The obligation is part of the UK’s proposed programme to tackle climate change and to encourage a more sustainable approach to energy consumption. Previous policy has been successful in introducing renewables to the UK marketplace and in reducing costs. The focus of current policy is to build on these achievements through the Obligation and a system of capital grants designed to bring forward offshore wind and energy crops, thereby maximising the chances of meeting the Government’s targets.

In April 2002 the new Renewables Obligation (RO) covering England and Wales and the analogous Renewables (Scotland) Obligation came into effect2. Northern Ireland introduced a similar Renewables Obligation on 1 April 2005. It is an obligation on all electricity suppliers to supply a specific and growing proportion of electricity from eligible renewable sources in order to increase the level of renewable generating capacity and so contribute to the Government’s climate change targets. Examples of eligible sources are listed in the Table.

Monitoring compliance of the Renewables Obligation is the responsibility of the Office for Gas and Electricity Markets (Ofgem), who administer a system of certification. Renewables Obligation Certificates (ROCs) are issued to qualifying renewables generators as evidence that the electricity supplier has been generated and supplied or used in a permitted way in the United Kingdom. These certificates may be sold by generators directly to licensed electricity suppliers or traders. ROCs can be traded separately from the electricity to which they relate.

The following graph shows the contributions from the renewable obligations since 1990.

As at 31 December 2007, 434 projects contracted under the NFFO, the SRO and the NI-NFFO had been commissioned and were still generating electricity, with a capacity totalling 1,142.4 MW DNC.

The changes that took place to the number of live RO schemes during the calendar year 2007 were:

• 1 scheme was terminated (-38.5 MW DNC, Energy crops and agricultural and forestry waste) and 5 applied for economic termination (-7.95 MW DNC, Landfill Gas) under NFFO3. 1 scheme was terminated (-1.43 MW DNC, AD of agricultural waste) and 2 applied for economic termination (-1.56 MW DNC, Landfill Gas) under NFFO4; 1 new scheme was commissioned (4 MW DNC Wind). 5 schemes applied for economic termination (-12.45 MW DNC, Landfill Gas) under NFFO5.
• 1 scheme under SRO 1 (-0.66 MW DNC, Hydro) and 1 scheme under SRO 3 (-8.29 MW DNC Wind) were lost; no new schemes were commissioned.
• No schemes were either commissioned or lost under NI NFFO.

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Exclusions:

• Hydro power from plants exceeding 20 MW DNC built before 1990 (unless re-furbished)
• Energy from mixed waste combustion. Mixed waste that is converted to fuel using advanced conversion technology is eligible, but only the biodegradable fraction of any waste is eligible (in line with the EU Directive)
• All stations outside the UK (which includes its territorial waters and the continental shelf)