Changes to REGO Regulations

Changes were introduced on 5 December to the requirements for the issue, transfer and revocation of renewable energy guarantees of origin (REGOs) in Great Britain. The purpose of the new 2010 Regulations is to give effect to recent changes required by the 2009 Renewable Energy Directive on the issue and cancellation of REGOs.
 
Background 
 
REGOs are transferable certificates, issued by Ofgem as evidence that electricity generated is "produced from renewable energy sources". The main purpose of a REGO is as evidence for Fuel Mix Disclosure (FMD) purposes. In bills and promotional material issued to customers, licensed electricity suppliers must specify the contribution of each energy source to the overall fuel mix of the supplier in the preceding year. Each supplier must hold REGOs equivalent to the quantity or share of electricity from renewable sources that the supplier claims it has supplied. Therefore the supplier will expect a generator to provide REGOs to accompany any renewable electricity that they purchase from that generator.
 
The main changes in the 2010 Regulations are as follows:
 
Definition of “renewable energy sources”
 
The definition of “renewable energy sources” has been amended to include energy from aerothermal (energy stored in the form of heat in the ambient air) and hydrothermal (energy stored in the form of heat beneath the surface of solid earth) sources. The sources now considered “renewable” for the purpose of the REGO Regulations are wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases
 
Measurement unit of a REGO
 
Under the previous 2003 Regulations one REGO represented one kilowatt/hour (kWh) of electricity and REGOs were rounded up or down to the nearest whole kWh. The 2010 Regulations amended this unit of measurement so that one REGO represents one megawatt/hour (MWh). This means that REGOs will now be issued for electricity rounded up or down to the nearest MWh (i.e. generation over 0.5MWh will receive one REGO whereas generation of 0.49MWh or less will not receive a REGO). 
 
Cancellation of a REGO
 
Whilst the 2009 Renewable Energy Directive requires that REGOs are cancelled once they are used, it does not prescribe how long a REGO can exist before it must be cancelled. The 2010 Regulations provide that a REGO must be cancelled 16 months after the month in which the electricity it relates to was generated (or if generated during a period longer than one month, the 16 months after the first month during which the electricity was generated). This means REGOs can be presented as evidence for FMD purposes up to 15 months after the month the electricity is generated. REGOs will however be cancelled on Ofgem’s Renewables and CHP Register on a 16 month rolling basis regardless of whether they have been used for FMD purposes. 
 
Information to be provided/recorded
 
The 2010 Regulations amend the information to be provided by a generator when making an application for a REGO and also the information to be recorded on the Ofgem Renewables and CHP Register. 
 
REGOs from other Member States
 
The 2010 Regulations strengthens the circumstances in which Ofgem can refuse to recognise a Guarantee of Origin (GoO) issued by another Member State. Under the 2003 Regulations, Ofgem could refuse to recognise a GoO where it was satisfied that such refusal was necessary to prevent fraud or where the GoO was mistakenly issued. Following the 2010 Regulations, Ofgem can refuse to recognise a GoO where it is “satisfied that there is good reason to doubt the accuracy, reliability or veracity” of that GoO.
 
During the Spending Review in October, the coalition government announced that the Renewable Heat Incentive (RHI) scheme will go ahead in 2011. Therefore, rather than deciding whether to introduce REGOs for heating and cooling in the 2010 Regulations, the Coalition has opted to take this decision following the introduction of the RHI next year. In the mean time, GoOs issued by other member states in relation to heating and cooling are capable of being recognised by Ofgem.
 
Impact of the 2010 Regulations 
 
The change to the unit used to measure REGOs will benefit generators producing 500kWh or just slightly above as they will now be treated as though they had produced 1MWh of renewable power. However, this benefit is merely reputational at this time, as REGOs do not have a monetary value in the way that ROCs or LECs do.
 
There will be a marginal increase in the administrative burden on generators due to the changes in the level of detail required to be supplied when applying for a REGO. However, this is offset by the decrease in the administrative burden brought about by the move to increase the unit of measurement of REGOs from kWh to MWh.
 
For further information regarding REGOs, please contact either Susan Fergusson or Liz McRobb.