Country:United Kingdom
Policy status:Superseded
Date Effective:2000
Policy Type:Regulatory Instruments>Codes and standards, Economic Instruments>Fiscal/financial incentives, Regulatory Instruments>Other mandatory requirements, Regulatory Instruments>Monitoring, Regulatory Instruments>Obligation schemes 
Renewable Energy Policy Targets:Multiple RE Sources, All
Policy Sector:Multi-sectoral Policy
Climate Change Policy Targets:Energy Sector, Electricity Generation, Renewable
Agency:Department of Energy and Climate Change (DECC)
Legal References:Utilities Act 2000
Renewable Energy Description:

The Renewable Obligation is a key policy instrument for the government to meet its UK-wide targets for renewable electricity supply. Part of the Utilities Act 2000, the Obligation will require licensed electricity suppliers to buy specified portions of their purchases (see targets below) from renewable sources, it is designed to succeed the Non-Fossil Fuel Obligation. The Obligation is planned to last for 25 years. A proposal was opened for discussion by interested Parties in 2000, the outcome of which was released in March 2001. A Statutory Consultation, including a draft Order was issued in August. The application date has been postponed several times from the original April 2001 and is currently planned for April 2002 in order to provide OFGEM with enough time to finalise operational details in relation to inconsistencies between English and Scottish versions of the order. These delays are causing difficulties for renewable energy producers who are not covered under the NFFO anymore and are obliged to trade in the open market. Scotland is expected to issue a similar proposal in the short term. All licensed electricity suppliers in England and Wales will be subject to the obligation; large-scale hydro and energy from waste will be excluded from the RO even if they count for the achievement of the 10% target. Suppliers will demonstrate their compliance with the obligation through RO Certificates. Their will be limited "banking" and even more limited "borrowing" of obligations. Suppliers will have the option to choose a buy-out option if the cost of renewables is too high, the proposed buy out price should initially be set at GBP 30/MWh. The introduction of the obligation is expected to result in a maximum 3,7 % increase to 1998 electricity prices by 2010. The targets are a percentage of output of 3% between October 1, 2001 and March 31, 2003 (4.3% in 2004, 4.9% in 2005, 5.5% in 2006, 6.7% in 2007, 7.9% in 2008, 9.1% in 2009, 9.7% in 2010) and 10.4% by March 31, 2011.

Climate Change Description:

As part of the UKs Climate Change Programme, the Government announced in 2000 that UK electricity suppliers will be required to supply a specified proportion of their electricity from eligible renewable energy sources. The Government is expecting to hold a statutory consultation shortly on the exact detail of the Obligation, which will be implemented through secondary legislation and will last for 25 years. Should the cost of supplying renewable electricity become prohibitively high, suppliers can choose the buy out option as an alternative to supplying what would be the more expensive renewable - generated electricity. It is proposed that the buy out price will be set at a level of 3.0p/kWh. It is proposed that buy out receipts will be recycled to suppliers in proportion to the extent that they meet with the targets set out in the Obligation, as evidenced by the redemption of Renewables Obligation Certificates.

This record is superseded by:Renewables Obligation (RO)
This record supersedes:10% Renewable Energy Target - Green Certificates

Last modified: Thu, 14 Mar 2013 15:44:57 CET