Offtaker of Last Resort (OLR)

Offtaker of Last Resort (OLR)

The Offtaker of Last Resort (OLR) is a government scheme that aims to promote the availability of power purchase agreements (PPA). It is intended as a last resort to help renewable generators who cannot get a PPA through the usual commercial means.

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

How does the OLR 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’s designed so you can enter into a BPPA quickly. 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

Our role is to administer the scheme on behalf of government. We do this 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

If we determine you’re a mandatory licensed supplier for a given OLR year, you must bid in all OLR auctions in that year. Ofgem will publish a list of our determinations in this section of our site 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 run and what you must do to participate. It also covers OLR levelisation.

Generators

Before you apply to the OLR scheme you should ensure you have read our OLR: Essential Guide for Renewable Generators to familiarise yourself with the rules of the scheme.

To be eligible to enter into a BPPA you must:

  • meet the specified eligibility criteria, and
  • provide all the necessary Project Information to us in the timescales required.

You should also be aware that 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 short guide on how to submit your Project Information if you are 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 these pages, please contact us via olr@ofgem.gov.uk.