Renewable Obligation

Key takeaways

The Renewables Obligation (RO) is a legacy scheme that supported renewable electricity generation.

It closed to new generating capacity on 1 April 2017, but it still runs for accredited generators already in the scheme.

Suppliers fund the scheme through Renewables Obligation Certificates (ROCs) or payments into a buy-out fund, and those costs are recovered through electricity pricing.

What is the Renewables Obligation?

The Renewables Obligation (RO) was designed to encourage renewable electricity generation in the UK.

Ofgem explains that it closed to all new generating capacity on 1 April 2017, but continues for stations already accredited under the scheme.

How is RO funded?

Ofgem sets out the core mechanics clearly:

• Each year, electricity suppliers must present a specified number of ROCs per MWh of electricity they supply during the obligation period (1 April to 31 March).
• Suppliers can meet the obligation by:
  1. presenting ROCs
  2. paying into a buy-out fund
  3. or a mix of both
• ROCs are issued to accredited generators for eligible renewable electricity they generate, and can be traded or sold.

How does RO show up on business bills?

It depends on your contract structure:

All-inclusive pricing

• RO costs are usually bundled into your unit rate.

Pass-through pricing

• RO may be listed separately (often as RO, Renewables Obligation, or included within a policy-cost grouping).

If you’re comparing quotes, the practical question is simple: are policy costs included, or passed through?

Quick checklist for quote comparisons

1. Ask if the quote is all-inclusive or pass-through
2. If pass-through, ask which policy costs are passed through (RO is often one of them)
3. Compare using total projected annual cost, not a single line item

Sources

1. Ofgem: Renewables Obligation scheme overview, including closure date and how obligations/buy-out fund work.
2. Ofgem: RO supplier section (scheme obligation on suppliers).