The Scottish Government has passed the Renewables Obligation (Scotland) Order 2009, which will take full effect on 1 April 2009. The Order runs to some 61 sections and quite a bit of detail, but there are a couple of issues worthy of particular note.
Incentivising new technology
Renewables Obligation Certificates (ROCs) were introduced in 2002 as an incentive for electricity suppliers to provide some of their electricity from renewable sources. While they have proved successful at incentivising the use of established renewables technologies such as onshore wind, landfill gas and sewage gas, they have been less successful at stimulating developing technologies such as wave and tidal.
In order to address this, the Order will introduce a banding of ROCs. The number of ROCs awarded to emerging technologies per unit of output will be greater than that for established technologies. Some technologies will continue to receive the same number of ROCs as before, and others will receive only fractional ROCs per unit. Although the banding proposals as a whole have been approved by the Commission of the European Union, the arrangements in respect of increased banding for ROCs for wind and tidal production are still subject to State Aid approval. The higher bands proposed for those technologies will be introduced by amendment to the Order once State Aid approval has been received.
Grandfathers of ROC
A "grandfathering" provision is built into to the Order, meaning that any project commissioned prior to a given date, or existing projects whose capacity is extended after that date, will continue to receive ROC awards at the current rate, rather than at what might be a reduced rate under the Order. Projects which received a capital grant prior to July 2006 will be entitled to either retain that grant, or to repay the grant and move to a higher banding.
ROC and a hard place?
It seems likely as a result of ROC bands that some electricity suppliers will end up marginally worse off than under the present regime, although some will benefit from a grandfather's inheritance. In the long run, however, the newly incentivised market for the generation and supply of electricity from renewable sources should be improved, and improvements allowing Scotland to capitalise on offshore wind and wave energy is to be welcomed.
The final draft Order can be read at:
Executive Note at
also makes good reading.