Renewables Obligation Late Payment Distribution 2021 - 2022

Reports, plans and updates

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RO

We redistributed the 2021-22 RO late payment fund on 5 December 2022. We paid a total of £44,000,191 to suppliers who presented Renewables Obligation Certificates (ROCs) this year. Suppliers received £7.04 per ROC presented after the redistribution of the buy-out fund. From the redistribution of the late payment fund, they have received an extra £0.40 per ROC. This means that the final recycle value for 2021-22 is £7.44.

Details of the late payments we received from suppliers (including interest) and the amounts we redistributed for each RO scheme are in Table 1 below:

Table 1
Obligation Late payments made by suppliers Late payments redistributed
England & Wales £42,088,144.65 £42,088,153.00
Scotland £1,912,034.37 £1,912,038.00
Northern Ireland £0.00 £0.00
Total £44,000,179.02 £44,000,191.00

We redistributed late payments to the suppliers on the same basis as the buy-out fund, i.e. in line with the proportion of the total ROCs they presented across the three schemes.

As with the buy-out fund, the amounts we redistributed are rounded down to the nearest pound.

Suppliers have until 1 September to present ROCs to us or until 31 August to make buy-out payments to meet their obligations. Suppliers who have not met their obligations in full by this date must make late payments by 31 October. Late payments incur a daily interest penalty, at an annualised rate of 5% + Bank of England base rate (so 6.75% this year). This is specified in RO legislation. 

Thirty-six supplier groups across 68 obligations failed to meet their obligation by the deadline of 1 September, as outlined in Table 2:

Of the thirty-six supplier groups across 68 obligations who failed to discharge their obligation by the 31 August and 1 September deadlines, 14 obligations were fully discharged by the late payment deadline of 31 October. The remaining 54 obligations were not met in full:

The total shortfall is determined by reference to article 72 of the Renewables Obligation Order 2015 and article 48 of the Renewables Obligation (Scotland) Order 2009.

The total shortfall amount across all RO schemes is £119,668,290.00 (excluding interest). This is distributed across the schemes, as follows:

RO: £111,789,972.00

ROS: £7,878,318.00

NIRO: 0

As a relevant shortfall has been reached, mutualisation has been triggered for both RO and ROS. In line with the RO Orders, suppliers who discharged part or all of their obligation will be contacted to make quarterly payments to make up the shortfall, in proportion to their obligation. Further information on mutualisation can be found within chapter 7 of our Renewables Obligation: Guidance for Suppliers.

Of the suppliers who failed to comply by the 31 October late payment deadline, 27 are either in administration or have had their licence revoked.

On 27 October 2022 Ofgem issued a final order to Delta Gas and Power Ltd to make the outstanding payment plus interest by 31 October 2021.  Ofgem received full payments from Delta Gas and Power Ltd on 25 November 2022. Any payments received after the late payment deadline will be redistributed at a later date. The supplier will be considered on a case-by-case basis and further enforcement action may be taken as appropriate, which could result in a supplier having its licence revoked.

RO legislation does not provide for payments received after the late payment deadline. As such, the amount to be mutualised is calculated by reference to the total shortfall in the late payment fund as of 31 October and the mutualisation sum is not recalculated to account for payments received after the late payment deadline. We are unable to pursue enforcement action against suppliers which have ceased trading and had their licence revoked. We will seek to recover outstanding payments due from such suppliers through the organisations’ administrators where appropriate.

Through our work on these issues, Ofgem seeks to secure the best outcomes for consumers and the wider energy market.

Contact: REcompliance@ofgem.gov.uk

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