Edie explains: Renewables Obligation Certificates (ROCs)

What is the Renewables Obligation (RO) scheme?

The Renewables Obligation (RO) was introduced by the Government in England, Wales and Scotland 2002, and Northern Ireland in 2005, to encourage the deployment of large-scale renewable electricity in the UK.

Small-scale generation is generally supported through the Feed-In Tariff scheme (FITs).

There are three separate obligations for England and Wales (RO); Scotland (ROS); and Northern Ireland (NIRO).

The RO requires licensed UK electricity suppliers to source a specified proportion of the electricity they provide to customers from eligible renewable sources.

What is a Renewables Obligation Certificate (ROC)?

ROCs are essentially the green certificates issued to electricity generators and bought by suppliers to show that they have fulfilled the Renewables Obligation (RO).

A ROC is issued to the operator of an accredited renewable energy generating station for every MWh of renewable electricity it generates. ROCs are ultimately used by suppliers to demonstrate that they have met their obligation.

A supplier’s obligation is calculated by: Supplier obligation (ROCs) = Total electricity supplied (MWh) x Obligation level (ROCs/MWh)

How does it work?

– Every month, an eligible renewable electricity generator reports to the Office of the Gas and Electricity Markets (Ofgem) the amount of renewable electricity it generates

– Ofgem issues the electricity generator with Renewables Obligation Certificates (ROCs) relating to the amount of eligible renewable electricity they generate

– Generators sell their ROCs to suppliers, allowing them to receive a premium as well as the wholesale electricity price

– Suppliers present their ROCs to Ofgem to demonstrate their compliance with the RO. Suppliers who do not present enough ROCs to meet their obligation must pay a penalty (known as the ‘buy-out price’)

– The money Ofgem collects in the buy-out and late payment funds is re-distributed on a pro-rata basis to suppliers who presented ROCs

How many ROCs does each generator receive?

The number of ROCs issued to each generator depends upon the type of technology it uses (each type falls under a ‘banding level’) and the amount of electricity it generates.

The default is that one ROC is issued per MWh generated. However, some technologies receive more ROCs and others receive fewer. For example, offshore wind receives two ROCs per MWh while onshore wind receives 0.9 ROC per MWh.

TABLE: banding levels for review period (2013-17) in England and Wales

When is a generator eligible for ROC?

Since the introduction of the Feed-in Tariff scheme in England, Wales and Scotland in 2010, a generator with a capacity smaller than 5MW is not eligible for ROCs.

Any large-scale renewable electricity generator listed in the above table with a capacity larger than 5MW can apply for accreditation under RO.

Where can I find out more?

Ofgem’s RO guidance for generators can be found here.

Guidance for suppliers can be found here.

Lois Vallely