UK REGOs Surge To All-Time Highs
UK REGOs Surge To All-Time Highs
Another Year of Heightened REGO Demand:
The renewable energy landscape witnessed a remarkable ascent in the value of Renewable Energy Guarantees of Origin (REGOs) this year. Across the diverse spectrum of renewable energy technologies, these certificates have reached new all-time highs, with Solar and Wind REGOs surging beyond the £14 mark. In this blog, we’ll explore the increasing price and demand for REGOs, shedding light on the various regulatory and corporate factors driving this trend, and share our insights on the current state of the REGOs market.
Understanding REGOs:
In the renewable energy industry, transparency and accountability are important. Consumers and businesses alike are increasingly interested in knowing where their electricity comes from and whether it has been sourced sustainably.
REGO certificates serve as evidence for electricity suppliers to demonstrate to their customers how much of the electricity they supply was produced from renewable sources. These certificates are awarded at a rate of one per megawatt hour (MWH) of eligible renewable output and are specific to each renewable technology, such as Solar REGO and Wind REGO. They can be sold separately from the power with which they are associated with. Purchasing parties, typically companies and organisations, can buy REGOs through auctions and use them to legally offset their emissions and progress their sustainability goals.
Bullish Momentum:
In April of this year, the UK industry’s shift towards domestically sourced REGOs gained momentum when the Government stopped recognising EU Guarantees of Origin (GoOs). This decision was in response to the EU ceasing recognition of UK REGOs in 2021 following the UK’s withdrawal from the Union. Since then, REGOs prices began to rise, increasing in momentum throughout subsequent E-REGO auctions. During the most recent E-REGO auction held on September 12th, REGOs reached unprecedented levels.
Compared to last year, Solar and Wind REGOs increased from £4.60 to £14.10 and £14.04, respectively, while Biomass REGOs soared from £3.22 to £13.60 per REGO - an increase of 322%. Overall, the latest auction round witnessed the highest prices ever seen in E-REGO auction history.
Contributing Factors:
As REGOs can be used by companies and organisations to reduce their Scope 2 emissions, the recent surge in prices is a compelling sign of increased corporate interest and a rush for voluntary green compliance. This emphasis has increased quite significantly, especially since the Science Based Targets Initiative (SBTi) prohibited Renewable Gas Guarantees of Origin (RGGOs) for reducing Scope 1 emissions.
Furthermore, the reduction in energy output from biomass and hydro compared to last year has resulted in a tightening of the REGOs supply, thereby creating a supply-demand dynamic that has contributed to the upward momentum in REGOs prices. As wind prices this year have been comparable to that of the past year, it has been unable to offset the shortfalls in biomass and hydro, further intensifying the demand for Wind REGOs.
Our Closing Thoughts:
After considering the various market, energy output, and regulatory changes observed this year, it has become evident that REGOs are becoming more than just certificates verifying the origin of renewable energy generation; they have evolved into financial instruments that play an integral role in driving the UK toward achieving net-zero. Looking ahead, it is reasonable to anticipate a sustained increase in demand for REGOs, and there is a possibility of witnessing new all-time highs in future E-REGO auctions.
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