More potential for farm-based renewables revenue with Rego scheme

The Renewable Energy Guarantee of Origin (Rego) scheme has seen some dramatic changes in the past couple of years, greatly increasing the potential returns from this once overlooked income source.

The scheme was introduced in 2001 as a way for licensed electricity suppliers to demonstrate the electricity they sell to consumers has come from a renewable source, be that solar, wind, biomass, hydro or other eligible technologies.

While some generate this “green” electricity themselves, others meet their obligations by purchasing Rego certificates from the open market.

See also: Farm wind turbine exclusivity agreements – what to watch out for

Ofgem issues one Rego to owners of eligible generation assets for every MWh generated, and there is an increasingly active market for trading these certificates, says Charles Ward of consultancy New Stream Renewables.

“Two to three years ago, Rego certificates had very little value, perhaps just 25-50p/MWh, whereas now they’re worth nearer £13-14/MWh, and we have seen small volumes trade at over £20/MWh.”

Growing demand

Illustrating the demand, he notes one leading dairy firm has recently been contacting its milk producers with energy generation assets asking to buy unused Rego certificates.

“While prices remain volatile, I believe there is a lot of revenue that is being left untapped by the farming community, often because they may have looked at Rego in the past and thought they’re not worth bothering about. That’s not the case anymore.”

Two main factors have driven the increase in Rego values, says Charles. One is the growing demand from electricity suppliers and corporate firms wanting to evidence their use of renewable power as the UK transitions towards net zero.

“All electricity suppliers require Rego as part of their fuel mix disclosure, but increasingly corporates are also using them to demonstrate they are buying renewable power.”

The other factor is the reduced supply of certificates following a change in legislation last year preventing energy suppliers from buying European certificates and requiring them to source only British Regos.

Good opportunity

Owners of generation sites must be registered to receive Regos, but many sites are likely to have already done so, often when signing up for the Feed-in Tariff (Fit), says Clare Haigh, from renewables and carbon offsets advisor, C-Zero Markets.

She believes the biggest opportunity is among generation sites using large amounts of power in-house (for example, running coldstores or chillers), rather than selling everything to the grid on a Power Purchase Agreement (PPA).

“Often where people are selling to the grid on a PPA, all Rego certificates are transferred to the PPA provider.

“However, in most cases, technically you are only required to send over the number of Rego certificates that correlate to the volume of electricity exported. Regos for any electricity outside that (for instance, power used on-site), are typically available to trade.”

Charles Ward adds that PPA providers generally pay less for Regos than it is possible to achieve on the open market, so it makes sense to maximise the value of anything that can be traded.

The process is relatively simple and fees charged by third-party traders are usually just a few pence per certificate, with payment typically within 10 days.

Any generation asset of 30-50 kW upwards should look at claiming Regos, says Claire.

“Something of that scale might receive 30 Regos a quarter, which multiplied by £13-14 for little or no cost, is worth doing.

“Often it can be hard for smaller plants to get a PPA because they’re not exporting enough electricity, but they still have access to Regos. It doesn’t cost anything to do, and just involves a bit of time on administration.

“If you’ve got a renewable asset, and haven’t registered for Regos, you are missing a trick.”

See Ofgem guidance on Regos (PDF).