UK renewables obligation to near 50% of supply by 2018-19

29 September 2017 18:10 Source:ICIS

British energy companies will have to show enough renewables obligation certificates (ROCs) to account for 46.8% of the electricity they supply in 2018-19.

The figure was revealed as the UK’s Department for Business, Energy and Industrial Strategy (BEIS) published the renewables obligation requirements for the 12-month compliance period starting in April 2018.

Dependent on the progress of a newly introduced clause that will protect energy intensive industries from the majority of RO-associated costs, the obligation on British energy suppliers could rise as high as 46.8% of the volume they supply.

If the legislation is not passed, the obligation will be lower at 45.2%. But this looks highly unlikely.

The energy department said it intends to publish the final revised 2018-19 obligation level which is due out on 31 October this year.

If this does not confirm the higher 46.8% total however, this does not mean the lower total will stand. BEIS said it may also publish a revised, higher total after this October deadline if the related legislation takes longer to come into force than hoped.

The higher 46.8% obligation therefore seems certain to be in place for 2018-19. It is only the date on which this will be confirmed that remains open to question.

Increase

The obligation marks a considerable increase from the 2017-18 requirement of 40.9%. This will mainly be driven by new offshore wind capacity that is expected to be online and earning ROCs that would not have been fully operational for the previous compliance period.

Some new onshore wind capacity will also come online around a similar time.

Projects subsidised by the RO are granted a certain number of ROCs per MWh of electricity generated depending on the technology type and year brought online. These ROCs can then be bought and sold, with suppliers having to present enough ROCs at the end of a compliance period to cover their obligation.

BEIS sets the obligation 10% higher than the total number of ROCs it expects to be issued, to create demand in the market.

The total obligation is eventually divided up between suppliers, indexed to total electricity market share. Suppliers that are short have to pay a fee per certificate.

At the most recent auction of ROCs, a certificate was valued at £49.18 (€55.79), according to the e-ROC auction platform. jamie.stewart@icis.com



By Jamie Stewart