DECC to extend RO to 2037

The RO is the Government’s principle incentive scheme to generate renewable energy in the UK. Under the RO, all renewable generators apply to Ofgem for accreditation that their electricity is being generated from eligible renewable sources and are issued with Renewable Obligation Certificates (ROCs) for their qualifying output. All UK electricity suppliers are obliged to show that they are obtaining a proportion – currently 9.1 per cent of their electricity – from renewable sources.

As well as extending the RO to 2037, the Government has given new projects 20 years of support to increase investor confidence and create stability for developers. It has also increased 'headroom' from eight to 10 per cent in yearly increments of 0.5 per cent.

“We are very conscious of the need to balance this increased support with maintaining value to consumers, to protect them from overpaying for renewables deployment. The introduction of banding earlier this year, as well as the move to headroom, help to make the RO more effective, and we will continue to look for ways to achieve further efficiencies,” commented Lord Hunt, Minister of State for Energy and Climate Change.

733 responses were made to the Renewable Electricity Financial Incentives (REFI) consultation, which closed on October 15. The Government states in its report that the RO extension to 2037 received widespread support, however “a significant minority” (33 out of 97) thought it should extend beyond 2037. The 20 year support limit was also welcomed although some thought that all plants, regardless of when they were built, should be entitled to 20 years of support.

The increase to 10 per cent headroom was also almost unanimous with “an overwhelming suggestion” that headroom should go directly to 10 per cent. It was suggested that the gradual approach could run the risk of the installed capacity exceeding the RO at some point in the ramping up period.