Renewables Obligation Plan
The Renewable Obligation is a key policy instrument for the government to meet its UK-wide targets for renewable electricity supply. Part of the Utilities Act 2000, the Obligation will require licensed electricity suppliers to buy specified portions of their purchases (see targets below) from renewable sources, it is designed to succeed the Non-Fossil Fuel Obligation. The Obligation is planned to last for 25 years. A proposal was opened for discussion by interested Parties in 2000, the outcome of which was released in March 2001. A Statutory Consultation, including a draft Order was issued in August. The application date has been postponed several times from the original April 2001 and is currently planned for April 2002 in order to provide OFGEM with enough time to finalise operational details in relation to inconsistencies between English and Scottish versions of the order. These delays are causing difficulties for renewable energy producers who are not covered under the NFFO anymore and are obliged to trade in the open market. Scotland is expected to issue a similar proposal in the short term. All licensed electricity suppliers in England and Wales will be subject to the obligation; large-scale hydro and energy from waste will be excluded from the RO even if they count for the achievement of the 10% target. Suppliers will demonstrate their compliance with the obligation through RO Certificates. Their will be limited "banking" and even more limited "borrowing" of obligations. Suppliers will have the option to choose a buy-out option if the cost of renewables is too high, the proposed buy out price should initially be set at GBP 30/MWh. The introduction of the obligation is expected to result in a maximum 3,7 % increase to 1998 electricity prices by 2010. The targets are a percentage of output of 3% between October 1, 2001 and March 31, 2003 (4.3% in 2004, 4.9% in 2005, 5.5% in 2006, 6.7% in 2007, 7.9% in 2008, 9.1% in 2009, 9.7% in 2010) and 10.4% by March 31, 2011.
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