The Renewables Obligation (Amendment) Order 2018

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends the Renewables Obligation Order 2015 (the “2015 Order”) to provide for an annual ROC cap and makes other minor amendments.

The 2015 Order imposes, on all electricity suppliers licenced under the Electricity Act 1989 which supply electricity in England and Wales, an obligation (the “renewables obligation”) to produce a certain number of renewables obligation certificates (“ROCs”) in respect of each megawatt hour of electricity they supply to customers in England and Wales during the periods known as “obligation periods”. Each obligation period runs from 1st April to 31st March.

The renewables obligation is administered by the Gas and Electricity Markets Authority (“the Authority”) which issues ROCs to accredited renewable electricity generators based on their output. These certificates are sold to electricity suppliers with or without the associated renewable electricity.

An annual ROC cap

Article 3 amends article 28 of the 2015 Order so that it is subject to a new Schedule 6 (inserted by article 6 of this Order) which caps the number of ROCs that can be issued in respect of “relevant electricity” generated by certain types of generating station during each obligation period. Relevant electricity is electricity that has been generated in certain ways described in paragraph 1 of new Schedule 6 (using either biomass or bioliquid as fuel).

New Schedule 6 also defines two types of generating station: “capped” and “mixed” generating stations (at paragraph 1). A capped generating station is a “relevant fossil fuel station” that includes one or more “capped combustion units” and no “exempt combustion units”. A mixed generating station is a relevant fossil fuel station that includes both capped and exempt combustion units. “Relevant fossil fuel station” has the meaning given in Part 1 of Schedule 5 to the 2015 Order, but excludes a station that has previously received ROCs for generation of electricity described as dedicated biomass, including dedicated biomass with ‘combined heat and power’ (‘CHP’). A CHP station is one which generates electricity and which is also able to supply heat to premises.

New Schedule 6 also defines two new types of combustion unit which a generating station may comprise (at paragraphs 1 and 2). Both definitions relate to combustion units which are accredited to participate in the Renewables Obligation scheme and to electricity which would, but for this Order, entitle the relevant generating station to be issued with ROCs:

• “capped” combustion units, so-called because they will be subject to either an actual or notional cap of 125,000 ROCs. A capped generating station will receive no further ROCs once it has been issued 125,000 ROCs multiplied by the number of capped combustion units of which the station consists (the “capped combustion unit allowance”) (paragraphs 3 and 4 of new Schedule 6). Electricity generated by capped combustion units forming part of a mixed generating station will not be issued with ROCs where the station has been issued with ROCs to the level of its “mixed generating station estimate” and where the capped combustion unit allowance has been exceeded. The mixed generating station estimate is the sum of the capped combustion unit allowance plus an estimate, made by the Secretary of State, of the number of ROCs the station’s exempt combustion units are likely to be issued in that obligation period (the “exempt combustion unit estimate”).

• “exempt” combustion units, so-called because they will remain entitled to receive ROCs for the electricity they generate, unless they form part of a mixed generating station. In this case, exempt units will be eligible to receive ROCs, except where the mixed generating station estimate has been reached and where the station’s capped combustion units have been issued more ROCs than the capped combustion unit allowance (paragraphs 5 and 6 of new Schedule 6). Combustion units are exempt where they form part of a relevant fossil fuel station and where they have been issued with ROCs prior to 12 December 2014 for electricity described as “unit conversion” or “station conversion”, unless certain exceptions apply (paragraph 2).

Paragraphs 7 to 18 of the new Schedule 6 modify the 2015 Order so that, for a mixed generating station, the provisions of the 2015 Order which would otherwise provide for the apportionment of ROCs to the entire station instead provide for the apportionment of ROCs to individual combustion units. The modifications include provision for the following:

• mixed generating stations must use a meter to measure the amount of electricity generated every month by each combustion unit separately and provide the information to the Authority, unless the Authority agrees that estimates may be provided instead (see modifications made to article 43 of the 2015 Order by paragraph 16 of new Schedule 6 and to article 80 by paragraph 17 of new Schedule 6);

• the “input” electricity (i.e. electricity used by each combustion unit for purposes related to its operation and which is deducted from electricity generated before ROCs are issued) does not need to be measured separately, but is a deemed figure, calculated by reference to the input electricity of the mixed generating station as a whole (see modification made by paragraph 9 of new Schedule 6, which inserts new article 26A);

• any notification previously given by the operator of a mixed generating station under article 81 of the 2015 Order must be disregarded (see paragraph 7(b) of new Schedule 6). The effect is that the actual energy content of biomass burned must be used for the purpose of calculating the number of ROCs to be issued.

Other amendments

Article 3 of this Order also makes certain corrections to article 28 of the 2015 Order.

Article 4 amends article 35 of the 2015 Order. The operator of a generating station that was accredited on or before 31st March 2013 and becomes a “qualifying CHP station” (as defined in article 2(1) of the 2015 Order) on or after the date on which this Order comes into force must make a declaration to the Authority in order to be entitled to ROCs issued at the CHP bands set out in the table in Part 5 of Schedule 5 of the 2015 Order in respect of electricity generated by the station’s “pre-2013 capacity” (as defined in article 2(1) of the 2015 Order). The declaration must state that support for heat produced by the use of that capacity has not been given under a scheme established under section 100(1)(a) of the Energy Act 2008. If no such declaration is made, ROCs will be issued at the non-CHP bands set out in the table in Part 2 of Schedule 5. This does not apply to microgenerators or electricity to which article 36 applies.

Article 5 amends the definition of “post-2013 dedicated biomass station” in paragraph 1 of Schedule 2 to the 2015 Order to make it clear that the term includes a generating station that was not accredited on or before 31st March 2013 and has, in any month after March 2013, generated electricity described as “dedicated biomass with CHP” in Schedule 5.

Explanatory memorandum and impact assessment

An explanatory memorandum is available alongside this Order on www.legislation.gov.uk. A full regulatory impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available alongside this Order on that website or from the Renewable Electricity Support Schemes Team, Department for Business Energy and Industrial Strategy, 1, Victoria Street, London, SW1H 0ET.