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Wind power in the United Kingdom

General

The Renewable obligation is the main support scheme for renewable electricity projects in the UK. It places an obligation on UK suppliers of electricity to source an increasing proportion of their electricity from renewable sources.
A Renewables Obligation Certificate (ROC) is a green certificate issued to an accredited generator for eligible renewable electricity generated within the United Kingdom and supplied to customers within the United Kingdom by a licensed electricity supplier. One ROC is issued for each megawatt hour (MWh) of eligible renewable output generated. As of 1 April 2009, the reforms introduced mean that new generators joining the RO now receive different numbers of ROCs, depending on their costs and potential for large-scale deployment. For example, onshore wind continues to receive 1 ROC/MWh, offshore wind currently receives 2 ROCs/MWh, and energy crops 2 ROCs/MWh.
The Renewables Obligation, the Renewables Obligation Scotland and the Northern Ireland Renewables Obligation are designed to incentivise renewable generation into the electricity generation market. These schemes were introduced by the Department of Trade and Industry, the Scottish Executive and the Department of Enterprise, Trade and Investment respectively and are administered by the Gas and Electricity Markets Authority (whose day to day functions are performed by Ofgem).
The Renewables Obligation Order came into effect in April 2002, as did the Renewables Obligation Order (Scotland). The Renewables Obligation (Northern Ireland) Order came into effect in April 2005. These Orders have been and are subject to regular review.
The Orders place an obligation on licensed electricity suppliers in England and Wales, Scotland and Northern Ireland to source an increasing proportion of electricity from renewable sources. In 2005-06 it was 5.5 per cent (2.5 per cent in Northern Ireland). In 2006-07 the obligation is set at 6.7 per cent (2.6 per cent in Northern Ireland).
Suppliers meet their obligations by presenting sufficient Renewables Obligation Certificates (ROCs). Where suppliers do not have sufficient ROCs to meet their obligations, they must pay an equivalent amount into a fund, the proceeds of which are paid back on a pro-rated basis to those suppliers that have presented ROCs. The Government intends that suppliers will be subject to a renewables obligation until 31 March 2037.



Renewable energy projections according to the National Renewable Energy Action Plan for the United Kingdom
The National Renewable Energy Action Plan (NREAP) for the United Kingdom was submitted in July 2010. The target according to Annex I of Directive 2009/28/EC is 15% for the year 2020 and the projected NREAP share in that year exactly matches the target.  According to the projection, the most important contribution in the year 2020 is expected from wind power (78.3 TWh or 6730 ktoe, 33% of all renewable energy). Second important contribution is expected from biomass (renewable heating and cooling) (3914 ktoe, 19% of all renewable energy). The third largest contribution is from biodiesel (renewable transport) (2462 ktoe, 12% of all renewable energy). Wind power contributes in the year 2020 with onshore wind (14.9 GW and 34.2 TWh) and offshore wind (13.0 GW and 44.1 TWh). For solar photovoltaic the 2020 contribution is projected to be 2.7 GW (2.2 TWh). For solar thermal the 2020 contribution is projected to be 34 ktoe. The two most important biofuels are projected to contribute 2462 ktoe (biodiesel) and 1743 ktoe (bioethanol / bio-ETBE) by 2020. The renewable electricity production from solid biomass amounts to 20.6 TWh (1770 ktoe) and for biogas it is expected to be 5.6 TWh (479 ktoe). The consumption of renewable heat is expected to amount to 3612 ktoe for solid biomass and 302 ktoe for biogas.

Renewable Electricity: wind power

The Renewables obligation buy-out price and mutualisation ceiling 2010-2011

Ofgem has announced in February 2010 the buy-out price and mutualisation ceilings for the Renewables Obligation for the 2010-11 compliance period. The buy-out price and mutualisation ceiling are updated annually to reflect changes in the Retail Prices Index
The buy-out price will be £36.99 per Renewables Obligation Certificate (ROC). The buy-out price sets the rate which suppliers need to pay if they do not present sufficient numbers of Renewables Obligation Certificates (ROCs) to meet their obligations under the scheme.
The mutualisation ceiling will be £222,805,333.33 in England and Wales, and £22,280,533.33 in Scotland for 2010-11. The mutualisation provisions come into effect if there is a shortfall in the buy-out fund above a certain level, which may result from a supplier not being able to meet its obligation, for example due to insolvency. All suppliers that met their obligation are then required to make additional payments to make good the shortfall, up to the level of the ceiling, which is the maximum total amount they would have to pay. These provisions have not been triggered to date.

