End of an era for UK Renewables Obligation scheme
Post Date: 31 March 2017
The Renewables Obligation (RO) scheme – one of the UK Government’s main support mechanisms for large-scale renewable electricity projects – closed on 31 March 2017 to new generating capacity. It will continue to run for a further 20 years for existing projects.
The RO scheme, which places an obligation on licensed suppliers to source an increasing proportion of their electricity from renewable sources, has played a key role in the dramatic increase of the UK’s electricity generated from low carbon energy. From the establishment of the RO in 2002, this rose from 1.3 to 23.5 per cent.
To date, in excess of 23,500 generating stations comprising 25 gigawatts (GW) of installed capacity have been accredited, which includes 9.3GW onshore wind, 5GW offshore wind and 5.3GW solar PV.
Energy Minister Jesse Norman continued: “The Renewables Obligation has helped to move the UK from having barely any clean energy 15 years ago to having nearly a quarter of all its electricity coming from renewable technologies."
The closure of the scheme, first announced in July 2011, takes effect from 31 March 2017, although some installations may qualify for a grace period.
Operators of accredited generating stations are issued certificates (ROCs) based on the amount of electricity they generate for a period of 20 years. The certificates are bought and traded by market participants and ultimately presented to Ofgem by suppliers as proof they have met their obligation. During 2015/16 90.4 million ROCs were issued on the basis of 69.1 TWh of renewable electricity generation.
Luke Hargreaves, Head of Renewable Generation at Ofgem E-Serve, explained: “We will continue to issue ROCs and monitor compliance on a scheme that is worth in excess of £4.5 billion a year. Any scheme participant wishing to make changes to their accredited installation should refer to our Guidance for Generators on our website.”
New large-scale renewable electricity installations will now have the opportunity to access support under the government’s Contracts for Difference scheme.
Tanuja Randery of renewable industry supplier Schneider Electric commented: “The UK has always been a leader in energy and climate change, and renewables are essential if we are to maintain that position and hit our 2050 targets. Subsidies and schemes such as the RO, have played an important role in helping to balance our fuel sources and make it attractive to invest in new forms of renewable energy.
“Energy demand is expected to double by 2050 due to urbanisation, industrialisation and digitisation. This means we need to be three times more efficient to address climate change and meet sustainability targets. Renewables are core to achieving this goal but investment is needed to continue their development and better connect cleaner power sources to our ageing grid. As demand grows, wind, water and solar sources will be crucial for keeping the lights on and safeguarding our climate in the years to come.”
Jesse Norman said: “This government remains fully committed to cleaning up our energy system and our support will continue through the more competitive Contracts for Difference scheme. This is designed to drive down costs and give companies the support and certainty they need to attract investment and get new projects off the ground.”