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Renewables Obligation

Question for Department for Energy and Climate Change

UIN 208908, tabled on 10 September 2014

To ask the Secretary of State for Energy and Climate Change, what recent estimate he has made of the cost of the Renewables Obligation Scheme to energy consumers since 2002.

Answered on

13 October 2014

The total support costs associated with the Renewables Obligation (RO) since 2002 are set out in the table below.

£bn nominal prices

2002/03

0.28

2003/04

0.42

2004/05

0.49

2005/06

0.58

2006/07

0.72

2007/08

0.88

2008/09

1.04

2009/10

1.12

2010/11

1.29

2011/12

1.46

2012/13

1.99

2013/14

2.60

Source: DECC based on Ofgem publications.

The impact of these support costs on actual energy bills depends on the total level of electricity sales, how energy suppliers pass these costs through to consumers, and the amounts of electricity consumed by individual consumers.

Assuming that costs incurred by energy suppliers are passed on in full to all electricity consumers (including households and businesses), and on an equal £/MWh basis, analysis published in March 20131 suggests that, in 2013, the RO accounted, on average, for around 2% (or £30, in real 2012 prices) of an annual household energy (gas plus electricity) bill.

Under the Electricity Market Reform, the RO will be closed to new capacity from 1st April 2017, and large scale renewable electricity will be supported through the new Contracts for Difference scheme.

[1] https://www.gov.uk/policy-impacts-on-prices-and-bills

Answered by

Department for Energy and Climate Change
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