Renewables Obligation (RO)
About The RO
The Renewables Obligation scheme closed to all new generating capacity 1 April 2017. More information on this can be found on the closure page and in the guidance on closure.
The Renewables Obligation (RO) scheme was designed to encourage generation of electricity from eligible renewable sources in the UK. The RO scheme came into effect in 2002 in Great Britain, followed by Northern Ireland in 2005.
The scheme places an annual obligation on electricity suppliers to present to Ofgem a specified number of Renewables Obligation Certificates (ROCs) per megawatt hour (MWh) of electricity supplied to their customers during each obligation period (1 April – 31 March). Suppliers can meet their annual obligation by presenting ROCs, making a payment into a buy-out fund or a combination of the two.
ROCs are issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can trade ROCs with other parties or sell them directly to a supplier.
The administration cost of the scheme is recovered from the buy-out fund and the rest is distributed back to suppliers in proportion to the number of ROCs they presented to meet their individual obligation.
Ofgem's role in RO
Ofgem’s statutory duties include (but are not limited to):
- prior to the scheme closure, accrediting generating stations
- issuing and revoking ROCs (where necessary)
- establishing and maintaining a Register of ROCs
- monitoring participants compliance with the requirements of the scheme
- receiving buy-out payments and redistributing the buy-out funds,
- initiation and facilitation of the mutualisation process (where applicable)
- receiving late payments and redistributing the late payment fund
- recovering the administration costs of the RO from the buy-out fund
- publishing an annual report