Hannah: From Argus Media, this is the Biomass podcast, focusing on all discussions that affect the biomass industry. I am your host, Hannah Adler, senior reporter on the Biomass desk for Argus Media. And today I'm with Giulio Bajona, who is a senior reporter on the power team at Argus Media, too. Thank you so much for joining us today for a chat, Giulio.
Giulio: Thanks for having me, Hannah. I'm very happy to be here.
Hannah: We are discussing REGOs today. So that's the Renewable Energy Guarantees of Origin, here in the UK and its relationship with the biomass markets. For those who don't know, could you quickly just explain what are REGOs?
Giulio: Yes, of course. As you said, REGO stands for Renewable Energy Guarantee of Origin. And it's a certificate issued for each megawatt hour on renewable power output. It's basically a way to track where electricity comes from.
Hannah: Okay. And then so what's it for? What's it used for?
Giulio: It's normally used to prove that at least part, if not all your electricity consumption came from renewables. The use cases normally are for corporates that, for instance, want to disclose their carbon emissions to customers, to stakeholders and make certain claims in terms of the renewable electricity consumption.
But it's also a scheme that's particularly used by utilities, so electricity suppliers, because they are here in the UK, mandated by law to disclose to the customers, existing and potential customers the mix of fuels that went into the generation of electricity. Every year they must submit that so-called fuel mix disclosure with deadline on the 1st of July.
Hannah: So, utilities use it then to prove that they are producing renewable energy. Are there any other ways that they could benefit from the scheme?
Giulio: Yes. Well, the scheme obviously is also beneficial for sellers. So, for essentially power generators, for producers, because it essentially guarantees an extra source of revenue. REGOs are certificates that trade in the market very similarly to other commodities, including power itself, and they can therefore essentially guarantee an extra source of income.
Hannah: What are the different renewable sources that a REGO could come from?
Giulio: That's a good question. It's definitely a big group of different technologies. We have wind, solar, hydropower. We have biomass, biogas, landfill gas, waste, and geothermal.
Hannah: That is quite a list.
Giulio: Yeah, it's quite a few technologies for sure.
Hannah: You mentioned biomass. What comes under that umbrella? Because that's quite a range as well, I can imagine.
Giulio: That's right. Yes. I should say there's a general distinction in the market between bio and non-bio REGOs. By non-bio, we normally mean wind, solar, hydropower. They are also called deep green REGOs. Whereas under the bio umbrella, we normally have biomass itself, biogas, landfill gas, municipal waste. So, some of the technologies that I mentioned before.
And the reason why the market tends to have this split between bio and non-bio is because, between these bigger groups, technologies tend to trade around the same level. And that is also reflected in the assessments that we produce weekly. We have on the one hand, non-bio REGO assessment, on the other hand, bio REGOs.
Hannah: RAnd then how do the biomass REGOs trade then compare with the other renewable REGOs? Are there differences between, like, the non-bio biomass and biomass or is it similar?
Giulio: Yes. So historically, biomass REGOs tend to trade at a discount to non-biomass. That's not only the case in the UK, but we also see similar trends in the wider European market, I should say, for guarantees of origin. There is normally a preference which translates into more demand for wind, solar, hydro.
And that normally comes from the fact that biomass can be seen as a less sustainable option in some cases, due to concerns regarding carbon emissions associated with burning biomass or also deforestation. But that tends to be a general trend, obviously.
Hannah: And so just in terms of how it trades. You mentioned that biomass normally trades at a discount. Is that typical for 2025? What's happening so far this year that you've seen?
Giulio: We've seen an interesting trend that's a good question, between the end of 2024, so let's say, and the start of 2025, I should say REGO prices have declined across the board. Basically, across all technologies. But we've noticed that, especially at the very beginning, the first few weeks of the year, the discount between bio and non-bio widened quite significantly. Essentially, that means that biomass REGOs were trading significantly lower compared to the non-biomass counterparts.
Hannah: And is that any particular reason? Is it more supply or is there something that's adding down with pressure?
Giulio: Yeah. We have noticed that. We have done some digging around that. And what we've noticed is that comparing year on year the number of certificates that have been issued, so there has been entering the market. We see that at the beginning of 2025, there was a significant difference compared with the start of 2024.
We're talking about an increase of about 5-terawatt hour in terms of the number of additional certificates in the market, which actually, I have to say, begs the question for you, reversing roles for a second, because I wonder if that actually means that biomass fire electricity generation has increased because, I mean, that would normally be the case. Have you seen anything in that respect in your market?
Hannah: We have. I think at the start of the year, at least for the first couple of months, the data we have available, yeah, there's been an increase year on year in UK biomass fire generation. And that's mainly just on an increase in generation at the contract for difference units, so the CFD units.
Giulio: Very interesting.
Hannah: It really is. We are going to have to wrap up now. But, Giulio, it was so great to have you on. And if any of the listeners want to hear more about what USS or the REGO market, where could they go to do that?
Giulio: Yes, great question. We produce a weekly report. It's called Argus Global Energy Certificates, and it comes out every Friday. You can request a free trial if you're not a subscriber already. And you're more than welcome to always get in touch if you have any questions.
Hannah: Thank you. Well, it was great to have you on. And it was a pleasure talking with you.
Giulio: Thanks so much, Hannah. Thanks for having me.
Hannah: Stay tuned for the next edition of the Argus Biomass podcast. In the meantime, if you want to learn about this topic more and other factors driving the biomass industry, follow all our coverage in the Argus Biomass Markets report and visit us at argusmedia.com.
