Renewables Obligation Certificates presented and Redistribution of Buy-Out Fund 2022-23
Reports, plans and updates
- Publication date
- Scheme name
- RO
Total obligation: 121,847,268 Renewables Obligation Certificates
The Renewables Obligation (RO) requires licensed electricity suppliers to source a proportion of the electricity they supply to UK customers from renewable sources. We set suppliers’ obligations as a number of Renewables Obligation Certificates (ROCs).
The obligation levels for 2022-23, announced by the Department for Energy Security and Net Zero (DESNZ) on the 29 September 2021, are:
- 0.491 Renewables Obligation Certificates per MWh of electricity supplied to customers in England, Wales and Scotland.
- 0.193 Renewables Obligation Certificates per MWh of electricity supplied to customers in Northern Ireland.
Multiplying these obligation levels by the total electricity supplied (in MWh) to UK customers during this obligation period (1 April 2022 – 31 March 2023) and rounding to the nearest whole number, the total obligation for 2022-23 is 121,847,268 Renewables Obligation Certificates.
Split out for each obligation jurisdiction this is:
- 109,608,101 Renewables Obligation Certificates in England & Wales
- 10,822,487 Renewables Obligation Certificates in Scotland
- 1,416,680 Renewables Obligation Certificates in Northern Ireland.
Suppliers were able to meet their obligations for 2022-23 by 1 September 2023 by:
- presenting Renewables Obligation Certificates to us
- making a buy-out payment of £52.88 per Renewables Obligation Certificate (these must be made by 31 August)
- using a combination of Renewables Obligation Certificates and a buy-out payment
Any suppliers who did not meet their obligations in full by 1 September were required to make a late payment by 31 October.
We have recently redistributed the Renewables Obligation buy-out fund for 2022-23. Details of the obligations and total payments for each Renewables Obligation scheme are shown in Table 1 below.
Table 1
Suppliers that presented ROCs towards their obligations received buy-out fund recycle payments on 19 and 31 October 2023. The amounts to be redistributed are shown in the far-right column in Table 1. We reached these values by withdrawing our and Northern Ireland Authority for Utility Regulation’s (UR) administration costs, factoring in interest and rounding down the redistribution amounts to the nearest whole pound. Suppliers received approximately £6.81 for each ROC they presented. The proportion of the total ROCs each supplier presented, and therefore the share of buy-out payments they received, is shown in Table 2 (rounded to 2 decimal places).
Table 2
There was a combined shortfall of £7,223,616.96 in the buy-out funds, this was due to four suppliers not meeting their total obligations by the 1 September deadline. These suppliers consequently owed late payments.
The breakdown of the shortfall by jurisdiction this was:
- England & Wales - £6,849,226.56
- Scotland - £374,390.40
- Northern Ireland - £0.00
The shortfalls in the buy-out funds were below the respective mutualisation thresholds of £65,800,000 for England and Wales and £1,540,000 for Scotland (as published by Ofgem on 15 February 2022), as such mutualisation has not been triggered for the 2022-23 Compliance year.
The deadline for suppliers to make late payments was 31 October 2023 and we will redistribute them before 1 January 2024. This will include interest paid by the suppliers at an annualised rate of 10.25% (5% + Bank of England base rate as of 1 September 2023). When we redistribute the late payments, we will also confirm the final recycle value, which will include an extra amount on top of the £6.81 per ROC.
For more information, contact: RECompliance@ofgem.gov.uk.