Renewables Obligation (RO) Annual Report: Scheme Year 22 (April 2023 to March 2024)
Reports, plans and updates
- Publication date
- Scheme name
- RO
The Renewables Obligation (RO) is a government scheme designed to support large-scale renewable electricity generation in Great Britain (GB), and both large-scale and smaller scale renewable electricity generation in Northern Ireland. As one of the government’s primary mechanisms for driving the large-scale deployment of renewable electricity, the RO has helped provide millions of UK households and businesses with a secure supply of clean electricity and has become a major contributor to net zero since its launch.
The RO provides long term support for renewable electricity generators by placing an annual obligation on electricity suppliers to present to Ofgem a specified number of Renewables Obligation Certificates (ROCs) per megawatt hour (MWh) of electricity supplied to their customers during each obligation period (1 April to 31 March). Suppliers can meet their annual obligation by presenting ROCs, making a payment into a buy-out fund or a combination of the two. ROCs are issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Generators are supported financially as ROCs are tradeable and can be sold between parties.
The RO scheme is now closed to new applications. However, the scheme will remain active until March 2037 and we will continue to service those accredited on the scheme as accredited generators are eligible to receive up to 20 years of support.
This annual report provides an update on RO scheme activity during Scheme Year 22 (SY22), covering the period 1 April 2023 to 31 March 2024. It provides information on accredited generators, the number of ROCs issued and the associated renewable electricity generated, the sustainability of the biomass fuel burnt under the scheme, audit and compliance activity, and our ongoing administration of the scheme.
Please note: For those wishing to look at the data used in the report in more detail, a spreadsheet with this information is published below.
Highlights
ROCs issued and low carbon electricity generation
- We issued 107.4 million ROCs to eligible renewable electricity generators in SY22, a slight decrease on the 108.3 million ROCs issued in SY21.
- ROCs were issued based on 78.2 GWh of eligible electricity during SY22. This was generated by 26,610 accredited stations with a generation capacity of 35.4 GW.
- The electricity generated on the RO in SY22 was equivalent to 31.5% of the total UK electricity supply market. When combined with generation under the Feed-in Tariffs (FIT) and Contracts for Difference (CfD) schemes, the figure rises to 43.8%.
Compliance by licensed electricity suppliers
- Suppliers collectively had to present 114.5 million ROCs (or make payments to cover the shortfall) to meet their scheme obligations for SY22. Suppliers presented 103.9 million ROCs towards the total obligation, or 90.7% of the total.
- To make up for the shortfall in ROCs, suppliers paid £613.7 million into the buy-out and late payment funds. All suppliers met the final late payment deadline of 31 October in SY22.
- As there was no shortfall in the buy-out or late payment funds, mutualisation was not triggered for the second year in a row.
- Although all suppliers met their obligations in full by presenting ROCs or making payments by the end of the late payment window, Equinicity Ltd, Farringdon Energy Ltd, and Foxglove Energy Supply Ltd failed to submit data on their supply volumes after the 1 July 2024 supply submission deadline. These instances of non-compliances have been added to our Supplier Performance Report (SPR): Supplier Performance Report (SPR)
- We conducted 4 audits of selected suppliers in SY22. These audits were targeted to include those suppliers where we have concerns over internal processes and those where we have concerns over the accuracy of supply volumes being reported. Of these audits, one was rated ‘Good’ and 3 were rated ‘Satisfactory’.
Generator compliance
- To ensure public money is being spent as intended and to ensure compliance with scheme regulations, we audited 50 generating stations as part of our targeted audit programme and 207 generating stations as part of our statistical audit programme in SY22.
- Of the 50 targeted audits conducted in SY22, 86.0% were rated “Weak”, 10.0% were “Satisfactory”, and 4.0% were “Unsatisfactory”. Of the 207 statistical audits conducted in SY22, 72.0% were rated “Weak”, 20.3% were “Satisfactory”, 5.3% were “Unsatisfactory”, and 2.4% were “Good”.
- A total of 280 compliance investigations were closed during SY22, with satisfactory evidence addressing the concerns raised provided in 254 of these cases. In 26 cases, satisfactory evidence wasn’t provided and the stations have been deemed non-compliant.
- The total value of our work detecting and preventing error on the RO scheme during SY22 was approximately £14.6m.
Announcements
Ofgem Decision: investigation into Drax Power Limited
- On 31 May 2023, Ofgem opened an investigation into whether Drax Power Limited (“Drax”) was in breach of annual profiling reporting requirements relating to the RO scheme and other related matters.
- The investigation concluded that there was an absence of adequate data governance and controls in place that had contributed to Drax failing to comply with its profiling data obligations under the RO scheme.
- For more information, please visit our webpage: Ofgem Decision: investigation into Drax Power Limited