Renewables Obligation (RO) Annual Report: Scheme Year 20 (2021-22)

Source: 3/30/2023, Location: Europe

The Renewables Obligation (RO) is a government scheme which places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. The scheme is designed to support large-scale renewable electricity generation in Great Britain (GB), and large-scale, as well as smaller scale renewable electricity generation in Northern Ireland (NI).

The RO provides long term support in the form of Renewables Obligation Certificates (ROCs) that are issued to accredited renewable generating stations for the eligible renewable electricity they generate. For each obligation period, licensed electricity suppliers are required to present ROCs to Ofgem in proportion to the amount of electricity supplied to their customers. Those suppliers not presenting sufficient ROCs to fulfil their obligation are required to make a payment to cover the shortfall.

The RO Annual Report presents the key points of interest covering Scheme Year 20 (SY20: 1 April 2021 to 31 March 2022).

Renewables Obligation Certificates (ROCs) issued and renewable generation

We issued 105.05 million ROCs in SY20. This represents a small decrease compared to the 109.3 million ROCs issued in SY19.
ROCs were issued based on 78.0 TWh of renewable generation. This was equivalent to 29.5% of the UK electricity supply market, and sufficient to power more than 26.9 million UK homes for a year.
Total generation when including output on the Feed-in Tariffs (FIT) and Contracts for Difference (CfD) schemes rises to 108.0 TWh, equivalent to 40.9% of UK supply.

Compliance by licensed electricity suppliers, scheme value and mutualisation
The total obligation for SY20 was 127.8 million ROCs.
109.3 million ROCs were presented by suppliers in SY20 (this was 85.5% of the total obligation) and a further £820.5 million was paid into the buy-out and late payment funds.
Each ROC was notionally worth £58.24, which when multiplied by the 109.3 million ROCs presented results in a scheme value of approximately £6.4 billion.
In total, 28 suppliers did not make the required buy-out or late payments in full or present the necessary number of ROCs towards their obligations by the relevant deadlines.
This resulted in a shortfall of £119.7 million in the buy-out and late payment funds and in mutualisation being triggered for the fifth successive year.
Of these 28 suppliers, 27 ceased trading before or during the 2021-22 (SY20) annual compliance period up to the late payment deadline of 31 October 2022.

One active supplier, Delta Gas and Power Limited, failed to discharge their obligation in full by the legislative deadline. This was the second consecutive year Delta they failed to meet their obligation in full and on time. Delta subsequently paid the remaining balance in November 2022. However, at the time of writing, we are considering imposing a financial penalty on Delta in respect of their non-compliance.

Participant compliance
As part of our work to ensure compliance with the scheme regulations we conducted 67 targeted and 364 statistical audits on generating stations in the UK.
A total of 34 compliance investigations on stations where concerns were identified were closed during SY20, with 18 of these cases resulting in compliance action being taken.
The value of our work preventing and detecting error on the RO scheme was around £76 million.

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