Renewable Obligation Certificates (or ROCs) store details of how electricity was generated, who generated it, and who eventually used it. Since April 2002 all UK licensed electricity suppliers have been obliged to obtain a proportion of the electricity they sell from a selection of eligible renewable sources such as wind and solar power.
For every 1,000 units (1MWh) of green electricity an energy company generates they receive one ROC. A company that generates more than its renewable obligation can sell ROCs to energy suppliers who have failed to meet their RE obligation. In this way power companies are financially motivated to invest in renewable energy generation projects.
The price of one ROC is set by the market and reflects the size of the difference between the percentage of RE electricity generated in the UK (currently around 6%) and the renewable obligation percentage (currently 6.7%). The bigger the shortfall, the more expensive each ROC and the more green electricity generators are rewarded for their efforts and fossil fuel burners are punished.
Currenly ROCs are selling at around £40 each, however prices could fall as more and more wind turbine generators and major offshore windfarms come online in the UK.
Every year the renewable obligation level increases – it started in 2002/3 at 3%, and will reach 10% by 2010, and 15.4% in 2015/16. The goal is to reach 20% by 2020.
Obtaining ROCs as a Domestic RE Generator
ROCs are not restricted to the major utility companies. Anyone who is generating renewable source electricity can apply to ofgem to be registered as a Small Scale RE Generator (<50kW). If you generate sufficient RE electricity from your solar panels and/or wind turbines you will receive renewable obligation certificiates which you can sell on the open market. In this way, you obtain free electricity from your RE source AND you effectively get paid for it!
If you have a grid-tied system then you would be paid by your energy supplier for every unit of electricity you spill into the grid AND you will get ROCs for every unit you generate whether you used it or sold it. An extra meter must be fitted to your renewable system and you simply declare each year how many units you have generated from your renewable source and your digital ROCs are added to your account.
You can sell your ROCs through a broker for a fee. Obviously the fewer ROCs you have, the higher the per ROC fee will be. e-ROC, for example, have a quarterly online auction of renewable obligation certificates charging just 50p+VAT per ROC sold with a minimum charge of £50+VAT.
ofgem buy ROC’s at an inflation linked price – currently around £32 – so at worst you can expect to make approximately 3p/kWh for each unit you generate as long as you generate more than 500 kWh per year.
nb. 500 kWh is approximately the annual output you can expect from around 200 Watts of PV solar panels in the UK, or a D400 Generator in a good windy location.