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ROCs Explained and Why 2017 Closure Shocked the UK AD Industry

ROCs Explained! In this article we explain ROCs (Renewables Obligation Certificates). And, why the 2017 closure of the scheme to new generator capacity and businesses for Anaerobic Digestion was a big shock to the UK AD industry at the time.

ROCS explained - rock fall stopped - used as featured image.
UK ROCs Scheme Ceased to New Entrants in 2017. Why was this a shock to the biogas Industry? Scroll down for the answer.

To many people it still seems like a mistake and a missed opportunity for UK businesses.

By scrolling down to you can read the original article to find out why.

But, first here is our explanation of ROCS, those enigmatically named “Renewables Obligation Certificates”.

What is a ROC?
A ROC (Renewables Obligation Certificate) is the certificate issued to the operator of an accredited renewable energy generating station for every MWh of renewable electricity it generates. ROCs are ultimately used by suppliers to demonstrate that they have met their obligation.

The Renewables Obligation’s Function as a Support Mechanism (Subsidy)

The Renewables Obligation (RO) is one of the main support mechanisms for large-scale renewable electricity projects in the UK. Smaller scale generation is mainly supported through the Feed-In Tariffs (FIT scheme).

The RO came into effect in 2002 in England and Wales, and Scotland, followed by Northern Ireland in 2005. It places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources.

The RO was closed to all new generating capacity on 31 March 2017. There are also a number of early closures which came into in force for specific technologies. Generators who were eligible to apply for a grace period can gain entry to the RO after these closures for a specified amount of time. More information on the 2017 closure and early closures [was provided] on the [Ofgem] RO closure page.

ROCs are certificates issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can trade ROCs with other parties.

ROCs are ultimately used by suppliers to demonstrate that they have met their obligation. via www.ofgem.gov.uk

Comment

In other words ROCs were an important way the Labour government of the day (in 2002) decided to help renewable energy producer companies. These companies were struggling to develop their technologies and bring energy generation costs for renewable energy down. Short-term assistance was needed to get them to a point of development at which they would be able to compete with gas and coal prices.

It was clear that renewable energy producers would not be able to invest in renewable technologies, develop better techniques, compete and grow the much needed climate change reducing renewable energy market, without short-term financial help of this kind.

The government did not want to raise direct government taxes to do this. So, they invoked a mechanism which required private (UK energy industry) sellers to fund this subsidy via the energy bills paid by businesses and the public. Rather than a tax, it became a largely hidden cost added to all electricity bills.

How are ROCs Administered

Although now closed they are still administered because existing scheme members are locked-in to be given this subsidy for 20 years from the date they enter the scheme.

The Utilities Act 2000 gives the Secretary of State the power to require electricity suppliers to supply a certain proportion of their total sales in the United Kingdom from electricity generated from renewable sources.

A Renewables Obligation Order is issued annually detailing the precise level of the obligation for the coming year-long period of obligation and the level of the buy-out price.

The Renewables Obligation (England and Wales) was introduced by the Department of Trade and Industry. The Renewables Obligation (Scotland) was introduced by the Scottish Executives. And, the Northern Ireland Renewables Obligation was introduced by the Department of Enterprise Trade and Investment (DETINI). via en.wikipedia.org

The Difference Between ROC s and REGOs

There are two types of renewable energy certificates in the UK: ROCs and REGOs.

You get them when your (electricity generator) installation is accredited with Ofgem through their Renewables and CHP Register.

  • ROCs have a cash value to you and
  • REGOs help suppliers tell their customers where their energy has come from. via www.edfenergy.com

The UK ROCs Subsidy Placed in Context

The Renewables Obligation (RO) is the main support system for renewable electricity projects across the UK

Any large-scale renewable electricity generator with a capacity larger than 5MW was able to apply for accreditation under RO, until the scheme was closed to new entrants on on 31 March 2017.

What is the Renewables Obligation (RO) scheme?

The Renewables Obligation (RO) was introduced by the Government in England, Wales and Scotland 2002, and Northern Ireland in 2005, to encourage the deployment of large-scale renewable electricity in the UK.

Small-scale generation is generally supported through the Feed-In Tariff scheme (FITs).

