Market Report | Spring 2022

Introduction to Renewable Energy Guarantees of Origin – aka REGOs.

What is a REGO?

As Ofgem set out, the Renewable Energy Guarantees of Origin (REGO) scheme provides transparency to consumers about the proportion of electricity that suppliers source from renewable generation.

All EU Member States are required to have such a scheme.

How does it work?

It’s relatively simple.

One REGO certificate per MWh of eligible output to renewable electricity generators is credited.

A certificate is issued to prove to the final customer that the generator produced a given share of energy from renewable sources. One of the primary uses of REGOs in the UK is Fuel Mix Disclosure (FMD).

FMD requires licensed electricity suppliers to disclose to potential and existing customers the mix of fuels (coal, gas, nuclear, renewable and other) used to generate the electricity supplied.

Is there a market for REGOs?

Yes, there is an active market for REGOs. Over the last couple of months, we have seen increased price volatility on the back of movements in UK gas and power markets.

Timing and market transparency are key in trading REGOs from both a seller and buyers’ perspective.

Mike Ridler

Head of Green Markets at C-Zero, explains what a REGO is and how the market operates.

Find out about the team

“Timing and market transparency is key in trading REGOs from both a seller and buyers’ perspective.”

So REGOs are a tradeable commodity?

“Yes, they are a fully tradeable green market certificate. We can help you buy and sell them!”

Are all REGOs the same value?

No. Technology has become key, and we are seeing a clear market premium for REGOs that are deep-green.

What has happened recently in the REGO market?

The market pre-2017 was characterised by flat pricing with minor price movements and low volatility. Moving forward into 2018, we saw a general move up UK REGO levels on the back of European export demand only to pull back post-Brexit in 2020.

In 2020 we saw some COVID-19 demand destruction move prices lower, but demand from green energy suppliers quickly supported pricing levels as buying interest in the market returned.

Is there now corporate and compliance market buying interest?

Definitely, we are particularly active in this space. If you looked at
the second half of 2021, when compliance was suddenly on everyone’s radar, we saw the market price move up.

What is Ofgem’s role in the scheme?

Ofgem act as the scheme administrator for generation in Great Britain on behalf of the Department for Business, Energy & Industrial Strategy (BEIS), and in Northern Ireland on behalf of the Northern Ireland Authority for Utility Regulation (NIAUR). They also report to HM Revenue & Customs (HMRC) and BEIS, and are responsible for the annual Fuel Mix Disclosure (FMD) compliance deadline.

Where next for REGOs?

Whilst we don’t have a crystal ball, we fully expect buying interest for REGOs to remain strong in short to medium term. We are going to see some buying from some non-traditional names as more organisations use REGOs for compliance, ESG, off-setting as part of a net-zero plan or strategy.

How can C-Zero help me access, manage and trade REGOs?

C-Zero supports companies and organisations with renewable energy and emission reduction solutions as they navigate the pathway to net-zero carbon by 2040.

We also help companies navigate an opaque marketplace providing transparency and traceability, such as the REGO market.

The C-Zero process ensures that buyers and sellers have certainty on delivery and an auditable system for compliance and reporting purposes.