Low carbon energy: How renewable energy certificates work
Businesses across the UK are seeking ways to reduce the amount of greenhouse gases that their operations release into the atmosphere, directly and indirectly.
SaveMoneyCutCarbon has seen a rising trend for businesses across most sectors to find the expertise and knowledge that will reduce their carbon footprint. It’s driven by the desire on the one hand to fall into step with the UK government’s climate commitments and on the other hand to reduce operating costs.
The government has set a legally binding target for the country to achieve net zero emissions by 2050. It has also set interim targets to reduce emissions by 78% by 2035 and to have a net zero power system. (1)
REGOs explained
One relatively easy route to shrink carbon footprint is to buy energy from renewable sources, validated by Renewable Energy Certificates. These will guarantee that a supplier will source electricity from renewable generation.
In the UK, renewable energy certificates are known as Renewable Energy Guarantees of Origin (REGOs). These are issued by Ofgem (the Office of Gas and Electricity Markets) when a megawatt-hour (MWh) of electricity is generated from renewable sources and added to the electricity grid. (2)
The REGO scheme provides transparency to consumers about the proportion of electricity that suppliers source from renewable electricity.
The primary use of REGOs in Great Britain and Northern Ireland is for 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. (3)
Disclosure limits
One thing to bear in mind is that after Brexit, the Guarantees of Origin (GoOs) scheme used by EU member states (their version of the REGO scheme) is no longer recognised by the UK, and similarly, the EU does not recognise UK REGOs.
This means that disclosures from April 1st 2023 onwards, GoOs cannot be used in FMDs, Feed-in Tariffs annual levelisation reports or Contracts for Difference (CfD). (4)
All the REGO certificates will be listed at the end of the financial year in the Ofgem Renewable and CHP Register, allocated to the supplier that held them when issued.
How do businesses benefit?
It helps with annual reporting: Any company that achieves 100% renewable power can report zero carbon emissions under Scope 2 related to purchased electricity, in line with the GHG protocol. (5)
SaveMoneyCutCarbon advises that businesses can also benefit from the high visibility of the energy disclosures, demonstrating to customers clients that sustainability is a key element of company strategy. The Ofgem register is freely available and so the source of renewable energy purchased by any businesses can be easily traced back.
A REGO-validated energy supply can increases environmental credentials while offering greater peace of mind that business power is being delivered through renewable sources. It can be a relatively inexpensive means of carbon reductions, with little impact on business infrastructure.
The REGO scheme was put in place to increase accountability and transparency for renewable electricity generation. Being able to track where electricity comes from enables customers to make more informed decisions based on their business needs.
The average fuel mix for all UK suppliers in 2023 was 40.8% renewable, with quite a wide range in the balance among energy companies. (6)
With that in mind, every company could benefit from an analysis of their power sources. Some suppliers can suggest they are delivering renewable power but might include a high proportion of non-renewable energy in some contracts. It is useful to be explicit about the requirement for “green” energy.
Fuel mix
The FMDs are a very useful and quick way to check on the balance of green and fossil-fuel power generation. Suppliers are required to disclose the mix of fuels used to generate the electricity they supply. (7)
It's also worth checking with an energy supplier to identify if they have any independent accreditation from trusted third parties which would audit energy sources using GHG Protocol standards, for example.
Power generators in Great Britain and Northern Ireland which produce electricity from eligible renewable energy sources can apply for REGO certificates. Applications for accreditation under the scheme are made via the Renewables and CHP register. (8)
Bibliography
2 https://www.ofgem.gov.uk/environmental-and-social-schemes/renewable-energy-guarantees-origin-rego
3 https://www.ofgem.gov.uk/environmental-and-social-schemes/renewable-energy-guarantees-origin-rego
4 https://www.ofgem.gov.uk/environmental-and-social-schemes/renewable-energy-guarantees-origin-rego
5 https://ghgprotocol.org/scope-2-guidance
6 https://electricityinfo.org/fuel-mix-of-uk-domestic-electricity-suppliers/
8 https://www.ofgem.gov.uk/environmental-and-social-schemes/renewable-energy-guarantees-origin-rego