Two schemes currently cohabit in the UK, when it comes to payments to electricity generators:

Both schemes are funded through a compulsory levy on electricity suppliers, in proportion to their share of the electricity sales market.

For FiT, “anyone who had installed an eligible installation that uses one of the following technology types could apply for accreditation: Solar photovoltaic (solar PV), Wind, Micro combined heat and power (Micro CHP), Hydro, and Anaerobic digestion (AD). Installations could have a capacity of up to 5MW, Megawatts (or 2kW Kilowatts for Micro CHP)”. Since February 2016, the number of new installations that could be accredited under the scheme each ‘tariff period’ (for most technology types, every three months) was capped.

Electricity suppliers in the UK can seek exemption from the compulsory levies in respect of renewable electricity generated in an EU member state and supplied to customers in Great Britain (thus using EU GOs). Since the UK has left the EU, "the UK Government, therefore, believes that it is now appropriate to review the continued operation of the CfD and FIT green import exemptions", the 

On EU GOs imports, the document also mentioned that the UK Government’s view was that "there is currently an asymmetry, whereby the UK recognises EU GOs issued in the EU for Fuel Mix Disclosure (FMD), while the EU no longer recognises REGOs issued in the UK".

 to this consultation (read our article on OFGEM response 

), led us to see Option 3 as the more likely to occur, i.e. to “repeal the green import exemptions ensuring scheme costs are equally distributed across suppliers”, and this as of 1st April 2023.

The just released Government’s final decision on this matter confirmed what we foresaw two months ago. Let’s dive in.

BEIS provides, in its final document, the breakdown of the 28 answers received for this consultation, by organisation type. Find below a summarizing chart.

Consultation results UK 2022

On the matters that the respondents were asked to position themselves on, CfD and FIT schemes’ green import exemptions (i) and the Government’s intention to remove the UK recognition of Guarantees of Origin produced in the EU (ii), a consensus was pretty much formed.

i. CfD and FIT schemes’ green import exemptions

On the first matter, 22 out of the 25 respondents for this question favoured option 3, the repealing of CfD and FIT schemes’ exemptions. As a reminder, option 1 was the continuation of the current exemptions, and option 2 was the extension of the exemptions to all international trading partners.

The 22 in favour of option 3 argued that it would bring fairness, simplification, and transparency:

, because of “the lack of equal distribution of scheme costs between suppliers in the GB energy market due to the use of the green import exemption by only some suppliers”, summarizes BEIS;

, probably because the current set-up is seen as a bit blurry by the respondents, and not only them…

Finally, some of the respondents highlighted that these exemptions could be “an incentive for GB suppliers to purchase of EU renewable electricity, with a consequence of reduced revenue going to UK generators and therefore a reduced investment in the UK sector, which can be seen as in opposition to Government’s decarbonisation goals”. This seems more of one of the Government’s arguments than one of the respondents.

On the timing of the implementation of such changes, respondents were divided between 1st October 2022 (8 respondents) and 1st April 2023 (16 respondents). The main argument for the date ultimately chosen (1st April 2023) by the Government was that 1st October is right in the middle of a reporting year, while 1st April is the first day of the next reporting year (Compliance Period 22).

ii. Government’s intention to remove the UK recognition of Guarantees of Origin produced in the EU

On the end of EU GOs recognition in the UK, respondents had less choice: their only margin was on the date of the change, not the change itself…

21 respondents participated in this question, 6 of them preferring 1st October 2022 mainly because, in their view, the current disparity between the EU and the UK (the EU does not allow UK GOs – REGOs – imports while the UK allows EU GOs imports) needs to be addressed as soon as possible. Thus, 15 gave their preference to the 1st of April 2023, for administrative, investment, and cost implications. With the 1st of April 2023, they will have more time to schedule and adapt to the new changes.

Both the dates favoured by the respondents thus coincide as to be the 1st of April 2023, a position that OFGEM, in its response to the consultation, underlined and supported, for consistency and a more global approach.

Logically, the UK Government states that they will amend the corresponding legislation so that both changes will be implemented as of 1st April 2023, as proposed by the Government, agreed by OFGEM, and supported by most of the respondents to the consultation.

As a result, we assume the below two effects are likely to occur:

- Logically, the lack of EU GOs in the FMD will be felt: during CP19, almost 70 TWh of EU GoOs were imported into the UK (see historical graph below). The period from CP15 to CP19 has seen a Compound Annual Growth Rate (CAGR) of these imports of 35,11%. In CP19, these thus imports represented 67% of the REGOs redeemed. The gap to fill will be substantial: 

we expect both the amount of REGO issuers and issuances to significantly increase

we expect the price for REGOs to increase

 since it is more than likely that the demand increase cannot yet be faced by the same increase in REGO supply. In times of shortage, this will lead to an increase in REGO prices.

EU GOs in the UK: Total Imports 2016-2019

Greenfact has decided to host a Webinar on this specific issue, to help our customers that show an interest in the UK GoO market to better understand the new rules.

This Webinar will be held on September 6th at 4pm CET

, with the special presence of a member of BEIS that will enlighten all attendees on the new rules and answer questions.

For any questions on the UK market and/or the Webinar, do not hesitate to contact me at 

News

Poland paves way for AIB membership 

FuelEU Maritime and potential impact on the renewable gas market

Spanish GO Biweekly Update for Weeks 37-38: Stable Prices Amidst Decreased Domestic GO Activity

Italian September 2023 Auction witnessed very low demand

Week 38: RGGI regulators announce the next meeting for its Third Program Review 

Week 38: Muted market reaction to the announcement of the next regulatory meeting to update California’s cap-and-trade program

Spain to suspend Import/Export of Serbian GOs

Week 38: Despite negative media coverage, all VCM contracts appreciate

GO Week 38 Recap: 2024 contracts dancing at the 7 EUR edge

Week 38: Without clear fundamental direction, EUAs watch technical signals 

Week 38: KAU23 sales volume expands and turns downward. Tug-of-war between buying and selling is expected to continue for the time being

EP votes a mixed bag for biomethane - EBA

EAC Market Report - In The Midst Of A Bullish Wave

A platform with real-time GO data and insights, reporting prices and market fundamentals for Wind, Hydro, Solar, Biomass, Biomethane and RGGOs. 

Our community offers access to webinars, discussions and updates from industry leading experts and analysts. 

This is the end of a long and stressful wait for all of us. Today, July 27th 2022, BEIS has finally published the results of the 

 it opened on March 29th amongst stakeholders and, more importantly, the 

Our Platform gives you unfettered access to price benchmarking, analytics, new and insights covering the green certificates markets. 

Request a trial now and someone from our team will be in touch with you to learn more about your involvement in the markets and to answer any questions you may have.

News

EU GOs no longer recognised in the UK as of 1st April 2023

To read this article and explore our services, request a trial!

Related reading