We have seen continued uplift in REGO prices, increasing almost exponentially since the start of 2021. We’ve seen October hitting record numbers again:
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- Average prices at an all-time high; £9.81 +54% since July
- Highest prices at an all-time high; £20.25 + 113% since July
- Average prices at an all-time high; £9.81 +54% since July
At Renewable Exchange, we monitor the value of REGOs attached to PPAs and provide you with regular updates through our REGO Index reports. If you’d like to discuss your REGO strategy with our PPA experts, get in touch with us at [email protected] or through our website.
REGO value continuing in upwards trend
There are several reasons that seem to be driving REGO prices up. One of the primary reasons was OFGEM is no longer accepting EU Guarantees of Origin (GoOs), which has increased demand for UK REGOs (Renewable Energy Guarantees of Origin). This was enacted in April 2023 following the announcement in July 2022.
Another factor leading to the price increase could be green contracts. With more suppliers offering green import tariffs, and increasing demand from consumers both commercially and domestically, suppliers are now requiring more and more certificates to prove their energy is coming from green generation.
Within this high-price environment the previous hedging strategies implemented by suppliers may not be applicable anymore, which in turn can drive up prices as these strategies are adjusted. Corporates could also be in the market for REGOs to help reach their green energy targets, this additional competition would likely drive-up prices.
And finally, another factor we believe could be playing into this narrative is the impact of less planned offshore wind projects coming to completion. There have been a number of projects put on hold or significantly slowed down due to inflation, as well as a number of other reasons.
Below are the average and highest bid prices since March 2021 (via PPAs):
This graph shows all submitted REGO bids, regardless of technology type and compliance period, for REGO pricing attached to PPAs.
The data analysed here consists of the REGO component attached to PPA bids on the Renewable Exchange platform for all technology types and contract lengths, for operational assets in the UK. The complete PPA offers would have been inclusive of commercial value for power, ROCs where applicable, embedded benefits and any additional fees/charges.
REGO prices by compliance period
When reviewing REGO pricing, it’s become more and more important to consider which compliance period the REGOs fall into. REGOs can only be submitted to OFGEM within the timeframe outlined below, after which they expire. CP21, compliance period 21, is for REGOs generated from April 2022 until the end of March 2023, and REGOs must be submitted by July 2023.
Below is a graph of bids for REGOs, split by compliance period
This graph is showing REGO prices by compliance period for PPAs sold through Renewable Exchange.
Whilst it’s clear to see the overall rate of increase is roughly exponential, it’s also clear to see that prices for each compliance period only began to diverge in the summer of 2022.
REGO bid prices by compliance period during calendar year 2023
This graph shows 2023 submitted REGO prices for PPAs that fall within one compliance period only, not spanning multiple compliance periods and therefore all the PPA periods are 1 year or less.
Looking at this year only, we can see that although there are increases across REGOs for all compliance periods, we can see backwardation of REGO value, with the prices for REGOs further out into the future slightly lower than for the nearer compliance periods. This makes sense, as the market is still unclear exactly how REGO prices will continue to develop over the coming months and years, as we get closer to net zero and the grid becomes greener, REGOs may not be needed in the same way.
This graph shows both the average and highest REGO bids over the past 6 months, for PPAs that fall within one compliance period only, not spanning multiple compliance periods and therefore all the PPA periods are 1 year or less.
Generally, we see the highest bid offered is around £1 over the average for the further out compliance period (CP24), but up to £5 above the average bid for the closest compliance period (CP22).
This shows that getting pricing from multiple offtakers can have a big impact on REGOs as there is a big spread in prices, especially for the closer compliance periods.
REGO prices split by compliance period and tech type
This graph shows REGO bids broken out by compliance period and grouped by technology types. “Greener” certificates are shown in solid lines and fuelled generation is shown with dotted lines. HWS refers to Hydro, Wind, Solar and ABM refers to AD, Biomass, Multi
Hydro, Wind and Solar are generally thought of as “greener” energy, as they have less biproducts in the production of electricity. This means that the REGOs associated with this type of generation can have higher demand, and therefore higher prices.
The graph above demonstrates this correlation, with ABM prices tending to be lower than prices for CPs even a year or two into the future. However, in July, September and October this year we have seen that there has been less of a distinction between the types of renewable generation.
Your REGO strategy
At Renewable Exchange we can help you understand the best option for your REGO offtake: whether it’s selling them off as part of the PPA, via the wholesale market in fixed volume spot trades or in a long-term structured offtake.
Reach out to our team to discuss your REGO strategy, [email protected].
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Renewable Exchange discloses the REGO Index analysis to encourage transparency in the energy market and provide fair access to information for all participants. To view previous releases, visit our blog section.
For accurate, site-specific PPA price estimate, inclusive of subsidies, green certificates and embedded benefits, log in to the Renewable Exchange platform.
