REGO-backed electricity isn’t enough: Why you should aim for Carbon-Free.
I recently gave a talk at a public sector conference, with about 280 procurement and sustainability managers in attendance. As ever the Q&A proved the most insightful part. A manager from one of the UK’s top universities challenged me on Renewable Energy Guarantee of Origin certificates (REGOs) – she asserted that they weren’t sufficient to help the UK meet its legally-binding net zero targets. And of course, she’s right.
Good Energy has long been loudly critical of the REGO system. Last week, we saw Ovo announce they were no longer using REGOs. While it’s fantastic that they have publicly renounced REGO-backed tariffs, I would argue it’s three years late – we called on Ovo to make this change in 2020.
What’s the problem with REGOs?
Most buyers now know their options when looking for an electricity contract. You either get one backed by REGO certificates, which makes it legally ‘renewable’, or you don’t.
When a unit of renewable power is generated, a REGO certificate is issued alongside it. However, REGOs can currently be sold separately from their associated unit of renewable power at a very low price, which has unintentionally created a third-party market for certificates which are used to cheaply label electricity of unknown origin ‘green’.
This REGO process has proven that there is a huge appetite for businesses to show that they are helping decarbonisation. But because of their very low cost, lack of additionality in supporting renewables, and the inability to prove the unit of power’s origin, it really is time that suppliers and businesses demand better.
What’s better than 100% renewable power?
At Good Energy, we match our customer’s electricity usage with power generated by our community of 1700 renewable generators over the course of a year – keeping REGOs and their unit of power together as they were intended. While the way that we trade energy provides a great deal of additionality, the REGO-backed system leaves customers in the strange position to be able to claim their power is generated 100% by renewables, despite there being periods when the sun isn’t shining and the wind isn’t blowing.
The next logical step is to move towards a time-based certification system that sees the energy customers use matched with renewable power for every hour of the day. Not only will this provide greater transparency, it will also incentivise generators to build more renewable power that works 24/7 with technologies like anaerobic digestion, hydro even battery storage. This is known as Carbon Free Energy.
Hourly matching: the next step for businesses looking to decarbonise.
There is a growing movement among companies leading the decarbonisation charge to report their Carbon Free Energy. This is where they work with their energy supplier to look at where their power comes from for every hour in the day, ending up with a percentage score. Great scores see companies sourcing over 90% of their power on an hourly basis from renewable generators – in fact Google have set a target to operate entirely on Carbon Free Energy by 2030.
With our own Good Energy trading team, we manage to consistently achieve over 90% real time matching with renewable sources for our customers. We recently successfully trialled hourly matching of renewable power with our business customer, Teemill and our partners, Granular Energy. In this initial trial we matched 95% of their consumption on an hourly basis with renewable power from two renewable generators.
Being able to track our energy use this way means we not only know what we’re using, but where it is coming from, just as we do with the materials we use to make our clothing. That means all our partners, from major companies and international charities to the smallest operations, can have total confidence in our supply chain.
Mart Drake Knight, Co-Founder of Teemill
It can be harder for bigger companies to reach 100%, which is why we work with them to analyse their portfolio and set a stretching but realistic target. The customers can then share their targets with their stakeholders and work together to reach (and exceed) them, helping incentivise new build 24/7 renewable generation in the UK.
At scale, Carbon Free Energy has a crucial role to play in a greener, flexible electricity grid. It’s time to move away from trading REGOs and annual matching and look at real world usage on an hourly basis – this is the future for organisations genuinely standing up in the fight against climate change.
