DECC issues response to consultation on the transition between the Renewables Obligation and the Contracts for Difference regime

On 12 March 2014 the Department of Energy and Climate Change (DECC) issued its response to its consultation on the transition between the Renewables Obligation and the Contracts for Difference regime.

It confirms that fixed price Renewable Obligation Certificates (ROCs) will be introduced from 1 April 2027 via the Fixed Price Certificate Scheme.

ROCs issued between 1 April 2017 and 31 March 2027 will be sold and purchased in the same way as at present, with fixed price ROCs being introduced from 1 April 2027 for the final 10 years of the scheme.

A number of respondents to DECC's consultation argued that the fixed price ROCs should be introduced from 1 April 2017 due to concerns about the perceived possibility that the market price of a ROC might fall below the buyout price and about reductions in PPA availability.

However, DECC felt that the arguments in favour of maintaining the 1 April 2027 start date outweighed the arguments in favour of an earlier introduction. In particular, DECC believed the earlier introduction of a fixed price would involve significantly more transactions due to the higher proportion of ROC accredited facilities as at 2017 when compared to 2027. Consequently an early introduction of the fixed price would result in higher administrative costs, which would be passed on to either consumers or taxpayers.

DECC will be preparing and consulting upon the detailed design of the Fixed Price Certificate Scheme and the associated secondary legislation, in due course.