Understanding REGOs
The Renewable Energy Guarantee of Origin (REGO) scheme, which the energy industry regulator Ofgem administers, delivers benefits to all participants – and to the UK as a whole.
Generators and buyers of renewable electricity gain the certainty of operating within a proven, trusted and transparent verification system that matches the production and consumption of green power.
The scheme supports the UK’s move towards a clean energy system because the financial rewards for generators encourage investment in renewable power generation plants. These generators can also gain extra income by selling the certificates (or REGOs) associated with the volume of power they’ve produced.
Organisations that buy REGOs can link their power consumption to the renewable energy generated. By demonstrating a commitment to sustainability via these purchases, businesses can enhance their corporate social responsibility (CSR) standing and, where needed, meet regulatory requirements and renewable energy targets.
We’ll provide further details about the scheme and how it works, then address how Drax Energy Solutions and its parent company – Drax Group – engage with it. We’ll end with a ‘future look’ anticipating what’s next for REGOs.
What’s the REGO scheme?
The REGO scheme issues a certificate for every megawatt hour (MWh) of eligible renewable power produced across the UK. Generators producing electricity from eligible renewable sources can apply to receive the REGOs they’re due based upon the MWh volume they’ve generated. Applications for accreditation go via the Renewables and combined heat and power (CHP) register.
The renewable electricity generators that receive REGOs can keep or trade the certificates. The market allows non-generating organisations to buy the REGOs associated with the renewable source(s) they prefer such as biomass, wind or solar.
As a side note, licensed electricity suppliers – including Drax Energy Solutions – must issue an annual Fuel Mix Disclosure (FMD) regarding the feedstocks used to generate the electricity they’ve supplied. These fuels may include renewables as well as coal, nuclear and gas.
REGO prices: the recent history
As with any market, supply and demand drive the price of REGOs up or down. Five years ago, when the price for these certificates ranged between 10p and 30p, more organisations became interested in buying renewable energy and the associated REGOs.
Simultaneously, the momentum for using renewable power gained speed and the Science Based Targets initiative (SBTi), RE100 and similar programs proved popular and helped increase the demand for REGOs. Coincidentally, Brexit (the UK leaving the European Union) reduced the supply of renewable energy certificates generally available.
With demand rising and supply curtailed, a REGO price spike inevitably followed and certificates traded at prices as high as £25 in October 2023. Despite the price-peak being short-lived, it did deter some organisations from buying renewable power and instead encouraged investment in alternative approaches to decarbonisation. REGO prices today range between 50p and £2 per certificate.
How are Drax Group and Drax Energy Solutions involved with REGOs?
Drax Group owns and runs generation assets that qualify for the REGO scheme, most notably Drax Power Station (DPS) in North Yorkshire and our hydro assets in Scotland. The former uses sustainable biomass pellets as its fuel source; the latter include a pumped storage hydro facility and run-of-river scheme.
Our generation plants receive the number of REGOs commensurate to the amount of renewable electricity they’ve produced. At full capacity, this volume is 14 Terawatt hours (TWh) for DPS – enough to power five million homes. The assets in Scotland generate enough capacity to power over 1.5 million homes.
As a licensed supplier of renewable electricity, Drax Energy Solutions must match the volume of power that its business customers consume with the appropriate number of REGOs. It acquires some of these certificates from the Drax Group generation assets and buys others on the open market.
Drax Energy Solutions also operates as a Power Purchase Agreement (PPA) partner for more than 2,000 independent renewable electricity generators that receive REGOs according to the power they’ve produced. The generators pass on the correct number of REGOs to Drax Energy Solutions, in line with the volume of power they’ve sold via the PPA.
It’s worth noting that global testing, inspection and certification company SGS audits the Drax Energy Solutions’ FMD calculations. This independent, third-party verification accounts for the sources used by Drax Group’s generation assets and by the supplier’s PPA partners.
Drax Energy Solutions gets Granular
Since October 2024, Drax Energy Solutions has worked in partnership with Granular Energy, a clean energy management software provider for utilities and other businesses. The service helps organisations prove their sustainability credentials because the software tracks where energy comes from hour by hour.
The end of each year’s REGO compliance period is 31 March and the deadline for submitting REGOs is 1 July. After this date, Granular analyses the usage of Drax Energy Solutions’ customers and performs a REGO matching service. Customers can receive a report about each certificate allocated to them, including details about its serial number, the site’s ID number and name, and the emissions savings. Given this level of detail, customers can use the report for their Scope 2 emissions data submission as evidence of receiving a zero carbon-rated power supply.
What’s next for REGOs?
We’ve seen that REGO prices can fluctuate in the past five years – and that they’ve stabilised more recently. However, the energy industry still has concerns about the level of demand for certification – as well as for using renewable power – among UK businesses.
For organisations maintaining an interest in REGOs, the trend seems to be towards ‘bundled’ certificates bought from the wholesale market and attached to a PPA. However, ‘unbundled’ REGOs without a PPA attached provide suppliers and other organisations with more flexibility, so both kinds of REGO are likely to exist for the foreseeable future.
There’s also a move towards having REGOs associated with specific renewable technologies. For example, companies signed up with RE100 are driving the demand for certificates related to assets under 15 years’ old. This level of specificity means that matching services like the one that Drax Energy Solutions and Granular offer are likely to become more attractive to organisations.
For more information about this service, or answers to your questions about the REGOs market, please get in touch.
Get in touchDisclaimer
We’ve used all reasonable efforts to ensure that the content in this article is accurate, current, and complete at the date of publication. However, we make no express or implied representations or warranties regarding its accuracy, currency or completeness. We cannot accept any responsibility (to the extent permitted by law) for any loss arising directly or indirectly from the use of any content in this article, or any action taken in relying upon it.
