UK: Renewables Obligation - Is UK Solar On The ROCs?

Given the British Government's recent periodical decreases in the levels of Feed in Tariff support for solar PV projects, the announcement that it is also consulting in reductions in Renewables Obligation support will not come as a surprise. It will, however, remove the "Plan B" that many solar plant developers had been relying upon. In addition, given the potential fallout from the investigations into dumping of solar panels by Chinese companies, the changes may signal a period of reduced returns for the solar industry.


For some time there have been, and until the switch to Feed in Tariff Contracts for Difference in 2017 there will be, two mutually exclusive schemes providing support to generators of solar electricity in the UK.

For projects with a total installed capacity of up to 5MW, generators can currently apply for accreditation under the Feed-in-Tariff (FiT) scheme, which entitles the generator to payment of a certain sum per kWh.

As an alternative, generators can register the plant for the Renewables Obligation scheme, entitling the generator to Renewables Obligation Certificates (ROCs) for generated electricity. These ROCs can then be traded with other parties, and have a market value – but not a fixed price; the project income is generated from the sale of ROCs, combined with the sale of the electricity (usually under one power purchase agreement).

Historically, the FiT has been the route preferred by solar generators. It provided a greater (and more certain) level of support than ROCs. However, the PV solar industry has changed considerably in recent years, with substantial decreases in the cost of PV generating equipment (especially modules manufactured in China) making solar energy increasingly viable and profitable. The result was a considerable increase in the number of projects applying for FiT support. The reaction from the British Department of Energy and Climate Change (DECC) was swift; through incremental steps they have considerably reduced the level of FiT support offered, from 30.7p/kWh in April 2011 to the current level of 7.1p/kWh for projects of between 250kW and 5MW. The support offered by ROCs has not decreased at the same rate as the FiT levels, and increasingly, solar projects have been relying instead on ROCs.

On 25 July 2012, the DECC announced its decision on the banding review for support under the RO system. We have previously  commented on this review. As part of that review, the DECC noted that it would issue a further consultation on reduction of ROC support for solar PV projects, and also consult on whether to exclude new projects at or under 5MW from the RO system entirely, taking away the choice for such projects and confining them to the FiT scheme.

On 7 September 2012, the DECC published its consultation on solar PV support under the RO. The consultation does not seek responses regarding whether ROC support should be excluded for new projects at or under 5MW (as was anticipated in the banding review); instead, it now appears that the DECC is seeking to reduce ROC support so that the level of support mirrors the FiT scheme. The effect of this change is that projects above 5MW, as well as those below, would be impacted.

The proposals in outline

The DECC proposes to reduce the support rates for new solar PV projects accredited from April 2013, so that the RO support rates broadly reflect the rates under the FiT scheme (for projects between 250kW and 5MW). The proposed rates are (down from the current rate of 2 ROCs/MWh):

  • 2013/14: 1.5 ROCs/MWh
  • 2014/15: 1.3 ROCs/MWh
  • 2015/16: 1.1 ROCs/MWh
  • 2016/17: 0.9 ROCs/MWh

These rates will apply to all projects under the RO system, including projects above 5MW. However, the consultation invites comment from the solar industry regarding large-scale solar PV projects, so that it can "get a more complete picture" of the likely costs over the next few years for large-scale projects.

In addition, the consultation notes that in due course, a further consultation may still be issued relating to the exclusion of new projects up to and including 5MW from the RO system entirely, binding all but the largest of projects to the FiT scheme.

It should be noted that the consultation also reiterates the government's commitment to "grandfathering" (i.e. maintaining) the support offered to existing projects.


The proposed reductions in support are significant: an initial cut of 25%, followed by further reductions which in four years' time will see a ROC allocation of less than 50% of that provided now. This reduction in support appears to anticipate a continuing steep drop in production costs over the next few years.

Recent political indications, however, are that the industry will be hard pushed to meet these price reductions. This is shown by the ongoing trade disputes regarding solar "dumping" (i.e. selling panels for substantially less than the cost of production), both in the EU and the US.

Following allegations in the U.S. that Chinese manufacturers have been "dumping" solar panels, the U.S. Government has announced plans to impose import tariffs of up to 250% on imports of solar panels into the US from China. On 6 September 2012, the European Commission (EC) itself announced an investigation into imports of solar panels from China, following allegations of dumping. EU ProSun, a European industry group, has argued that such dumping could threaten the prospects for European solar companies.

If the EC investigation follows that of the United States, then it seems likely that import tariffs will be imposed on imports of Chinese solar generating equipment. Not only would these tariffs themselves increase the cost of PV, but they would also indicate that current equipment prices are a product of Chinese market manipulation and not a true reflection of the cost of PV.

Given that the DECC is looking to reduce support based on the current cost of PV, it has to be asked whether the decreases in price over the past few years are indicative of a natural and sustainable fall, or whether in fact the market is simply temporarily and artificially suppressed. Events in the United States, followed by the EC investigation, tend to suggest the latter. If this is correct, then the decrease to ROC support as currently proposed by the DECC could mean that new solar PV projects are not sustainable at all.

The consultation is open for comments until 19 October 2012, and the DECC welcomes evidence from the industry of forecasted costs of production, especially with regard to projects above 5MW.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.