There are three separate obligations for England and Wales (RO); Scotland (ROS); and Northern Ireland (NIRO).

The RO requires licensed UK electricity suppliers to source a specified proportion of the electricity they provide to customers from eligible renewable sources.

ROCs are essentially the green certificates issued to electricity generators and bought by suppliers to show that they have fulfilled the Renewables Obligation (RO). via www.edie.net


2017 Article:

Effective Cancellation of RO Subsidy for Anaerobic Digestion – UK AD Industry Shocked

The announced effective cancellation of RO Subsidy for Small Scale Anaerobic Digestion is a huge missed opportunity. In this article we explain why that is.

The four excerpts we have included below are from recent news releases from the UK AD and renewable energy industry opinion-formers.
Featured inage to the post: Renewables Obligation Subsidy Review and Cancellation of RO Subsidy
They show the level of shock and disbelief at the government’s (2012) announcement of forthcoming consultation on new Renewables Obligation (RO) subsidy bands.

Autumn 2019 Update: This page is of only historical interest. The UK Feed-in Tariff is also no longer available to new AD Plant applicants, only the RHI continues for new applicants.
Spring 2017 Update: In April 2017 the R.O. subsidy was terminated for all new AD Plants, however, the UK government has not reneged on the R.O. payments previously promised to AD plant operators already in the scheme and their subsidy will continue until the end of their 20 year subsidy payment periods. The information on this page has been retained for historical interest.

In addition, the latest UK Government RO announcements, amounting to cancellation of RO subsidy, conflict with rising expectations on AD Plant subsidies after their announcement on their Feed-in-Tariff (FiT) plans, made just last week.

The proposal that ROCs subsidy will exclude all plants between 50kW and 5MW output level – which is in the range almost all AD Plant projects are planned for – amounts to a virtual scrapping of the RO subsidy for the vast majority of AD projects.

At a stroke the UK government has announced a body blow to the development of potentially thousands of on-farm and community food waste AD plant projects which were otherwise set to proceed with aid of the expected lower RO output limit.

The young, rapidly growing UK anaerobic digestion industry risks being nipped in the bud, and all those innovative new technological developments expected to flow from the scramble for business in the sector, will gather dust. And, all this at a time when the nation so badly needs to develop new energy sources, develop new jobs, and develop products at home to sell on the world market.

This week industry leaders as a whole have been asking for a cabinet reshuffle in order to get the government to focus more on the economy. Here, surely is another example of a lack of economic vision…

As stated already, we are not alone in our criticism. We have included below extracts from other news releases and articles from the AD industry, for your further reading:

AD dealt double blow by effective cancellation of RO subsidy

“The anaerobic digestion (AD) industry faces “disaster” after being “squeezed from both sides” by two Government announcements on renewable energy subsidies, the Renewable Energy Association (REA) has warned. REA head of biogas David Collins said …”
www.mrw.co.uk

Renewables Obligation for Anaerobic Digestion should be maintained …

“energy and environmental management magazine, the definitive resource for news features and opinions in the energy, environmental management and renewable. This is to all intents and purposes a cancellation of RO Subsidy….www.eaem.co.uk/…/renewables-obligation-anaerobic-digestio…”
www.eaem.co.uk

Plans to exclude generators from RO leave industry ‘flummoxed’

“Alongside new levels of support, Energy and Climate Change Secretary Ed Davey also announced there will be a consultation later this year on excluding solar, wind, anaerobic digestion, and hydro-electric projects between 50kW and 5MW. This would leave …”
businessgreen.com

ROCs banding review ‘a disaster’ for AD industry

“However, in a surprise move, DECC also proposed ending ROC support for anaerobic digestion plants under five megawatts from April 1 2013, subject to consultation. The review document states: “The government will shortly consult on proposals to exclude …”
www.letsrecycle.com

To sum up. It really is strange as this move comes without any obvious purposeful policy change. Can the manner in which such matters are handled by government really be going to be done in such a dis-functional manner… Let’s hope for some re-thinking in this area during consultation.

If you have a view on this news we would be very pleased to receive your comments.


Article first published 26 Jul 2012

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