Policies

Non-Fossil Fuel Obligation

Source: JOIN IEA/IRENA Policy and Measures Database
Last updated: 25 June 2013

The Non-Fossil Fuel Obligation (NFFO) was the governments previous major instrument for encouraging growth within the renewable energy industry. The institutional framework was established as part of the 1989 Electricity Act. The NFFO in England and Wales and similar obligations in Scotland and Northern Ireland required electricity supply companies to secure specified amounts of new generating capacity from non-fossil sources, including renewables.

The NFFO process began with the governments announcement of proposals for an order covering specific technology bands. Five orders were carried out during the programmes span. The Non-Fossil Purchasing Agency (NFPA), an agent through which the electricity suppliers contracted collectively with renewable generators, issued bids for prospective schemes for specific technologies. Renewable energy generators competed in a tender process. Each scheme that passed a "will-secure" test submitted a final bid and the government then selected the cheapest schemes to secure the required capacity within each technology band. The renewables capacity was secured through contracts with generators at premium prices. The guaranteed contractual price was made up of the pool price and a technology-specific premium. Additional costs incurred by the electricity suppliers under these contracts were financed through the Non-Fossil Fuel Levy. It was funded by all final electricity consumers as a levy on electricity consumption. The levy is also used to support nuclear power. The levy rate was set by the regulatory body each year, and in 2003 stood at 0.3% of the cost of fossil-fuel sources of electricity.

  • NFFO 1: 1990-1998
  • NFFO 2: 1991-1999
  • NFFO 3: 1994- 2014
  • NFFO 4: 1997- 2016
  • NFFO 5: 1998- 2018

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