Renewable Energy Guarantees of Origin (REGO)
REGOs are the cornerstone of green tariffs offered by domestic and business electricity suppliers in the UK.
They are the official certificates that prove that the electricity being sold to you was generated by a renewable generator.
But does it really mean that your electricity was generated in a wind farm or hydroelectric plant?
Let’s find out!
- What are Renewable Energy Guarantees of Origin (REGOs)?
- How do Renewable Energy Guarantees of Origin work?
- What is a fuel mix disclosure?
- How to apply for Renewable Energy Guarantees of Origin?
- Can I buy a Renewable Energy Guarantee of Origin?
- Frequently Asked Questions
- The AquaSwitch commercial utilities comparison service
What are Renewable Energy Guarantees of Origin (REGOs)?
Renewable Energy Guarantees of Origin (REGOs) are certificates issued to renewable generators for every MWh of electricity they generate for the national grid.
The EU has an equivalent scheme known simply as Guarantees of Origin that helps integrate the trading of REGOs across jurisdictions.
While the physical electricity is transferred through the interconnectors, the REGOs are virtually traded to help suppliers on both sides of the channel prove the origin of their electricity while avoiding any “double counting” of the same unit of renewable energy.
How do Renewable Energy Guarantees of Origin work?
The Renewable Energy Guarantee of Origin works as follows:
- Ofgem issues a REGO certificate for every megawatt-hour (MWh) of renewable electricity generated in the UK
- Energy imported from Europe is provided with an equivalent Guarantee of Origin certificate.
- The generator or importer sells the electricity to a business or home energy supplier providing the associated origin certificates (Note: These can also be decoupled and sold separately. More details here)
- The business or home energy supplier sells the electricity to customers under an energy tariff.
- The business or home energy supplier uses the certificate of origin to prepare a fuel mix disclosure for their customers.
💡 Interestingly, each country in Europe may have its own standards and verification processes for each REGO issued. For instance, what one country considers as eligible biomass might differ slightly from another, meaning a foreign REGO arriving in the UK may actually misrepresent the same MWh of electricity produced in the UK!
What is a Fuel Mix Disclosure?
A Fuel Mix Disclosure (FMD) is a statement that breaks down electricity generation sources for a six-month period into the following categories:
- Natural gas
- Other (e.g. Burning of non-renewable waste-to-energy, Oil)
Its is a mandatory requirement of any licensed electricity supplier in the UK.
The disclosure for each tariff will be available in the supplier’s annual statement or their website.
The fuel mix disclosure will show 100% renewable in a green energy tariff!
💡 Any MWh of renewable electricity declared in the Fuel Mix Disclosure must be substantiated by REGOs. Once accounted for, suppliers “retire” these REGOs to avoid any “double counting” of these certificates.
What is the Fuel Mix Disclosure for the UK?
Here is the fuel mix disclosure for the UK as a whole in 2022-2023 compared to 2021.
💡 Even if the the Fuel Mix Disclosure regulations only apply to electricity suppliers, the UK government regularly publishes its own fuel mix data.
How to apply for Renewable Energy Guarantees of Origin?
There are two parties that typically apply directly for REGOs:
- Commercial renewable generators like wind and solar farms.
- Domestic and business electricity suppliers who apply on behalf of the micro-generators exporting their renewable energy through the Smart Export Guarantee.
Let’s look at how each of these work:
REGOs for commercial generators:
Commercial generators that generate electricity as their principal activity can apply for a REGO certificate by registering to the scheme and providing detailed generation data.
Generators with a capacity of up to and including 50kW may use their MCS-certificate or equivalent as evidence in their application.
Ofgem organises a public register of all REGO certificates that shows the generation source and current holder of certificates.
💡 While the REGO application is fast, achieving a physical grid connection is not. The queue for new renewable generators is many years’ long, even with the goverment’s dogged attempts to alleviate bureacratic charges.
REGOs for micro-generators:
Even though generators of all sizes can directly apply to the REGO scheme, micro-generators tend to –inadvertently– leave this tedious task to the electricity supplier that is purchasing their renewable electricity through an export tariff.
This is because the Smart Export Guarantee is set up in a way that the SEG-licensee (i.e. the electricity supplier) handles the REGOs on behalf of the generators to:
- Simplify the REGO application: By aggregating hundreds if not thousands of applications into a single one.
- Meet the 1 MWh requirement: Only by combining the output of all micro-generators can this quota be met.
- Fuel Mix Disclosure: Suppliers tend to own the REGOs as part of the export agreement, letting them use it to improve their FMDs!
💡 Micro-generators are considered those who have a generation capacity of less than 50kW and have MSC-certified renewable generators. This includes small commercial and residential properties equipped with solar panels and solar batteries to meet their needs while exporting any excess back to the grid.
Can I buy a Renewable Energy Guarantee of Origin?