Ofgem has responsibility for administering the Government’s Renewables Obligation, which started in April 2002 (April 2005 in Northern Ireland). The Obligation sets a level for electricity suppliers to source at least part of their electricity from renewable generators. In England & Wales and Scotland, this level started at 3 per cent of electricity supplied in 2002-2003. The level for 2009-2010 is 9.7 ROCs per 100 MWh and in 2010-2011 is 11.1 ROCs per 100 MWh (ie approximately 11 % renewable electricity). In Northern Ireland, the level started at 2.5 per cent of electricity supplied in 2005-2006; the level for 2009-10 is 3.5 ROCs per 100 MWh and in 2010-11 is 4.27 ROCs per 100 MWh. Beyond 2010-11, the obligation levels will be set by the Department of Energy and Climate Change prior to the start of each obligation period, based on a series of formulae in the legislation.

All renewable generators apply to Ofgem for accreditation that their electricity is generated from eligible renewable sources. These generators are issued with Renewables Obligation Certificates (ROCs) for their qualifying output. Up until March 2009, each ROC represented one megawatt hour MWh of electricity; from April 2009 onwards the value of the ROC has been “banded” dependent on the generation technology type. Onshore wind continues to receive 1 ROC/MWh, offshore wind currently receives 2 ROCs/MWh. The renewable generator can sell ROCs either with or separately from the electricity generated.
To meet their obligations, suppliers can present Ofgem with enough ROCs or make a buy-out payment. They can also use a combination of ROCs and buy-out to meet their obligations. The buy-out price per ROC (or per MWh prior to 2009-10) of electricity is normally adjusted by Ofgem each year to reflect changes in the Retail Prices Index. It was £30 per MWh in the base year, 2002-03. The buyout price in 2009-10 is £37.19.

Latest development concerning the calculation of the level of the Renewables Obligation
The Renewables Obligation Order (ROO) 2009 introduced changes that require the Secretary of State to announce the level of the Obligation six months preceding an Obligation period. The Secretary of State will therefore announce the size of the Obligation for the 2011/12 period on 1 October 2010. This paper sets out the methodology to be used in calculating the size of the Obligation.
Before setting the size of the Obligation, we need to make two calculations:
A) The number of Renewable Obligation Certificates (ROCs) that would be needed for suppliers to meet a fixed target of 0.114 ROCs per MWh from eligible renewable sources in England, Scotland and Wales and 0.05 ROCs per MWh in Northern Ireland
B) The amount of renewable electricity we expect to be generated, and based on this the number of ROCs that we expect will be issued, uplifted by 10% (headroom)

The Obligation level is set as one of these calculations, determined as:

•    Fixed targets: If fixed targets (A) is greater than headroom (B).
•    Headroom: If headroom (B) is greater than the fixed target (A).

Following further evidence of expected generation from industry the run of the model suggests that calculation B will determine the number of ROCs to be supplied for the 2011/12 period.

 

Calculation A sets the total obligation at 34.85m ROCs using DECC forward electricity demand figures Central scenario, compared with Calculation B which sets it at 37.99m ROCs.

This means that the number of Renewable Obligation Certificates (ROCs) that would be needed for suppliers to meet their targets will be 0.124 ROCs per MWh from eligible renewable sources in England, Scotland and Wales and 0.055 ROCs per MWh in Northern Ireland

Small installation (<5 MW)

The Feed in Tariff (FiT) scheme

The Feed in Tariff scheme (FiTs) was introduced on 1st April 2010 and is a financial support scheme for eligible low-carbon electricity technologies, aimed at small-scale installations up to a maximum capacity of 5 Megawatts (MW). FiTs support new anaerobic digestion, hydro, solar photovoltaic and wind projects up to that 5 MW limit, by requiring electricity suppliers to make payments (generation tariffs) to generators based on the number of kilowatt hours (kWh) they generate. In addition to the tariff paid for generation, a fixed export tariff of 3p per kWh is paid for electricity generated that is not used on site and exported to the national grid. The scheme will also support the first 30,000 micro combined heat and power (CHP) installations with an electrical capacity of 2 kW or less, 




Future programme changes expected

No programme change expected

Sources


Calculating the Level of the Renewables Obligation, Department of Energy and climate change (2010)

Feed-in Tariffs : Government’s Response to the Summer 2009 Consultation, Department of Energy and climate change (2010)

The renewables obligation buy-out price and mutualisation ceiling 2010-11, Ofgem, 4 February 2010


Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources, http://ec.europa.eu/energy/renewables/transparency_platform_en.htm

World Wind Energy Association (WWEA), Wind Energy International 2009/2010, http://www.wwindea.org, May 2009

The National Renewable Energy Action Plans (NREAPs) are all published on the Transparency Platform on Renewable Energy: http://ec.europa.eu/energy/renewables/transparency_platform/action_plan_en.htm (sourced July - December 2010)

Renewable Energy Projections as Published in the National Renewable Energy Action Plans of the European Member States, http://www.ecn.nl/nreap (sourced December 2010)

Interactive EurObserv’ER Database
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Last update: January 2011


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