Following its Energy Review Report in July, the Government issued on 9 October a Consultation on the Reform of the Renewables Obligation. Investors in renewables, including microgeneration, need to be aware of the proposed changes and the potential impact on their investment. You can also seek to influence the outcome by responding to the Consultation.

The Consultation has two parts. The first deals with major changes to the Renewables Obligation, such as the introduction of a banding system and is open until 5 January 2007. The second part, which is open until 15 December 2006, deals with a set of more limited changes to the Renewables Obligation Order, mainly aimed at helping microgenerators.

Part 1 Of The Consultation

The Government's key proposals in Part 1 of the Consultation are to:

  • introduce a banding system in the Renewables Obligation, whereby projects using emerging technologies, such as offshore wind and photovoltaics, would receive more Renewable Obligation Certificates (ROCs) per MWh of electricity produced than projects using more standard technologies, such as onshore wind. Such projects may receive only a percentage of a ROC per MWh.

  • adopt a "grandfathering" approach in respect of projects using more established technologies. Grandfathered projects would continue to receive a minimum of one ROC per MWh if they become operational prior to the introduction of the banding system.

  • raise the maximum level of the Renewables Obligation from its current limit of 15.4% of electricity generated as from 2015/16 to 20%, subject to controls.

Part 2 Of The Consultation

The key proposals in Part 2 of the Consultation are to:

  • make the benefits of the RO more accessible to microgenerators (generating units smaller than 50 kilowatts) by allowing agents to carry out the procedures for Ofgem accreditation and claiming ROCs and to amalgamate generation.

  • remove the need for generators who wish to claim ROCs to enter into sale and buyback agreements with suppliers.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 16/10/2006.