The Renewables Obligation is a compulsory requirement for electricity suppliers to source an increasing percentage (over 15% by 2015) of their energy from renewable energy sources. In doing this the energy suppliers are awarded Renewables Obligation Certificates (ROCs) for each MWh (Megawatt hour) of power generated from renewable energy. In order to be eligible to receive Renewables Obligation Certificates an energy supplier must apply to be registered with Ofgem.
Whilst the larger energy generators will be registered to receive Renewables Obligation Certificates, they are also available to small scale renewable energy generators (under 50KW). These then have a market value and can be sold to energy companies in order for them to move towards achieving the necessary renewable energy targets. It is in the interests of the energy companies to try and meet their obligation as, should they fall short of their target, they will need to make payment into a fund which is then paid out to suppliers in proportion to the number of Renewables Obligation Certificates presented. As a small scale generator, this can make renewable energy a more cost effective alternative to fossil fuels as, not only is the energy from, for example, solar or wind power free, but payment can be received for Renewables Obligation Certificates according to the amount of power generated. The market value will undoubtedly vary but has tended to be over £40 per ROC.
More information on the Renewables Obligation Certificates can be found at the Ofgem website. Income can also be generated by renewable energy installations via feed-in tariffs. Follow the link for more information.
Source: www.ofgem.gov.uk and www.e-roc.co.uk 2011
