Commentary on Sections Electricity from renewable sources
44.The Renewables Obligation (RO) is an obligation, administered by OFGEM, on licensed electricity suppliers to provide a specified and annually increasing proportion of their sales from renewable sources. Generators can claim 1 Renewable Obligation Certificate (ROC) for every 1 MW of eligible renewable electricity generated. Suppliers can meet their obligation by presenting ROCs or by paying into the “buy-out fund” or a combination of the two. At the end of an obligation period the buyout fund is recycled pro rata to all suppliers who presented ROCs.
45.Under the Renewables Obligation Order as currently drafted, specific arrangements apply for microgenerators (those with a capacity of 50kW or less). In order to be issued with ROCs the microgenerator must first gain accreditation from OFGEM by completing a questionnaire, although ROCs will be issued for data that has been submitted prior to accreditation being obtained. In order to receive ROCs on an ongoing basis, generators must submit output information to OFGEM. Microgenerators have the option to submit their data on either a monthly or annual basis. ROCs are awarded on the basis of electricity generated. 500kWh – 1499 kWh earns 1 ROC, 1500kWh – 2499kWh earns 2 ROCs, and so on. These ROCs can then be sold to electricity supply companies to help them meet their obligation.
46.Section 23 inserts new provisions into section 32B of the Electricity Act 1989 to provide a power to make an order allowing generators to claim renewable obligation certificates (ROCs) for the electricity they have generated, without the need to have a ‘sale and buyback’ agreement with the supplier. The provision will also enable the order to permit generators to claim ROCs in circumstances where electricity is provided to a distribution or transmission system in circumstances where its supply cannot be demonstrated. This might be the case, for example, where surplus electricity produced by a household that generates electricity for its own use is exported to the electricity network.
47.Section 23 also provides a power to amend the Renewables Obligation Order to allow ROCs to be issued to agents who are acting on a generator’s behalf. Agents could act on behalf of one or more generators, and may also combine output to claim ROCs. This will reduce the administrative burden on generators with the aim of making it easier for generators who produce small amounts of electricity to obtain ROCs.
48.Section 24 makes supplementary amendments to section 32 and 32A of the Electricity Act 1989. The section also enables the Department to consult on the provisions of a new Renewables Obligation Order before the provisions in sections 23 and 24 have been commenced. It also provides that the Scottish Ministers cannot exercise the functions conferred on the Secretary of State by these provisions unless an Order in Council has been made (under section 63 of the Scotland Act 1998).
49.Section 25 amends section 185 of the Energy Act 2004. This section gives the Secretary of State the power to adjust transmission charges for renewable generators in an area of GB with high potential for renewable development, where that development would be deterred by the high level of transmission charges that would otherwise apply.
50.The amendment to section 185 of the Energy Act will extend the potential life of any scheme from 10 years from the commencement of the Energy Act provision, to a time not later than 4 October 2024 (i.e. 20 years from commencement of the Energy Act provision), clarify that such a scheme may apply to two or more separate areas should the conditions of section 185 apply to those separate areas, and allow for the consultation requirement in section 185(7) of the Energy Act 2004 to be satisfied by consultation taking place before the commencement of this section.