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Ofgem to review disclosure process for electricity suppliers

Ofgem is reviewing processes for requiring electricity suppliers to reveal their source of supply, ICIS has reported.

The EU and UK operate separate certificate schemes for disclosing evidence of electricity derived from renewable energy sources.

The GoO is an EU-traded commodity, which companies or countries with a renewable oversupply transfer to regions with stronger demand.

The AIB is the common organisation that allows the transfer of certificates from one country to another.

However, the UK’s unilateral certificate scheme – renewable energy guarantees of origin (REGO) – has come under increased scrutiny after the government removed the climate change levy exemption for renewables generators from 1 August.

Levy exemption certificates (LECs) were used by businesses to prove that electricity was green and qualified for exemption from the tax.

For UK suppliers sourcing green energy from the continent LECs, issued to generators and sold to suppliers, were used to verify fuel origin.

As Ofgem does not recognise GoOs as proof of origin, it previously married up the number of LECs sourced from overseas with the GoOs issued by continental generators in conjunction with LECs.

This enabled Ofgem to verify the origin, which suppliers are obliged to publish annually through fuel mix disclosure (FMD) data.

With LECs redundant as of 1 August, the commercial purpose of some capacity contracts on the BritNed and IFA interconnectors has been called into question.

As a result, the UK’s isolation from the wider EU in the trade of green energy grabbed the spotlight.

“Historically, LECs have been used as proof of supply for a range of renewable schemes and evidence of supply is required in legislation,” an Ofgem spokeswoman said.

Although the regulator refrained from confirming discussions with AIB, it is actively looking to reform the proof of origin process.

“One of the schemes we intend to review is our recognition of overseas GoOs for fuel-mix disclosure. As part of this, we will consider a number of delivery options,” the spokeswoman added.

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