REGOs vs PPAs — what does 'green' business energy really mean?

The claim ladder

There is no single definition of 'green' business energy in the UK. Different products deliver different levels of environmental integrity — and different levels of scrutiny will hold up.

Broadly there are four rungs: unbundled REGO-backed supply, matched REGO plus disclosed sourcing, physical or virtual PPAs, and on-site generation. All are legitimate; the right one for you depends on how your sustainability claim will be tested.

REGOs — the mainstream baseline

A Renewable Energy Guarantee of Origin (REGO) certificate is issued for each MWh of eligible renewable electricity generated in the UK. Suppliers buy certificates to match customer consumption, and the tariff is then marketed as '100% renewable'.

REGO-backed tariffs are legitimate, low-friction and often within 1-3% of standard pricing. They support Scope 2 market-based reporting under the GHG Protocol. Their limitation: certificates are often traded unbundled from the underlying power, so the direct link between your consumption and specific new renewable generation is weaker than higher-integrity products.

PPAs — direct and matched

A power purchase agreement (PPA) is a long-term contract to buy electricity from a specific renewable asset — either physically (the power actually flows to you) or virtually (a financial contract with matched attributes).

PPAs deliver stronger additionality claims because they typically underpin new generation. They're standard for large corporates but originating a PPA usually needs 10+ GWh/year of consumption to be commercially efficient.

Time-matched supply — the emerging standard

Higher-integrity products increasingly match renewable supply to consumption on an hourly (not just annual) basis. Time-matched supply is the direction of travel for organisations under significant sustainability scrutiny, particularly regulated financial services and hyperscale tech.

Green gas — RGGOs and biomethane

The equivalent instrument for gas is the Renewable Gas Guarantee of Origin (RGGO), backed by biomethane injected into the grid. Availability is more limited than REGOs and prices carry a premium, but they support Scope 1 emissions reduction claims where a business must remain on gas.

Picking the right rung

For most SMEs, REGO-backed supply is the sensible starting point — it moves your Scope 2 to zero on a market basis without significant cost. Organisations with detailed sustainability reporting (CSRD, TCFD, science-based targets) should think harder about matched supply or PPAs so the claim survives audit scrutiny.