There is more pressure on the energy sector to reform Renewable Energy Guarantees of Origin (REGO) certificates following the move by Ovo to ditch them, an industry expert has suggested.
Kit Dixon, senior policy and regulation manager at Good Energy, was speaking to Utility Week following the major move announced by its rival supplier earlier this week.
He explained that Good Energy is a 100% renewable power supplier and that it buys its energy via power purchase agreements (PPAs), but that it also buys the REGOs alongside these to stop them being sold to greenwash supplies.
Dixon said he believed the move by Ovo to scrap REGOs will increase the pressure on the sector to reform the system. He further welcomed Ovo’s calls for a kitemark system to clearly identify the tariffs directly supporting decarbonisation or the generation of renewable energy.
He said: “Certainly, the more people speak out about it and the more people turn their back on REGOs, there will be more pressure to reform the system. It was something that was being looked at by DESNZ , which was BEIS at the time, I’m not sure where that workstream is up to at the moment but there’s work going on in Ofgem as well, around the price cap.
“That’s why I think the kitemark is quite interesting. We asked for something very similar, alongside Scottish Power, a few years ago. Basically an official system or body that recognises the renewable credentials of a tariff. Of course, there are companies with derogations from the price cap on account of their renewable credentials, of which Good Energy is one. But that doesn’t cover all of the market.
“Other organisations have filled the vacuum, like Uswitch, which prioritises PPA-tariffs as gold standard in their rankings of tariff offerings. We’d love to work with Ovo and the rest of the industry to see what can be done to produce something that could give the information and transparency to customers.”
Meanwhile former SSE director Tom Bent, who is now a consultant, said he does not believe other suppliers will be rushing to follow Ovo’s lead.
Bent, director at Principle and Commercial Energy Services, told Utility Week: “We’ll have to see what other suppliers’ response is. I’ve got a hunch that they will probably hold the line, and be a little bit grateful that – all things being equal – this should bring the price of REGOs down.
“It means they, and ultimately their customers, are paying a little bit less to the renewable generators for the bragging rights to claim green supply.”
He added: “One big supplier saying they are not supporting REGOs makes it more palatable for the others to say they are supporting REGOs – because it will probably have a beneficial effect on price, and it’s a way to differentiate themselves.
“I think a really interesting thing will be if suppliers start to say we’re still doing REGOs as standard, but we’ve also got a ‘super green’ tariff, a REGO+ tariff, which is exempt from the price cap. Or maybe they’ll ask Ofgem for a small premium to be allowed on the price cap for REGO-backed tariffs, as a different way to claw back margin lost.”