Extracts from NATTA's journal
Renew, issue 147 Jan-Feb 2004

6. ROCs, LECs, and now - REGOs

We already have ROCs and LECs (Renewable Obligation  Certificates and Levy Exemption Certificates).  Now welcome REGOs - Renewable Energy Guarantees of Origin. 

REGO, the new EU wide green power certification system is designed to provide a boost for renewable energy generators (see Renew 145).  It was formally introduced in the UK last Oct. The REGO scheme will enable renewable energy producers to show that their electricity comes from a green source. The scheme is open to all producers of green energy, including the smallest domestic generators as well as large-scale hydro-electric power generators. It aims to encourage the development of renewable energy projects by enabling generators to provide their buyers with an assurance of the ‘greenness’ of their product. All producers of electricity from renewable energy sources will be able to request these electronic certificates, which will be issued by the energy regulator, Ofgem.

The scheme should be particularly helpful to small generators which do not generate enough electricity to qualify for Renewable Obligation Certificates (ROCs). The REGOs will be issued in units of 1kWh, and along with the proposals to relax the qualifying conditions for ROCs, this should make the scheme attractive to smaller generators.  The scheme works alongside the existing ROCs which are only available to generators producing more than 0.5MW per month from specified renewable sources. In parallel there are the Levy Exemption Certificates (LECs) given to companies who make use of renewables to escape the Climate Change Levy.

RO buy outs ? time to pay...

With problems having emerged with some payment returns for the ‘buy out’ charges in the first year of operation of the Renewables Obligation (see Renew 146), the government has proposed an amendment to the rules which would allow Ofgem, the energy regulator, to accept and distribute late payments.

The RO, which began in 2002, set out targets for energy suppliers to source an increasing amount of their energy from renewable resources. Certificates, or ROCs, are issued to renewable generators who can then sell them to electricity suppliers, allowing them to demonstrate their compliance with the targets. ROCs can also be traded between suppliers to make up any shortfall. An alternative means of compliance is through paying the buy-out fee to Ofgem. Receipts from the buy-out fund are re-distributed to holders of ROCs.  As with existing payments, the late payments will be recycled to those suppliers who redeemed ROCs for the relevant Obligation period.  The DTI noted that ‘The changes are not meant to encourage late payment. Failure by an electricity supplier to meet their obligation by 1 October each year would, as now, risk a substantial fine and require payment of any outstanding amount’.