Unlicensed individuals or businesses cannot take part in the buying or selling of REGOs or the electricity it represents.
But this is where things get complicated, so let’s explain this in steps:
REGOs can be decoupled from the physical renewable electricity:
When it comes to the trading of renewables, there is a distinction between the (1) physical electricity and the (1) environmental attribute represented by REGOs. These can be decoupled and traded separately.
In other words, when renewable electricity is generated, two separate “products” are effectively created:
- The physical electricity that can be consumed.
- The environmental attribute (or proof) that this electricity is renewable: i.e. the REGO certificate.
In practice, a generator might sell the physical electricity to one entity (perhaps based on price, demand, or proximity) and the associated REGO to another entity (perhaps an electricity supplier wanting to green up their energy mix).
This means that the expiry of the REGOs is also decoupled from electricity use. REGOs remain perishable, just like the electricity it represents, but must be “retired” once a supplier has used it to prove its Fuel Mix Disclosure.
Who can trade REGOs?
The entities typically involved in the buying and selling of REGOs are:
- Renewable Generators: Generators sell the REGOs issued to them for every MWh of renewable electricity generated.
- Energy Traders: Traders can speculate on the price of REGOs and trade it to suppliers or between themselves. This is akin to carbon credits.
- Energy Suppliers: Suppliers are the main consumers of REGOs, purchasing them to offer green tariffs or improve their Fuel Mix Disclosure.
Does the Fuel Mix Disclosure need to be backed by REGOs?
Yes, Fuel Mix Disclosures need to be backed by REGOs (Renewable Energy Guarantees of Origin).
This allows electricity suppliers to offer green tariffs even if the physical electricity was not generated by renewables, as REGOs can be purchased separately!
When did REGOs come into effect?
REGOs (Renewable Energy Guarantees of Origin) were introduced in the UK as a result of the European Union’s Renewable Energy Directive (2001/77/EC), which was adopted in September 2001.
The directive aimed to promote an increase in the contribution of renewable energy sources to electricity production in the internal market for electricity.
Do REGOs also apply to clean energy storage?
No, REGOs (Renewable Energy Guarantees of Origin) are specifically designed to verify that a given quantity of electricity was generated from renewable sources.
However, if an energy storage facility stores electricity with an attributed REGO, they essentially act as an intermediary, holding custody of the REGO until that electricity is released and the REGO is transferred to the supplier who purchased it.
Note that with increasing emphasis on storage due to the intermittent nature of most renewable sources, regulatory frameworks are likely to adapt.
Are REGOs used by both domestic and business electricity supply?
Yes, because both home and commercial electricity suppliers need to issue Fuel Mix Disclosures (FMD) that must be substantiated with REGOs.
REGOs can be purchased from traders or by the power generators who generate the MW of electricity it represent.
Can I get a REGO for my solar panel electricity?
If you are not in a Smart Export Guarantee tariff, you will need to apply to REGOs via Ofgem.
If you are selling your renewable electricity through an export tariff, the supplier (i.e. the SEG licensee) who is purchasing your electricity handles the REGO process (and benefits from it!)
This greatly simplifies the process for micro-generators, but in return, the suppliers will directly benefit from the REGOs they generate.
Is my supplier stealing my REGOs?
Technically no. Each supplier offering an export tariff formulates their own agreement with the exporter and compensation for the REGOs. The supplier may re-sell or use the REGO for their Fuel Mix Disclosure.
The REGOs may be priced into the export tariff or compensated in a different way. This is why it’s so important to read your energy contracts!
Are REGOs retired at the same time as its electricity is consumed?
No, REGOs (Renewable Energy Guarantees of Origin) are not necessarily retired at the exact moment their associated electricity is consumed.
The process of retirement of REGOs is more related to accounting and verification than to the real-time consumption of electricity.
To put it simply:
- 1 MWh of electricity will perish once it is consumed by the electricity customers of a supplier.
- The REGO representing it will perish once the supplier holding it (it could be a different one who purchased it separately!) has used it to substantiate 1 MWh in its Fuel Mix Disclosure.
Are there other Guarantees of Origin for other sources of electricity?
Yes, the concept of Guarantees of Origin (GoOs) is not exclusive to renewable sources of electricity, but it is not commonly used in the UK.
In Britain, the primary focus has been on the Renewable Energy Guarantees of Origin (REGOs) system, which confirms the renewable source of electricity and plays a significant role in substantiating renewable claims, particularly for suppliers’ Fuel Mix Disclosure (FMD) and for green tariffs.
The AquaSwitch commercial utility comparison service
At AquaSwitch, we help businesses get more from their utilities.
Companies increasingly seek to reduce their environmental impact by moving to a renewable tariff.
Energy suppliers are now offering green business gas rates that provide a carbon-neutral supply of gas through:
- Carbon offsetting projects
- Direct supply
Explore green gas tariffs for your business with our business gas comparison service.