Briefing note April 2017

2015/16 (CP14) - Supplier compliance

Overall position Banked ROCs In 2015/16 (CP14) renewable generation receiving RO support Around 8.8m ROCs issued in 2015/16 (CP14) were not presented amounted to 69.1TWh, or 23.4% of all electricity supplied in the back to Ofgem, 6.0m more than the number presented. These UK, of which 99.9% was met by suppliers presenting ROCs, a rec- will have to be submitted for compliance in 2016/17 (CP15). Re- ord high. Against the England and Wales obligation of 0.290 ROCs newables policy allows for a maximum of 25% of a supplier’s RO per MWh there was just a 0.0002 ROCs per MWh shortfall. to be made up of ROCs banked from the previous period. The recycle value per ROC was £0.00, which when added to the In total suppliers submitted 3.3% of the total RO with ROCs gen- buy-out price made the nominal ROC value equal £44.33/ROC. erated in 2014/15 (CP13), totalling 2.8m. The Big Six presented This was the first time the recycle was zero since the start of the 49% of the total. and RWE presented the RO as a result of a record number of ROCs issued against the to- most at 0.8m and 0.3m. Green Energy (UK) presented the largest tal obligation. proportion at 25%.

Large suppliers Bioliquids In 2015/16 (CP14) the Big Six energy suppliers (EDF Energy, RWE From 2013 suppliers have been capped at presenting bioliquids npower, E.ON UK, , SSE and Scottish Power) continued to at 4% of their RO. Some 58,973 were presented, equating to dominate the renewable electricity supply market with a com- 0.07%. Centrica submitted the most, at 28,999, equating to 0.3%. bined share of 79% of the total RO, but this continued to reduce, with 3.4 percentage points less than in the previous year. Independent suppliers EDF Energy again had the largest RO of 13.8m ROCs, and for a The proportion of the RO held by independent suppliers was second year all of this was met by ROCs. 21.4%, an increase of 3.4 percentage points year-on-year. Some 45 of the 66 independent suppliers presented ROCs for their en- All of the Big Six suppliers complied with a 100% ROC submission, tire RO in 2015/16 (CP14), which is 16 more than a year ealier. with none paying any buy-out. Most of the smaller suppliers have seen their RO increase by Scottish Power’s obligation increased by the most, at 20%, year- more than the increase in obligation levels, including Haven Pow- on-year. This was the only one close to the 17% increase in the er, Smartest Energy, Total Gas & Power and . RO, suggesting market share was at least maintained. E.ON UK saw a 13% increase compared to a 17% increase in the total RO. and Centrica’s increased by a relatively low 6% and 11%, sug- gesting a reduction in market share. Five suppliers failed to make buy-out payments by the 31 August 2016 deadline, but did make the full £1.9m late payment due. Supplier ROC compliance 2015/16 (CP14) For the first time since the RO scheme was launched, there were insufficient funds to cover administration costs. 14,000

12,000

10,000 ROCs pre- RO ('000s sented Change in 8,000 UK RO ROCs) ('000s ROCs) ROC % ROC % 6,000 EDF Energy 13,802 13,802 100% 0%

'000s '000s ROCs RWE npower 12,997 12,997 100% 0% 4,000 SSE 11,503 11,503 100% 1% 2,000 E.ON UK 11,481 11,481 100% 0% 0 Centrica 10,652 10,652 100% 0% EDF Energy RWE SSE E.ON UK Centrica Scottish Scottish Power 5,914 5,914 100% 0% npower Power Other 18,091 18,037 99.7% 4% Source: Ofgem ROCs Buy-out CP13 RO (ROCs) Total 84,439 84,385 99.9% 8%

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Ofgem ’s RO annual report

RO annual report 2015/16 (CP14)

Scheme costs percentage point shift to England and Wales from Scotland. In 2015/16 (CP14) the total cost of the RO was £3.7bn, a year-on- England has mainly offshore wind, fuelled and solar. Wales has year increase of 20%, the same as in the previous year. mainly offshore and onshore wind. Scotland is dominated by onshore wind and Northern Ireland has predominantly onshore The average number of ROCs against the nominal ROC value wind. gives the worth of a ROC, or support per MWh. This equated to £58.07/MWh in 2015/16 (CP14), an increase of 4% year-on-year, Emissions saving mainly as a result of the higher buy-out price. Using Defra’s conversion factor for greenhouse gas emissions of Offshore wind continued to have the highest worth in 2015/16 0.48759kgCO /kWh against 69.1TWh of renewable generation (CP14) at just under £85/MWh because of high levels of capacity 2 results in a saving of around 33.7m tonnes CO e, which is 14.4% receiving more than 1 ROC per MWh. But the solar PV figure con- 2 higher than the 29.4m tonnes CO e in 2014/15. tinued to fall, to around £68/MWh, as a large proportion of ca- 2 pacity is subject to lower banding levels. The fuelled technologies Biomass sustainability remained at just over £50/MWh. Also relatively stable were on- shore wind, hydro, landfill and sewage gas at £40-45/MWh. There was a 29% increase in the total quantity of non-waste solid biomass used in 2015/16 to around 10m tonnes, com- Technologies pared to the previous year, with the increase coming from woody biomass. The use of energy crops, husks and straw was In 2015/16 (CP14) Ofgem issued 90.4m ROCs, which was 27% relatively stable. Waste fuel streams were utilised by new ca- more than in the previous year, mainly because of 8.4m from pacity, with only a slight increase in waste solid biomass. As in offshore wind, 4.4m more from the fuelled technologies and the previous year all stations that used energy crops sourced 3.9m more from solar PV. them from the UK and Republic of Ireland. While wind capacity increased, high wind speeds during the win- Around 71% of the fuel supply in stations above 25MW comes ter helped to increase the number of ROCs significantly, with from forestry residues, with this category dominated by co- over 7.6m wind ROCs alone issued during December 2015. Dur- firing or conversions, with the biomass replacing coal-fired gen- ing this month over 10m ROCs were issued altogether, the high- eration. est number ever. Landfill gas continued to reduce as a result of the closure of and reduction in capacity. Less crops and silages are being used in larger anaerobic diges- tion sites, while biogas from food waste feedstocks make up the The number of ROCs issued accounted for 107.1% of the total largest percentage in stations of between 1-25MW. This may RO, with an excess of 6.0m ROCs. reflect larger stations being built specifically to utilise food Of the total number of ROCs, 77% were generated in England waste that would previously have been sent to landfill. and Wales, 19% in Scotland and 3% in Northern Ireland, with a 3

Support per MWh and scheme cost ROCs generated by technology and country

60 4,000 35,000 NI 3,500 30,000 Scot 55 E&W 3,000 25,000 2014/15 2,500 50 20,000 2,000 15,000 45 '000s ROCs 1,500

£/ROC MWh £/ROC and 10,000 Scheme Scheme (£m) cost Nominal (£/ROC) 1,000 40 5,000 Support (£/MWh) 500 Scheme cost (£m) 0 35 0 Offshore Fuelled Onshore Solar PV Landfill Hydro Sewage Marine Source: Ofgem 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 wind wind gas gas

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