Renewables Obligation (RO)
The Renewables Obligation (RO) places an obligation on licensed electricity suppliers in the UK to provide a specified number of ROCs per MWh of electricity supplied.
Each year the Government set out what the RO obligation will be. This is based on a prediction of the amount of electricity that will be supplied in the UK and the number of Renewables Obligation Certificates (ROCs) that Ofgem will issue to eligible renewable generators.
The total obligation level is published at least six months before the start of each obligation period which runs from 1 April to 31 March. Further information on the calculation methodology can be found on the Department for Energy Security and Net Zero web page.
Individual obligations for each supplier are confirmed by Ofgem. Suppliers can comply with their obligations by presenting ROCs, making a payment into the buy-out fund, or through a combination of both.
The following table shows obligation levels and buy-out prices for recent obligation periods. The buy-out price per ROC is adjusted with the Retail Price Index annually.
The timetable and actions can be viewed on the RO compliance process web page.
For full details on how to comply please read the Guidance for suppliers.
Renewables Obligation Ringfencing
For the 2023/24 scheme year onwards, licensed electricity suppliers in Great Britain need to protect their RO under a process called ‘RO ringfencing’, a requirement introduced by standard licence condition 30 of the electricity supply licence.
It requires suppliers to meet their accruing RO by holding ROCs, protecting the funds equivalent to the buy-out price of their obligation in an ‘RO Credit Cover Mechanism’, or a combination of the two.
The requirement applies to the part of a supplier’s RO attributable to their domestic electricity supply volumes only. Suppliers are not required to meet the requirement in relation to their non-domestic electricity supply volumes.
The RO ringfencing guidance and schedule can be found on the RO Ringfencing web page.