Ofgem reports 15 per cent increase in ROCs

The Renewable Obligation (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 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.

Each ROC represents one megawatt hour (MWh) of electricity and Ofgem said it had received 18.9 million ROCs this year compared to 16.4 million last year. That means the total RO for electricity supplied to customers across the UK in 2008-09 was 28,975,678 MWh.

England and Wales’ total RO for the period was 25,944,763, MWh, while the total RO for Scotland was 2,774,881 MWh and for Northern Ireland 256,034 MWh.

Energy suppliers who haven’t met their statutory requirement by either self-generation or by acquiring ROCs from third parties, have to contribute to a ‘buy-out fund’, which is then distributed to suppliers who did present their ROCs. The buy-out price per MWh of electricity is calculated by Ofgem each year by adjustment to reflect changes in the Retail Prices Index. The buy-out price for 2008-09 obligation period was £35.76 and the amount paid to suppliers from the buy-out funds on September 30 2009 for each ROC they presented was £18.54.

The total values of the RO buy-out funds (including interest) due to be redistributed were £320,673,766 for England and Wales, £23,943,338 for Scotland and £6,860,976 for Northern Ireland.

For the period of 2008 to 2009, there was a shortfall of £7,196,101.08 in the three buy-out funds as not all suppliers fully complied with their obligations. A large proportion of this shortfall was due to two suppliers – Bizz Energy Ltd and Electricity4Business Ltd – being in administration and one supplier making a late payment.