This Order amends the Renewables Obligation Order 2015 (the “2015 Order”).

The 2015 Order imposes on all electricity suppliers licensed 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”. Suppliers can also make a cash payment in lieu of each ROC as an alternative. Each obligation period runs from 1st April to 31st March.

The renewables obligation is administered by the Gas and Electricity Markets 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.

The renewables obligation has a mechanism known as mutualisation which seeks to recover a shortfall of payments from suppliers if there is a payment default and the level of default is equal to or in excess of a threshold of £15,400,000. This Order provides for the mutualisation threshold to be updated each year and linked to the annual cost of the scheme to suppliers. This will be set at 1% of the scheme’s total annual cost rounded to the nearest £100,000.

A full impact assessment has not been produced for this instrument as no significant impact on the private, voluntary or public sector is foreseen. An explanatory memorandum is available alongside this Order on www.legislation.gov.uk.