REGO Certificates Explained: What Actually Backs a Green Business Tariff
A REGO proves a megawatt hour was generated from renewables. It does not prove that megawatt hour reached you, which is why green tariffs are under scrutiny.
REGO Certificates Explained – If your business is on a renewable electricity tariff, a REGO is almost certainly what makes that claim possible. It is worth understanding what one is, because the gap between what a REGO proves and what businesses think it proves is wide.
REGO Certificates Explained – What a REGO is
A Renewable Energy Guarantee of Origin is issued by Ofgem to accredited renewable generators. One certificate is issued per megawatt hour of renewable electricity generated.
Suppliers acquire REGOs and redeem them against the volume they sell, which is how they evidence the renewable share in their Fuel Mix Disclosure. Redeem enough certificates to cover a customer’s annual consumption and that customer can be sold a 100% renewable tariff.
The scheme runs on a compliance year to 31 March, with certificates redeemed after the year ends. Ofgem’s REGO scheme pages set out the accreditation and redemption process in full.
So far, so reasonable. The problem is in how they trade.
REGO Certificates Explained – The unbundling problem
REGOs can be sold separately from the electricity they were issued against. The generator sells the power into the wholesale market and sells the certificate to whoever wants it.
That means a supplier can buy entirely undifferentiated wholesale electricity, buy a matching pile of certificates, and market the result as 100% renewable. No new renewable capacity is built as a result. Nothing about the physical electricity changes. The claim is technically accurate and substantively thin.
For several years REGO prices were low enough that the certificates cost a fraction of a penny per kWh, which is why almost every supplier could offer a green tariff at negligible premium. Prices have moved around considerably since, and the cheapness of the claim was always the clue that it was not doing much.
None of this is fraud. It is how the scheme was designed. But if your business is making public claims about renewable electricity, the distinction between certificate-backed and genuinely additional matters, and stakeholders are increasingly asking.
Where the regulator has got to
Ofgem has consulted on improving consumer protection in the green and renewable tariff market, with proposals covering how suppliers describe environmental benefits, a requirement to be clear where a tariff delivers no additional benefit, and evidence requirements for renewable supply claims.
That work has focused on domestic consumers. The direction of travel is clear enough that business buyers should read it as a signal rather than as something that does not apply to them, particularly any business whose own customers ask about supply chain claims.
What this means for your carbon reporting
Under the GHG Protocol, Scope 2 emissions can be reported two ways. The location-based method uses the average grid emissions factor. The market-based method reflects the contractual instruments you hold, which in the UK means REGOs.
So a REGO-backed tariff does legitimately reduce your market-based Scope 2 figure, and for SECR and most reporting frameworks that is a valid position. This is not nothing.
What it does not do is change the location-based figure, and it does not satisfy the more demanding standards. Businesses working towards net zero under SBTi criteria are being pushed towards hourly matching and towards instruments with a demonstrable link to specific generation, which unbundled REGOs are not.
The gap between a defensible reporting position and a defensible sustainability claim is the thing to be clear-eyed about. Our post on carbon neutral versus net zero covers the same distinction in a different context.
Options that carry more weight
If you want a renewable position that holds up to scrutiny, the ladder runs roughly like this.
Unbundled REGOs. Cheapest, weakest. Fine for a baseline claim, poor as a headline sustainability story.
Bundled REGOs from a named generator. The certificates come with the power from an identified asset. More expensive, considerably more defensible, and you can name the source.
Sleeved or virtual PPA. A direct contract with a specific generator, usually over ten years or more. This is where genuine additionality lives, because your offtake commitment can be what makes a project financeable. See our guide to corporate power purchase agreements for how these are structured.
On-site generation. Rooftop solar and the like. Unambiguous, though limited by roof area and load profile.
Most businesses end up with a mix. There is nothing wrong with a REGO-backed supply forming the base, provided you are not describing it as something it is not.
Questions to ask at tender
When you next go to market, three questions separate a real renewable offer from a paper one:
> Are the REGOs bundled with the power, and from which generators?
> What is the explicit premium in p/kWh over the equivalent brown product?
> Will the supplier provide evidence of redemption against our volume?
Suppliers that can answer all three clearly are usually the ones doing it properly. Getting the premium quoted separately is the single most useful thing, because it lets you decide whether the claim is worth the money. That is how we handle it on every renewable procurement exercise we run.
Chris Hurcombe is Managing Director of Catalyst Commercial Services, an independent business energy consultancy based in Birmingham. He works with UK businesses on energy procurement, contract management, and carbon strategy, and writes on energy markets, compliance, and the commercial implications of the UK's net zero transition.
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