Renewable Energy Incentive Announcement – ROC Review

by Jarrah Harburn on September 10, 2012

The Department of Energy and Climate Change have released their recommendations for the review of the Renewable Obligation rsz_solar-farm_rw_smallCertificate (ROC) scheme for large solar projects and solar farms in the UK. The review has outlined a gradual reduction model that will begin with the ROC allocation falling from 2x ROC’s to 1.5x ROC’s on March the 31st, 2013.

The Renewable Obligation Certificate Scheme

The Renewable Obligation Certificate scheme is utilised at present by large solar photovoltaic (PV) installations as an alternative to the Feed-in Tariffs. It is hailed as a pillar to the large scale of renewable energy uptake in the UK, multiplying the financial returns from large scale renewable projects such as solar farms. There are other forms of renewable energy that the ROC scheme applies to, but because it works by measuring units of energy in megawatt hours (MWh’s) it is aimed at the commercial or utility scale of generators.

FYI: Your average domestic solar panel system generates approximately 8-12kWh’s per day. A MWh is 1,000kWh’s of renewable energy. A 5MW solar farm (200 x 250w panels) will generate approximately 11,150kWh per day or 11.15MWh’s.

The Renewable Obligation Certificate scheme works through a trade market that requires large consumers of energy such as utilities and commercial property owners to offset energy usage through the purchase of ROC’s proportional with their usage/emissions. Renewable Obligation Certificates are generated by renewable energy systems such as solar farms and are equal to a megawatt (MW) hour of clean electricity. It is through this trade that large scale renewable generator owners can be paid additional funds for the energy they generate (not including any customers that buy and use the actual energy from the renewable plant/system).

The Renewable Obligation Certificate Market

The ROC system promotes the selling off of Renewable Obligation Certificates by large scale renewable generators and solar farms to polluters at a market rate.

FYI: The current market trend for ROC’s is approximately £40 each fluxuating in small degrees day in day out.

The Renewable Obligation Certificates also enjoy a mulitplier that helps to establish the ROC’s as a suitable subsidy for large scale renewable until the costs of procurement/installation come down and the cost of energy rises. This review focuses on the set multiplication rate and how it changes over time to match these two factors of system cost and energy price.

The Outlined ROC Multiplication Reduction Rate

Right now the ROC multiplier is 2×1; meaning each MWh of clean energy generates two Renewable Obligation Certificates. The DECC has released the following digression rate:

  • March 31st 2013 – 1.5x Renewable Obligation Certificates multiplier for renewable energy
  • March 31 2014 – 1.3x Renewable Obligation Certificates
  • March 31 2015 – 1.1x Renewable Obligation Certificates
  • March 31st 2016 – 0.9x Renewable Obligation Certificates

Responses to Consultation

The DECC have announced they welcome and will will accept responses from industry until October 19 2012. Feedback is an essential part of ensuring these incentives are accurate and informed, so please contact the DECC here for further information. This scale of renewable energy technology is a crucial part of the process of a country becoming less dependent on coal, oil and gas, so do take the time to respond.

Initial Feedback

The solar industry were expecting a reduction along these lines. However the dominant opinion is that this was the safest option for the DECC. A 25% reduction is considerable, especially given the initial feedback provided before the review indicated the 2x ROC mutliplier to be safe until 2015. Ultimately large scale solar farms are still viable at this point and the security that this announcement can drive investment along a known path into the future. Solar farms are becoming increasingly popular choices for land owners and this digression rate means that the quicker the solar farm can be established the better, as ROC multipliers are set upon installation.

Further thoughts to follow in a more in-depth article shortly, or see our previous articles on solar farms and their growing popularity.

Written by Jarrah Harburn

jarrah@solarselections.co.uk

020 7205 2267

© Solar Selections Ltd 2012

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