The Renewables Obligation (RO) scheme aims to encourage energy suppliers in the UK to generate electricity from renewable sources. The scheme means that licensed suppliers are obliged to source an increasing amount of their electricity from these sources.

In order to show that these obligations have been met, suppliers are required to submit Renewable Obligation Certificates (ROCs) to Ofgem. If suppliers don’t have the necessary ROCs, they instead need to make a payment into a buy-out fund.

Should the costs of non-renewable and renewable generation become very similar, the price of ROCs could ultimately fall to nothing. As it stands, consumers of companies that don’t supply sufficient ROCs effectively pay for them, with savings passed on to consumers of energy supply companies who fulfill their renewables obligations.

Each licensed electricity supplier is required on an annual basis to either purchase and redeem a requisite number of Ofgem Renewable Obligation Certificates as calculated based on their annual electricity sales total or to pay an equivalent amount into a buy-out fund (the proceeds of which are then distributed on a pro-rata basis to those suppliers that have presented ROC’s) or a combination of these two options.

Energy suppliers are required to submit two sets of sales data to Ofgem for any group licensed electricity supply companies on an annual basis.

The first data submission (indicative) is due by 1st June. Ofgem publish the calculation criteria on which our demand submission must be based. Approximately 2 weeks before the submission deadline, Ofgem will send - by email - Elexon demand data for each supplier for comparison purposes. If a supplier’s calculated figure differs materially from the Elexon data, the supplier will need to explain the reason (s) for any differences.

Separate demand submissions are required for each of England & Wales and Scotland – Elexon will break down their respective data between these regions.

Current guidelines allow licensed suppliers to exclude “self-supply” (i.e. electricity supplied to the premises from which the supplier trades) from the calculation. Exclusion of self-supply will create a difference between a supplier’s submitted demand and the Elexon demand totals which will need advising in the submission email to Ofgem.

The second data submission (final) is due by 1st July and is submitted to Ofgem via its Renewables and RHP Online Register. Again, Ofgem will send Elexon demand data to us before the submission date for comparison. Once a supplier has submitted the required data, Ofgem will then advise in writing in late July the supplier’s final RO obligation for the relevant compliance period (for both England & Wales and Scotland) and will also advise the supplier of the payment arrangements should the supplier wishes to redeem any part of this obligation by paying the buy-out fee.

By 31st August annually (or the following working day if a weekend), each supplier is required to submit an annual Compliance Report to confirm whether the supplier wishes to redeem ROC’s or buy out the calculated obligation (or a combination of both).

For more information on entering the energy market, get in touch with Dyball Associates today and we’ll be pleased to help.

Further Reading

Renewables Obligation Mutualisation risks are growing

Three energy suppliers receive Final Orders from Ofgem for unpaid Renewable Obligations Payments

GnERGY Ceases Trading after Failing to pay its Renewables Obligations

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