RENEWABLES OBLIGATION - TOTAL OBLIGATION LEVELS FOR 2010-11
5 Aug 2011 02:08 PM
Energy regulator Ofgem today publishes information on the amount (in ROCs) of the Renewables Obligation for the 2010-11 obligation period, which finished in March this year.
The Renewables Obligation places an obligation on electricity suppliers to source an increasing portion of the electricity they supply from renewable sources. The obligation levels for 2010-11 are 11.1 ROCs per 100 MWh of electricity supplied to customers in England & Wales and Scotland, and 4.27 ROCs per 100 MWh of electricity supplied to customers in Northern Ireland.
Using these ratios, combined with data from suppliers regarding the amount of electricity supplied in the period, Ofgem has determined that the total Renewables Obligation on electricity supplied to customers across the UK for 2010-11 is 34,749,939 ROCs. On electricity supplied in England & Wales it is 31,165,241 ROCs; on electricity supplied in Scotland it is 3,229,941 ROCs; and on electricity supplied in Northern Ireland it is 354,757 ROCs.
Electricity suppliers must comply with their Renewables Obligations for 2010-2011 before 1 September 2011. They can do this by:
presenting Ofgem with Renewables Obligation Certificates (ROCs) to the full value of their obligation;
using a buy-out clause which allows them to pay £36.99 per ROC for any shortfall; or
using a combination of ROCs and buy-out.
Notes to editors
1. All licensed electricity suppliers have now submitted their supply data and obligation levels for 2010-11 to Ofgem, which were required to be provided by 1 July under the requirements of the Renewables Obligation Order 2009, the Renewables Obligation (Scotland) Order 2009, and the Renewables Obligation Order (Northern Ireland) 2009.
2. All renewable generators apply to Ofgem for accreditation that their electricity is generated from eligible renewable sources. These generators are issued with Renewables Obligation Certificates (ROCs) for their qualifying output. Since April 2009 the value of a ROC has been "banded" according to the generation technology type. The renewable generator can sell ROCs either with or separately from the electricity generated.
3. The introduction of banding in April 2009 changed the obligation from being a percentage of a supplier's supply to an obligation to present a number of ROCs per MWh of a supplier's supply. This broke the direct link between the level of the Obligation and the actual amount of renewable energy required to meet it; one ROC is not necessarily equivalent to 1 MWh of renewable electricity.
4. The Renewables Obligation started in April 2002 (April 2005 in Northern Ireland). The obligation levels are set out on a yearly basis in Schedule 1 of the Order; in England, Wales and Scotland this obligation started at 3 per cent of electricity supplied in 2002- 2003. The Renewables Obligation (Amendment) Order 2010 (including the Scotland and Northern Ireland equivalents) removed the possibility of the obligation being capped from the legislation, the obligation may therefore exceed the level set out in Schedule 1 of the 2009 orders. The calculation to set this level is performed by DECC and incorporates the number of ROCs issued and the total amount of electricity supplied under the RO and ROS. The 2010-2011 obligation was the first time the obligation level (11.1 ROCs per 100 MWh in England and Wales) exceeded that of Schedule 1, similarly for 2011-2012 the obligation has exceeded Schedule 1 and is 12.4 ROCs per 100 MWh.
5. In order to meet their Renewables Obligations, suppliers can present Ofgem with enough ROCs or use a buy-out clause to make up the difference. They can also use a combination of ROCs and buy-out to meet the obligation. The buy-out price per ROC is calculated by Ofgem each year by adjustment to reflect changes in the Retail Prices Index. All buyout payments are redistributed to suppliers who have presented ROCs against their obligation in proportion with the number of ROCs that each has presented.
6. Suppliers provide Ofgem with their total supply figures for each obligation period in order for their Obligations to be calculated. If a supplier fails to meet its part of the Obligation, either through not producing sufficient ROCs or not making the correct buy-out payments, it will be in breach of the Electricity Act 1989 and liable to enforcement action.
7. Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority's powers and duties are largely provided for in statute, principally the Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act 1998, the Enterprise Act 2002, the Energy Act 2004 as well as arising from directly effective European Community legislation.