Renewable Energy Guarantee of Origin (REGO) prices have jumped 50% higher than they were in January 2021, as market sentiment remains broadly positive.
According to the results from Cornwall Insight’s latest Green Certificates survey, for Fuel Mix Disclosure (FMD) years 2020-21 up to 2023-24, prices have increased by half compared to the beginning of the year.
“Demand outlook was also positive among participants, with 64% reporting increased demand for REGO backed supply products in the past three months,” said Luke Ansell, analyst at Cornwall Insight. “As well as citing end-of-year supplier buying, uncertainty surrounding the future acceptance of European Guarantees of Origins (GoOs) and greater climate ambition from businesses as bullish demand drivers.”
Demand for REGOs was up by the largest amount among large industry and corporates, although it had increased in all sectors of the market according to the survey respondents.
The positive sentiment around REGO growth will continue, with prices set to continue to increase over the next year as electricity prices fully recover to pre-pandemic levels. As lockdowns were rolled out in the UK in 2020, electricity demand fell to record low levels, causing a corresponding drop in the wholesale electricity price.
In October, EnAppSys found that demand had almost returned to pre-pandemic levels, boosting power prices. However, following this a further lockdown was implemented in the UK, pushing the growth in power prices further down the road.
But 11% of respondents to Cornwall Insight's survey said they expected a strong upward trend in price.
“During the survey, we asked participants if they traded REGOs alongside power in Power Purchase Agreement (PPA) deals. 59% of respondents said they had purchased REGOs and power in PPAs at least occasionally. At the same time, the same percentage indicated there was no price differential between REGOs traded within PPAs and REGOs traded,” continued Ansell.
“23% of respondents had entered into corporate PPA (CPPA) deals, of these, half felt that provision of REGOs was very important to the customer, while three quarters considered technology type of REGOs very important to corporate customers.”
Despite participants in January’s survey calling for REGO market reform, in particular to enable more transparency, the most recent Cornwall Insight survey found that an overwhelming majority, at 74%, felt there had been no improvement in the three months.
REGOs have previously faced criticism, with ScottishPower and Good Energy most recently calling for regulatory reforms to close “loopholes” in the energy retail market, arguing that REGOs currently allow for greenwashing.