Know your ROCs and REGOs
Renewable Energy Certificates explained
There are two types of renewable energy certificates in the UK: ROCs and REGOs. You’ll get them when your installation is accredited with Ofgem through their Renewables and CHP Register. ROCs have a cash value to you and REGOs help suppliers tell their customers where their energy has come from.
ROCs are a key part of the Renewables Obligation scheme and are useful to suppliers who are incentivised to support the growth of renewable generation.
The number of ROCs you receive for each MWh of electricity you produce depends on the technology (wind, solar PV, anaerobic digestion etc.) of your generation asset and when it was built. This is called ROC banding and helps promote newer technologies which receive more support with multiple ROCs per MWh.
You can bundle your ROCs with the power you are selling in one Power Purchase Agreement (PPA), or sell the certificates separately in a stand-alone contract by entering into a ROC Trading Master Agreement (RTMA). We offer contracts lasting from one month to five years. Choose from three main pricing options to fit your appetite for risk and exposure to the variable recycling fund payment along with how you’d like to be paid:
- a fixed price gives you budget certainty and improved cash flow
- a percentage share option (Buyout Price / Recycling Value) can be a good choice for generators looking to achieve a better return over the longer term and who are less focused on cash flow certainty
- the processing fee (per ROC) option is similarly a good choice for generators looking to achieve a better return over the longer term. This is a two-stage ROC payment consisting of the Buyout price less a processing fee and the Buyout fund.
Register your generation asset with Ofgem and provide meter readings to receive ROCs digitally if your installation meets Ofgem’s requirements.
Contact us today about Renewable Energy Certificates and one of our dedicated team will call you back within the next working day.
Renewable Energy Guarantees of Origin (REGOs)
REGOs show electricity has been generated from renewable sources. Electricity suppliers use REGOs to demonstrate to customers the renewable content of electricity they’ve supplied each year.
- You’ll receive one REGO per MWh of electricity you generate
- You sell REGOs in a bundle with the electricity you sell.
Register your generation asset with Ofgem and provide meter readings from your generation meter according to its guidance.
Electricity Market Reform
Contracts for Difference (CFD) has now replaced the Renewable Obligation (RO) scheme.
The RO will continue to operate until 2037 for those already registered, but from 2017 new installations can only join the CFD scheme.
And from 2017, the Capacity Market becomes an alternative option for generators that can control when they generate and produce electricity when the system is under stress. And we do mean alternative. You can’t participate in the Capacity Market if you’re already registered in the FIT, RO or CFD schemes.
CFDs incentivise investment in new low carbon electricity generation by reducing the risk and cost of investing.
They overcome the issue that electricity prices are hard to predict over the life of a low carbon power plant. A CFD sets an agreed fixed price – called a strike price – for 15 years to reduce uncertainty about volatile wholesale prices and encourage long-term investment.
A strike price works this way. When the market rate for electricity falls below the strike price, generators are paid from a fund, run by the Low Carbon Contracts Company. When the rate exceeds the strike price, generators pay back into the fund.
If you are building on a commercial scale (typically more than 1-2MWs), the Renewable Obligation (RO) scheme or Contracts for Difference (CFD) scheme could offer the best rewards. You’ll need a Power Purchase Agreement (PPA) to sell through these schemes.
Is it a small installation, under 250kW? Then Feed-in-Tariffs (FITs) are probably a better option for you.
You’ll need to opt out of receiving the FIT Export Payment, but this may be more beneficial to you. Your PPA would be a separate agreement to your FIT contract and you can continue to receive your FIT Generation Payment through your existing FIT supplier.