Renewable Obligation Certificates (ROCs)
ROCs are an important extra income stream derived from generating wind energy. A ROC is allocated for every 1,000 units of power produced whether used by the generator or exported to the grid.
By virtue of a new Renewables Obligation Order the government is intending to incorporate a banding of ROC allocations effective from 1st April 2009 subject to Parliamentary processes. This change will double the ROC allocation and therefore income for microgeneration including wind turbines (i.e. 2 ROCs per 1000 units).
The Renewable Obligation legislation was implemented by the government as a tool to promote the uptake of renewable energy. The legislation makes it a requirement of power suppliers to derive a specified proportion of their power from renewables. This requirement comprised 3% in 2002/3 and will rise as follows:
2007/08 7.9%
2008/09 9.1%
2009/10 10.4%
By 2015/16 the obligation will rise to 15.4% and will remain at that level until 2026/27.
In cases where the supplier does not produce renewable energy they can either purchase ROCs or they can pay a ‘buyout’ price for any shortfall such a levy being redistributed to energy suppliers proportionate to the ROCs held. The buy out price is fixed by Ofgem each year to reflect changes in the RPI.
2002/03 £30/MWh
2007/08 £34.30/MWh
2008/09 £35.76/MWh
ROCs are traded for up to £50/ROC however, for small producers by the time costs are deducted the net figure is often less than £40 although some DNO/energy suppliers will pay as much as 5p/unit. The price reflects the buyout price and the benefit derived from holding ROCs in terms of the redistribution of funds.
Given the upward trend of the renewable obligation requirement it is quite possible the return from ROCs will increase in the future.
