Renewable energy for business moved from “premium ESG choice” in 2018 to “default option” in 2026. Almost every UK supplier now offers a 100% REGO-backed electricity tariff with negligible premium over their standard product. This guide explains the four levels of renewable supply available to UK businesses, how each one is verified, and which one suits which type of buyer.
Level 1: Standard REGO-backed renewable tariff
The most common option. Your supplier buys (or generates) renewable electricity equivalent to your annual consumption and matches it with Renewable Energy Guarantees of Origin (REGOs) issued by Ofgem. Each REGO certifies 1 MWh of renewable generation.
Pros: cheap or free premium; easy to switch to; widely accepted for ESG reporting.
Cons: REGOs are traded separately from the electricity itself, so you do not actually receive renewable electrons. Some sustainability auditors discount REGO-only tariffs.
Level 2: Sleeved or “matched” renewable tariff
The supplier buys renewable electricity from a specific generator (e.g. a named wind or solar farm) and “sleeves” it through to your meter. You can usually name the generation source in your sustainability report. Premium typically 0.5-1.5p/kWh over standard.
Level 3: Corporate Power Purchase Agreement (CPPA)
You sign a long-term (10-15 year) contract directly with a renewable generator (or developer) for a fixed price per MWh. The most demanding option but offers the strongest sustainability claim and a hedge against wholesale price rises.
Mostly used by businesses with over 5 GWh/year of consumption. Setup costs are significant (legal, structuring, hedging) but pay back at scale.
Level 4: On-site generation (solar PV, behind-the-meter)
Install solar PV (or smaller wind / biomass) on your premises. The cleanest sustainability claim because the electricity is genuinely consumed where it is generated. ROI on UK commercial solar PV in 2026 is typically 7-12% with payback in 6-9 years.
Combine with battery storage and a “smart” energy management system to maximise self-consumption.
Renewable gas options
For gas, the equivalent is Green Gas Certificates (GGCs) issued by the Renewable Energy Assurance Limited scheme. Verified biomethane is injected into the gas grid and matched against your consumption. Premium typically 0.5-2p/kWh over standard. Genuine biomethane PPAs are also available but limited in scale.
How REGOs and Green Gas Certificates work
Both work via a “matching” model:
- Renewable generator produces 1 MWh of clean electricity (or 1 MWh of biomethane).
- Ofgem (REGO) or REAL (GGC) issues a certificate against that generation.
- Supplier buys the certificate.
- Supplier matches the certificate against a customer’s consumption.
- Customer claims the equivalent consumption as renewable.
Critics argue this allows “double counting” because the renewable electron and its certificate flow into separate accounts. Defenders argue REGOs create demand for renewable generation by paying generators a small premium.
Which renewable option suits which business?
- SMEs (under 100k kWh/year): Stick with Level 1 REGO-backed. Premium negligible, ESG box ticked.
- Mid-market (100k-5m kWh/year): Consider Level 2 sleeved tariff or on-site solar where roof space allows.
- Large I&C (5m+ kWh/year): CPPA usually beats on-grid renewables on both price and ESG depth.
- Multi-site retail / hospitality: Level 1 across the portfolio plus targeted on-site solar at suitable sites.
Frequently Asked Questions
The premium has fallen sharply — in 2026, REGO-backed renewable electricity is typically 0-0.5p/kWh more than a standard tariff with the same supplier. Some suppliers (Octopus, Bryt, Good Energy) charge no premium at all.
REGO-backed means the supplier has bought renewable certificates equivalent to your consumption but the actual electrons flowing to your meter come from the grid mix. “Pure” or “sleeved” tariffs match your consumption directly to a named generator’s output. CPPAs and on-site generation give you the strongest direct claim.
Yes — under the GHG Protocol, market-based Scope 2 reporting accepts REGO-backed electricity as zero-emission. Some advanced sustainability frameworks (RE100, SBTi) prefer time-matched or location-matched supply.
Almost all of them. Pure renewables-only suppliers include Octopus Energy for Business, Good Energy, Ecotricity, Bryt Energy and So Energy. Big Six suppliers all offer REGO-backed variants of their standard tariffs.
Typically £25,000-100,000 in legal, advisory and structuring fees for a 10-15 year deal. Payback is usually within year 1 of operation for businesses over 5 GWh/year through the long-term price hedge and ESG benefits.
Want a quote on renewable vs standard for your meter? Get a free 60-second business energy quote — we quote both side by side so you can see the actual premium for your usage.
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