Offtaker of Last Resort (OLR)

About the Offtaker of Last Resort (OLR) scheme

The Offtaker of Last Resort (OLR) scheme was designed by government to promote the availability of power purchase agreements (PPA). Introduced on 1 October 2015, the scheme is intended as a last resort to help renewable generators who cannot get a PPA through the usual commercial means.

Who’s the scheme for?

The OLR is only available to eligible renewable generators who have an Investment Contract or Contracts for Difference (CFD) contract. 

How does the scheme work?

The scheme provides an alternative route to market for eligible generators by facilitating a backstop power purchase agreement (BPPA) between the generator and a licensed supplier. This is achieved through a competitive auction process – the OLR auction.

The scheme is designed to enable eligible generators to quickly enter into a BPPA. Statutory deadlines apply to all parties involved in the OLR process; generators, suppliers and Ofgem.

The terms of the BPPA have been set by the government and can last no longer than 12 months. The licensed supplier will buy the electricity produced under a BPPA at a specified discount below the market reference price. This ensures the OLR route to market is a genuine ‘last resort’.

OLR roles and responsibilities

Ofgem's role

Ofgem's role is to administer the scheme on behalf of government. We work with the Department for Energy Security and Net Zero to ensure the scheme is being delivered in accordance with government policy. Our main role is to enable generators to enter into a BPPA by:

  • assessing generators’ eligibility
  • running competitive OLR auctions
  • running a levelisation process, to ensure that the successful bidder’s costs for entering into a BPPA are shared among all licensed suppliers

Licensed electricity suppliers

Each year we’ll determine which suppliers are considered a mandatory OLR supplier. A supplier is determined as a mandatory supplier if they, and any affiliates of theirs, supplied 6% or more of all the electricity supplied to customers in Great Britain in the applicable OLR year. We’re required to make these determinations by 1 September each year.

Mandatory suppliers must bid in all OLR auctions in that year. We will publish a list of our determinations on our website before each OLR year starts. All other licensed suppliers can bid in an OLR auction too.

All licensed suppliers are required to participate in OLR levelisation. This process ensures that the successful bidder’s costs for entering into a BPPA are shared among all licensed suppliers in proportion to their market share of electricity supply.

Our OLR: Essential Guide for Suppliers explains how an OLR auction will be administered, what suppliers must do to participate and explains the OLR levelisation process.

Generators

Before applying to the OLR scheme generators should read our OLR: Essential Guide for Renewable Generators to familiarise themselves with the rules of the scheme.

To be eligible for a BPPA generators must:

  • meet the specified eligibility criteria
  • provide all the necessary project information to us in the timescales required

Failure to act according to the Regulations during the OLR process may result in your generating station being added to the record of ineligible generating stations for OLR.

Read our help sheet on help sheet on how to submit project information if applying to enter into a BPPA.

Need help?

If you have questions about the OLR scheme and can't find the information you need on this page, please contact us at olr@ofgem.gov.uk.