Commentary on Sections Part 2: Sustainability and Renewable Energy Sources.Summary and Background Chapter 4: Renewables Obligations relating to Electricity
231.Under the Electricity Act 1989 (c.29) and the Renewables Obligation Order 2002 (S.I. 2002/914), electricity suppliers in England & Wales have a “renewables obligation” to produce to the Gas and Electricity Markets Authority (“GEMA”), before a specified day, certain evidence regarding the supply to customers in Great Britain of electricity generated by using renewable sources. The evidence required is Renewables Obligation Certificates (“ROCs”) issued by GEMA. Scottish electricity suppliers have a similar renewables obligation under the Renewables Obligation (Scotland) Order 2002 (S.S.I. 2002/163).
232.As an alternative to providing ROCs, electricity suppliers may discharge their renewables obligations (either fully or partially) by making buy-out payments to GEMA. This Chapter makes it clear that the Secretary of State may provide for more than one specified day in a year. This Chapter also provides for suppliers who do not comply with the renewables obligation by the specified day, to be treated as having subsequently discharged the renewables obligation if they make late buy-out payments, together with an escalating surcharge into a late payments fund. It also makes provision for requiring suppliers to make payments to GEMA to cover some or all of an unrecovered shortfall in the buy-out fund. This process is known as mutualisation. The Order taking these powers is expected to come into force on 1 April 2005.
233.Whilst Northern Ireland has not yet made a renewables obligation Order, it has recently enacted legislation (Articles 52 to 55 of the Energy (Northern Ireland) Order 2003) (S.I. 2003/419)(N.I.6)) which is analogous to the provisions of the Electricity Act creating the renewables obligation. That legislation requires Northern Ireland suppliers to produce, as evidence, Northern Ireland Renewables Obligation Certificates (“NIROCs”) issued by the Northern Ireland equivalent of GEMA, the Northern Ireland Authority for Energy Regulation (“Ofreg”).
234.This Chapter provides for the recognition in Great Britain of Renewables Obligation Certificates issued in Northern Ireland. Taking these powers now paves the way for the reciprocal arrangements to come into force from the outset of the renewables obligation for Northern Ireland. In due course, Northern Ireland is expected to make an analogous Order which will allow electricity suppliers in Northern Ireland to satisfy all or part of their renewables obligation by producing ROCs to Ofreg instead of NIROCs. The Northern Ireland Order is expected to come into force on 1 April 2005.