Policies of incentives FiTs/ROCs/RHIs

Feed In Tariffs

The FiT scheme is a Government programme introduced by the Energy Act 2008 that is designed to promote the uptake of a range of small-scale renewable and low-carbon electricity generation technologies. The scheme is applicable to a range of eligible renewable technologies up to a maximum total installed capacity of 5MW. Under the FiT scheme, energy suppliers are required to pay a tariff to small-scale low-carbon electricity generators. Electricity suppliers must pay two types of tariff: a 'generation tariff' for the energy generated and an 'export tariff' for electricity exported to the grid. These tariffs provide for guaranteed, index-linked levels of revenues over 20 years from the date of accreditation under the FiT scheme.

Renewables Obligation Certificates

Under the Renewables Obligations Order 2009, energy companies must obtain an increasing number of ROCs each year. A fixed number of ROCs are earned by a renewable energy producer for each MW of electricity generated. The number of ROCs earned per MW of electricity depends on the technology used and has been set by the Department for Energy and Climate Change. ROCs can be traded separately from the electricity in respect of which they were issued (or together with it) with the ROCs ultimately being used by energy suppliers to demonstrate that they have met their obligations. There is therefore a market for ROCs, where the price of ROCs is determined by the supply of ROCs from renewable energy producers and the demand for ROCs from energy companies or other third parties. The ROC market price is guided by a price set annually by Ofgem, referred to as the 'buyout price' which increases each year in line with RPI.

The ROC scheme is set to end for new installations in 2017 and is due to be replaced by the Feed in Tariffs with Contracts for Difference ("CfDs"). It is envisaged that the ROC Scheme will come to an end entirely by 2037.

Renewable Heat Incentives

The RHI scheme is a Department of Energy and Climate Change initiative aimed at promoting the uptake of renewable heat technologies through financial incentives and reducing the UK's carbon emissions. RHIs are paid by the Government for heat generated from proven renewable technologies, particularly biomass wood pellets, biogas and solar thermal, and the scheme works in a similar way to the FiT scheme. The RHI scheme is administered by Ofgem and paid by the Government under the Energy Act 2008. The RHI scheme provides for a guaranteed payment per kWh of heat generated from a qualifying source that is used for an eligible purpose which increases in line with RPI for the life of the installation or a maximum of 20 years from the date of accreditation.