production are around the £11-12 mark and crop circa £6-7.
  • Most buyers’ enquiries are now for 2024 volumes, so this might halt the decline and/or push pricing slightly
  • The fundamentals, such as lower gas demand, lack of clarity on regulatory and carbon reporting standards, and more prominent European players not participating in the market, remain the same, so any upside will likely be limited.
  • Some interesting insights came out of the GGCS oversight meeting on 19th March.
    • RGGO retirements in 2023 were down to 3,444 GWh from a record high of 4,476 GWh in
    • The transfer of RGGOs to DENA (German Biogas registry) was also down, at 704 GWh in 2023, from 1,106 GWh in 2022. Notably, transfers were 334 GWh in
    • RGGOs retired by domestic and non-domestic consumers also showed weakness in 2023 compared to 2022.
    • As of January, a large proportion of RGGOs remained in producers’ RGGO accounts, suggesting that they were holding on for higher prices.

  • The above data verifies the market drivers we discussed in our February report, but there are now additional headwinds to contend with.