Business Renewable Obligation Charges
Set up in 2002, the Renewable Obligation or RO places a mandatory requirement on licensed electricity suppliers to source a specified and annually increasing proportion of electricity they supply to customers from eligible renewable sources or pay a financial penalty. The RO is currently the main financial mechanism by which the Government incentivises the deployment of large scale renewable electricity generation and the energy industry regulator Ofgem administers the scheme. By the 1st October each year the annual obligation on electricity suppliers is published and comes into effect for the next financial year starting on the 1st April.
Business Renewable Obligation or RO Charges Explained
Generators of renewable energy have to report the volume of renewable energy that they generate on a monthly basis to the energy regulator Ofgem. In turn Ofgem then issues ROC’s (Renewables Obligation Certificates) to these electricity generators relating to the amount of eligible renewable electricity they generate. In turn the generators then sell their ROC’s to suppliers or traders. This allows them to receive a premium in addition to the wholesale electricity price. These suppliers then present these ROC’s back to Ofgem to demonstrate their compliance with the Renewable Obligation.