What are Renewable Energy Certificates (RECs)?

Renewable Energy Certificates are certificates that are issued as proof that electricity has been generated from a renewable energy source. Typically, one Renewable Energy Certificate (REC) is issued for each megawatt-hour (MWh) of electricity produced by a renewable generator. There are many reasons why obtaining these certificates is beneficial for both suppliers and consumers. This guide will explore in more detail what RECs are and how they are beneficial to the UK’s energy market.

In the UK, the equivalent of a REC is a Renewable Energy Guarantee of Origin (REGO) certificate. The name for this type of certificate varies by country; for example, in the United States, they are called RECs, while in Europe, they are known as EU GOs (European Guarantees of Origin). Regardless of the name, they represent the same thing.

A REGO certificate provides consumers and businesses with transparency about the percentage of energy they purchase that is generated from renewable sources. The certificates are issued by Ofgem, the UK energy regulator, with one REGO certificate awarded for every megawatt-hour (MWh) of renewable energy produced.

In the UK, REGOs provide evidence of the renewable energy included in a supplier’s fuel mix. This enables consumers and businesses to clearly understand what they are paying for, supports ESG objectives, and helps attract eco-conscious customers. REGOs offer a cost-effective way to claim green credentials without the need to change your business’s existing infrastructure.

All UK energy suppliers are required to publish their fuel mix, known as a Fuel Mix Disclosure (FMD), each year. This allows customers to see how their electricity has been generated.

This type of certificate is issued by Ofgem, but unlike REGOs, where one certificate is issued for every megawatt-hour (MWh) of electricity generated from a renewable source, the number of ROCs awarded varies. For example, it depends on the amount of electricity generated, the type of generator used, and the age of the installation. There is also a banding system, meaning certain technologies, such as offshore wind, may earn more ROCs per MWh than other forms of renewable energy.

The ROC scheme was created to encourage UK suppliers to increase the amount of renewable energy in their fuel mix. Under the scheme, energy suppliers were required to present a certain number of ROCs per megawatt-hour (MWh) of electricity supplied to their customers each year. If suppliers failed to meet this requirement, they were required to make a buy-out payment to Ofgem.

In 2017 this scheme closed but was replaced by the more competitive Contracts for Difference (CfD) scheme.

What are the benefits of a Renewable Energy Certificate (RECs)?

The UK has a target of reaching net zero by 2050, and to achieve this, it starts with the energy we source and the gradual process of phasing out fossil fuels from our electricity mix. The REGO certificate is a great way of helping us achieve this as a country.

Businesses benefit in multiple ways. The certificates allow you to reduce your Scope 2 emissions, strengthen green credentials, and meet commitments to help achieve carbon goals.

Renewable Energy Certificates can also help drive a more renewable energy market by providing additional funding to generators and green projects. This is done through the purchasing of these certificates, which further supports investment in renewable energy.

A renewable generator, such as a wind farm or solar park, will produce 1 MWh of electricity and feed it into the grid. Ofgem will then issue one unique REGO certificate to that generator, verifying the green origin of the MWh. The generator can then sell the REGO certificate separately to suppliers, known as ‘unbundled’. 

Suppliers tend to buy REGO certificates to match the amount of renewable energy they sell to customers on their green tariffs. However, the issue occurs when suppliers have the option to buy the REGO certificate separately from the electricity itself. This raises concerns about how honest suppliers are when it comes to their fuel mix.

For instance, suppliers can buy electricity produced from fossil fuels and pair it with a REGO certificate to meet certain renewable obligations. 

This can then lead to greenwashing, which happens when businesses try and improve their brand image by appearing environmentally responsible without actually sourcing renewable electricity. In turn, this makes it difficult for companies to accurately assess their true environmental impact.

1. Check the terms of your contract.
2. Check your suppliers' Fuel Mix Disclosure (FMD)
3. Check if your supplier has independent accreditation for their renewable products, verified against recognised standards such as the GHG Protocol.
   

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Written By Faith Labong at Purely Energy