Why buying REGOs helps promote your sustainability credentials
The recent surge in the price of REGOs has prompted the question “Are REGOs still worth buying?”.
Some organisations have been asking whether the fact that the UK fuel mix is growing ever-more renewable is enough to make sustainability claims – without the expense of buying REGOs. There’s a school of thought that suggests they’ll automatically be using a higher percentage of renewable power, whatever contract they’re on. And that this should enable them to report lower Scope 2 emissions without needing the proof REGOs provide.
The truth, however, is that corporates and consumers are increasingly expecting their suppliers to evidence sustainability credentials. And asking whether suppliers source renewable energy – one of the simplest steps an organisation can take – is often the first question they’ll pose.
Assessing the alternatives
REGOs offer decarbonisation accessibility for organisations of all sizes. However, if businesses decide not to invest in them, what could they do with the savings? And would these alternatives enable them to make sustainability claims in the same way that buying REGOs would?
Investing in on-site renewable assets
A short-cut to guaranteed 100% renewable-source energy with REGOs is to install solar panels or wind turbines on-site. If the necessary space and infrastructure isn’t available, organisations can look into ‘direct-wire’ connections. Such options carry high upfront costs and are likely to require plenty of decision-maker convincing. They do have the potential to reduce long-term energy spend and generate PR opportunities, though.
PPAs
Virtual PPAs involve contractually taking a generator’s renewable source power and can provide more practical physical and contractual setups and long-term price stability.
However, as they involve ‘sleeving’ power (rather than taking it directly), there’s no proof that the electrons organisations consume originate from renewable generation. This gives them less PR power – especially if they’re not accompanied by relevant renewable energy certification.
Supply chain management
Organisations can also look to decarbonise through their supply chains in order to reduce Scope 3 emissions.
Investing in projects to onboard suppliers with low GHG-emission levels or net zero targets – or to raise sustainability standards within an existing supply base – can have impactful results. Such projects carry internal costs and run the risk of disrupting business-as-usual operations, though.
Carbon credits
Where it’s impractical to avoid certain GHG emissions, organisations can instead pay to ‘offset’ – or compensate for – them. Carbon credits offer an effective way of compensating for hard-to-abate emissions – but businesses should ensure investments are part of a broader sustainability drive that prioritises direct-emissions reduction.
Fleet electrification
Switching from petrol/diesel operations, maintenance and executive vehicles to electric vehicles (EVs) offers a visible commitment to sustainability that can resonate with customers, prospects and staff. The transition isn’t a simple one, though, and is likely to require considerable charging-infrastructure planning and investment as well.
Why REGOs make sustainability sense for organisations…
Although the National Grid’s fuel mix is increasingly renewables-biased, being able to claim zero Scope 2 emissions through market-based reporting still holds value. REGOs validating the source of the electricity organisations consume are crucial for reporting transparency.
Certification to prove consumption of renewable source energy will also open doors when pitching for certain contracts or seeking types of finance. Increasingly, corporates and lenders prefer doing business with sustainable organisations – doing so has PR benefits for them, too.
Prices surged from 2021 to 2023, but they’ve balanced over the last 12 months. With large-scale renewables farms coming online over the next few years, supply of renewable energy and accompanying certification should be more plentiful. This may reduce prices further.
As transparency in the REGO market increases, organisations will have more choice about where their energy – or their REGOs – come from. Selecting REGOs associated with a particular generation location or technology type will support organisations in making sustainability claims that align with their strategic goals or brand objectives.
And finally, suppliers and organisations have promises to uphold. Renewable energy contracts need REGOs to accompany the supplied power – and businesses need to make headway against public sustainability pledges. Without the verification that REGOs provide, this becomes much more difficult.
…and help the UK’s net zero ambitions
REGOs aren’t just helpful for organisations developing their sustainability credentials. They contribute to the development of emissions reductions that otherwise wouldn’t occur – and provide decarbonisation accessibility for all.
High REGO prices and the available profits – while not necessarily beneficial to buyers – may incentivise new or extended renewables generation. More renewable generation resources will help the UK balance its supply and demand using a higher proportion of green energy.
The possible shift towards 24/7 REGOs – certification to prove the source of energy organisations consume on a half-hourly basis – will provide even greater clarity. As carbon accounting advances and the need for transparency grows, this development would help substantiate businesses’ claims and provide accurate data for calculating UK net zero progress.
