Renewables obligation

What it is

The Renewables Obligation (RO) began in Great Britain in 2002. Each year, from 1 April to 31 March, suppliers must present a set number of Renewables Obligation Certificates (ROCs) for each megawatt hour they supply. Generators of eligible renewable power earn ROCs and can sell them. A supplier that falls short pays into a buy-out fund instead. The scheme closed to new generating capacity on 1 April 2017, though existing stations keep earning certificates.

Where you will see it

The obligation sits on suppliers, and in practice they recover the cost through the prices they charge electricity customers. On a business quote it is one of the non-commodity charges. It may be built into your unit rate or shown separately on a pass-through contract.

Why it matters

It is charged on electricity, not gas. The obligation level is set for each year, so the cost per kWh can change at 1 April. On a pass-through deal that change reaches you straight away; on a fixed deal the supplier priced it in when you signed.

Example

Illustrative only, not an official rate: if the RO element worked out at 2p/kWh, a café using 25,000 kWh would carry 25,000 × £0.02 = £500 of it inside its annual electricity cost. The real figure varies, so ask your supplier for the breakdown.

Related terms

See REGO (a different thing: proof of green origin), feed-in tariff and capacity market. Energy-intensive industries may get relief, see industry support.