New survey reveals falling values of green electricity certificates

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A SNAPSHOT of 50 organisations in the energy industry has revealed that Renewable Energy Guarantee of Origin (REGOs) certificate values have dipped below 30p.

The latest Cornwall Insight Green Certificates survey results show that the value of green electricity certificates has fallen significantly, with average values reportedly more than one-third lower than in the previous quarter.

Commenting on the survey results, Tom Andrews, Senior Consulting Analyst at Cornwall Insight, explained: “Conditions for renewable generation were good and saw above-average generation for this time of year; this has led to an increase in the availability of certificates.

“On its own, this would not necessarily cause such a dramatic drop in value for REGOs.

“However, this period of good renewable conditions was coupled with the COVID-19 pandemic, which saw electricity demand fall by 18% on average in April.

“This meant the market was oversupplied with certificates which caused the prices to drop.

“While prices may be low currently, the sentiment amongst respondents show that the value of green certificates is likely to rebound as the economy recovers from COVID-19.

“However, this is largely dependent on how fast the economy bounces back after the pandemic as electricity demand is intrinsically linked to economic activity.”

Green gas certificates have held their value better, but average prices have also fallen for these certificates.

In fact, REGOs have almost halved in value, but prices are expected to rebound.

The independent survey of 50 organisations across the industry that ran from 22 June to 3 July also revealed that 71% of respondents felt that COVID-19 had a negative effect on REGO prices.

Over a third believed that these effects would continue for at least 6-12 months and a further 21% thought these impacts would last significantly longer than that.

Nick Campbell, Director of Energy Intensive Clients at Inspired Energy, commented on the findings: “It certainly felt like the REGO market has weathered a perfect storm buffeted by reduced consumption.

“High renewable output has created a short-term lull in the market place.

“However, as consumption is returning to pre-COVID levels, and the validity/shelf life of the certificates means there won’t be a long-term hangover of supply, then it is likely, providing we don’t see a second lockdown, that REGO prices will continue to march upwards.

“This will be reflecting in particular the growing need by businesses to meet sustainability targets, as well as utilities to appeal to consumers and prospects.”