Renewable obligation certificates are currently issued to power generation businesses that operate renewable power generation systems. In the not too distant future, many homeowners may join that happy band. Large power producers have to meet minimum quotas of renewable generation and are therefore increasingly hopeful that small generators (homes, offices etc) will help them to meet their commitment. Sounds simple enough? Yet, as Ben Bamber found out, it is anything but ...

Renewable obligation certificates (ROCs) is the name given to digital certificates which hold details of exactly how a unit of renewable electricity was produced, who produced it and who bought the electricity. These certificates are effectively guarantees and are traded separately to the actual electricity itself. They were introduced by the government to work as a ‘bonus premium’ on top of the unit price of the electricity.
What are they for?
In 2005 the government passed ‘The Renewable Obligation Order 2005’ (updating previous orders of 2002 and 2004), requiring energy companies to derive 6.7% of the energy they provide to their customers from renewable sources. This actually started at 3% in 2003 and will continue to rise to 10% by 2010. The cost to consumers will be limited by a price cap and the obligation is guaranteed in law until 2027.

The law requires that if an energy provider fails to generate the required percentage of renewable energy itself, then it must buy the energy from someone who has. The ROC is the proof of generation which is passed to the purchaser (the energy provider). Due to their great demand, ROC’s are traded on the open market and sold to the highest bidder. If a company fails to generate the required percentage of renewable energy, or buy the appropriate amount of ROC’s, then fines can be imposed.

Eligible renewable generators receive ROCs for each MWh of electricity generated. These certificates can then be sold on the open market to companies that need them to make up their shortfall. Suppliers can then present enough certificates to cover the required percentage of their output. According to the British Wind Energy Association (BWEA), ‘ROCs have traded as high as £47/MWh but there is no guarantee that they will remain at this price. ROCs have increased the profitability of renewable energy generation as the certificates can currently sell for more than the power! This is especially true for wind, which was already producing electricity at competitive prices’. ROC trading is administered by the Non-Fossil Purchase Agency Ltd1 .

How can domestic generators sell their spare power?
As more and more of us take up the challenge of home power generation, the hope is that spare energy, should there be any, could be sold back to the energy company they’re signed up to. However, there has never been a clearly established way to regulate and monitor or even deliver the small amounts of spare energy back to the grid (called ‘net metering‘).

Ofgem2, the government regulator of the power industry, is considering offering direct payments for each unit of energy produced at home or simply a reduced import tariff. Ofgem says that 39,882,405 ROC’s have been issued between 1st April 2002 and 31st May 2006. To register you have to be accredited by Ofgem and have an eligible generation method. The process is already known to be very bureaucratic, but once you’re issued with ROC’s, energy companies might be willing to buy them off you.

In my research I discovered that there are currently an estimated 100,000 small units (below 50kW) in operation and government legislation allows electricity companies to count some of these as part of their renewable obligation. But how? An energy company told me that 1 – 2% of the clients on their books are micro power generators. The question is, without proper metering, how do they know how much electricity is being produced or are they just estimating against the rated output of the equipment3. BFF editor, Keith Hall, informed me that he is currently being paid a very nominal sum for exporting a small portion of the solar power generated by his solar array, but nobody actually checks what he has uploaded onto the grid or even when! The quantity is tiny in the big scheme of things but extrapolated out across the nation we could soon be talking of many thousand kWh of un-recorded output.

David Meechan from the DTI denies that there is a problem with measuring the contribution of renewables from micro generation from domestic properties. But I know, having spoken to owners of such systems, that they have no clue what contribution their system is making to their own energy consumption let alone what is going on to the grid! Meechan also says that ‘In order to receive ROCs, the installation has to be fitted with a gross generation meter which will accurately record the amount of electricity generated’4. So I failed to find out exactly how power companies are getting around this at present. But there are new rules afoot. The DTI has recently released details of a series of assisting legislation to help micro-generators to come into the ROC’s scheme. Previously small generators, who were generating less than 1MWh of electricity, would not be able to claim any ROC’s for their energy.

A detailed and lengthy consultation document5 says that agents will be used to group micro-generators together to claim the ROC’s and then the agent will distribute them. The schemes will be divided into technology groups, ie. people with wind turbines will be grouped together and so on. However, there seems to be no attempt to regulate the way in which agents will redistribute the ROC’s once they’ve been made available. Once a micro-generator has signed up to an agent, they will not be able to escape the contract until the ROC issuing period is up - so choose your agent carefully. Micro-generators can use agents when generating ‘up to and including 50kW declared net capacity (DNC)’. Though small generators will be not required to use an agent, those that do will only need to fill out a form which goes via the agent to Ofgem for registration. Any power company will be able to act as an agent if they choose to.

However, while there is an obligation to supply consumers with electricity, there is no obligation for generators to purchase micro-generated electricity from domestic suppliers.

Ben Bamber is a freelance journalist.

Refs
1. www.nfpa.co.uk/
2. The office of Gas and Electricity markets :
www.ofgem.gov.uk/ofgem/index.jsp
3. In BFF, (Vol. 16, No. 1, Summer 2006), Dave Elliott says that microgen (CHP) systems in trials were under-performing and were not living up to estimates provided by manufacturers.
4. In 2005 Good Energy was offering 4.5p per kWh generated, as long as you have an accredited total generation meter fitted to quantify the amount generated by your renewables. According to its website, however, it now appears to be paying based on an estimation of your renewable output.
5. Reform of the Renewables Obligation and Statutory Consultation on the Renewables Obligation Order 2007; pp.43-53; www.dti.gov.uk/consultations/page34162.html