Renewable Obligation Certificates (ROCs)
The Government has powers under the Utilities Act 2000 to impose an obligation on licensed suppliers to source an increasing proportion of electricity from renewable sources. These powers had effect from 1 April 2002 in Great Britain and from 1 April 2005 in Northern Ireland. The Office of Gas and Electricity Markets (OFGEM) is responsible for ensuring compliance with the obligation.
The actual obligation for each supplier is calculated by applying a percentage to that supplier’s total electricity sales to customers in the UK during each obligation year. Supplies to customers outside the UK are not eligible for ROCs.
ROCs are issued as evidence that electricity from an eligible renewable source has been supplied to customers in the UK. They are issued electronically by OFGEM to accredited generators for eligible renewable electricity generated within the UK, its territorial waters and continental shelf. In the case of output sold through existing non-fossil fuel obligations and Scottish renewable obligations contracts, the certificates will be issued to suppliers.
ROCs are issued in units of 1MWh and contain:
- a unique number;
- detail of the generating station;
- the renewable source; and
- the period in which the electricity was generated.
ROCs are sold with the electricity to a supplier. The supplier will be able to use the certificate to demonstrate progress towards meeting its renewables obligation.
ROCs can also be traded separately from electricity. As an alternative to supplying renewable energy, suppliers may discharge all or part of their obligation by:
- buying ROCs from generators or another party; and/or
- paying a “buyout” price to OFGEM.
|### Transaction||### VAT treatment|
|the issue of ROCs by OFGEM to accredited generators||no supply - outside the scope|
|supplies of renewable electricity with ROCs||single supply of electricity - standard-rated|
|trading in ROCs||supply of services - standard-rated|
|purchase of an obligation (buyout) from OFGEM||payment of a penalty - outside the scope|