• Trust moves away from renewable energy certification scheme, citing ‘unreasonable and unjustified’ costs with zero carbon reduction value
  • The scheme was made mandatory by NHSE to show the health service buys only renewable energy
  • But it has been criticised for failing to increase green energy production

An NHS trust has dropped a renewable energy mechanism that was intended to support a transition away from fossil fuels, despite it being made mandatory by NHS England.

Mid Yorkshire Hospitals Trust has decided to stop buying renewable energy guarantee of origin certificates to cover the energy it uses on its PFI estate. The cost of REGOs have spiralled while providing “no value from a carbon reduction perspective,” according to the trust’s September board papers.

REGOs are a means of accounting for the volume of renewable energy supplied into the national system. Every megawatt hour of renewable energy produced gets assigned one REGO certificate.

The NHS contract obliges trusts to buy energy covered by REGOs, so that the NHS can say it runs on 100 per cent renewable energy. The system is controversial, however, with the government conceding it does not support renewable energy generation on its own (see below).

Mid Yorkshire and several other trusts are pushing for the NHS to end the requirement. NHS England is not going to end the requirement as set out in this year’s contract, but HSJ understands it will not sanction trusts that take this option as a means to save on their vast and growing energy costs.

The Mid Yorkshire decided to stop buying REGOs for its PFI estate when the cost was projected to rise from £16,000 for the year to £155,000. This equates to £6.20 per REGO. “We felt that this uplift of nearly 1000 per cent was completely unreasonable and unjustified, and we are still of that opinion.”

The board paper notes the price has since increased further, to £180,000 or around £7.50 per REGO, “and will no doubt continue to rise”.

The trust estimates it would have cost more than £240,000 to provide REGOs for its entire estate had it not secured REGOs to cover energy for their non-PFI estate at a lower market rate on a deal that will last until the end of 2025-26.

“We have raised a complaint with Greener NHS (NHSEI) regarding this matter, and many other trusts have followed suit,” the board paper continues. “We hope to lobby for the requirement to be overturned, but stakeholders should be aware that we are technically outside of compliance as things stand.”

Mark Braden, the trust’s director of estates, facilities and information management technology, said: “We are committed to a continued approach to sustainability and decarbonisation, and are continually looking at ways of reducing energy consumption, avoiding undue costs, and lowering our carbon impact. At present we have not had a response from NHSE in regards to our stance on the REGO requirement.”

An NHS England spokesperson said: “The NHS remains committed to increasing the use of renewable energy and supporting climate change commitments. However, we understand that during this challenging period, purchasing REGO-certified energy may not be a viable option for some NHS organisations.”

REGOs explained

The REGO mechanism is a means of accounting for the amount of renewable energy provided to the national grid. Each megawatt hour of renewable energy produced gets assigned one REGO.

However, that does not mean consumers are necessarily getting only energy produced from renewable sources. REGOs can be sold separately from the unit energy they are assigned to. These “unbundled REGOs” mean suppliers can buy energy from non-renewable sources and separately buy a corresponding number of REGOs to cover the MWhs they have obtained.

The government’s Climate Change Committee has poured cold water on the capacity of the REGO system for increasing the volume of renewables in the overall energy mix.

“The buying and selling of REGOs is a market,” it said in a December 2020 report. “REGO prices are increasing as there is more demand for green tariffs and therefore for REGOs; however, it is widely understood that even with the increasing value of REGOs, the structure of the system will never provide prices high enough that will act as a support mechanism for new generation on its own.”

NHSE itself acknowledges this. Its Greener NHS policy paper from 2021 says that buying 100 per cent energy – as qualified by REGOs – does not create additionality in the system. However, “it does demonstrate the system’s commitment to net zero”.

Source

Trust board paper

Source Date

September 2022

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