Revising the level of the Renewables Obligation for Great Britain for 2024 to 2025 to implement an increased exemption for energy intensive industries (published 26 March 2024)
Updated 26 March 2024
© Crown copyright 2024
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/renewables-obligation-level-calculations-2024-to-2025/revising-the-level-of-the-renewables-obligation-for-great-britain-for-2024-to-2025-to-implement-an-increased-exemption-for-energy-intensive-industries
Background
The Renewables Obligation (RO) scheme places an annual obligation on UK electricity suppliers to present to Ofgem (the scheme’s administrator) a specified number of Renewables Obligation Certificates (ROCs) per megawatt hour of electricity supplied to their customers during each obligation period.
During the period 2018/2019 to 2023/2024, Energy Intensive Industries (EIIs) in Great Britain had an exemption from up to 85% of the indirect costs of the RO. To implement that, the level of the obligation for Great Britain (in ROCs per megawatt hour) was applied to 15% or more of the electricity supplied to EIIs, and to 100% of electricity supplied to non-EIIs.
A provisional level of the obligation for the 1 April 2024 to 31 March 2025 obligation year for Great Britain was published in a note on 27 September 2023. Legislation requires the level to be published 6 months before the start of the obligation year, that is by 1 October 2023 for the 2024 to 2025 obligation year. As the EII exemption at that time was 85%, the level of the obligation was calculated on the basis of that 85% exemption.
However the September note explained that the UK government was seeking to amend the existing legislation to increase the EII exemption to 100%. The note forewarned that such an increase would require a revision to the level of the obligation for Great Britain, and set out what the revised level would be with a 100% EII exemption.
Revised EII exemption
The necessary legislative changes have now been made to increase the rate of the EII exemption from 85% to 100% across Great Britain, with effect from 1 April 2024. The Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2024 increase the rate of the exemption for EII excluded electricity to 100%.
The Department for Business and Trade’s forecast (as at September 2023) for 100% exempt electricity to be supplied to eligible EIIs in Great Britain in 2024 to 2025 was 11.7TWh. That figure was used in calculating the level of the obligation based on a 100% EII exemption.
Amending the level of the obligation for 2024 to 2025 after 1 October 2023
The Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2024 came into force on 21 March 2024, and permits the level of the obligation for England and Wales for only 2024 to 2025 to be revised once after 1 October 2023 to take account of the revised EII exemption rate.
The Renewables Obligation (Scotland) Amendment Order 2024 came into force on 22 March 2024, and permits a similar one-off revision to the level of the obligation for Scotland for only 2024 to 2025.
This note of 26 March 2024 announces the revised level of the obligation for Great Britain for 2024 to 2025 under those one-off provisions.
Final revised level of the obligation for Great Britain for 2024 to 2025
Taking account of a 100% exemption for EIIs in Great Britain from the indirect costs of the RO, the number of ROCs that electricity suppliers in Great Britain are required to produce during the 2024 to 2025 obligation period will now be:
- 0.491 ROCs per MWh in Great Britain (England, Wales and Scotland)
This revised level replaces the one announced on 27 September 2023 and will apply for the whole of the 2024 to 2025 obligation year (that is, from 1 April 2024 to 31 March 2025).
Northern Ireland
An exemption from the indirect costs has not been introduced for EIIs in Northern Ireland. Instead, support is provided via direct compensation. As a result, the level of the obligation for Northern Ireland does not make any adjustments for electricity supplied to EIIs.
The level of the obligation for Northern Ireland as published on 27 September 2023 is therefore not affected by the change in the support for EIIs in Great Britain.
The number of ROCs that electricity suppliers in Northern Ireland are required to produce during the 2024 to 2025 obligation period remains unchanged at:
- 0.192 ROCs per MWh in Northern Ireland
Details of the calculation
The underpinning methodology behind the calculation of the level of the obligation for both Great Britain and Northern Ireland remains as set out in the note published on 27 September 2023 for the following aspects:
- calculation A
- calculation B
- caps on the ROCs received by certain biomass conversion stations
- capacity of UK stations by technology
- load factors
- estimated number of UK Renewables Obligation Certificates (ROCs) to be issued by technology