What is the Renewables Obligation?
A. The Government has introduced an obligation (Renewables Obligation) on all electricity supply companies to increase, on an annual basis to 15% by 2015, the proportion of our electricity sourced from renewable energy sources such as the wind. If a company fails to meet its annual renewable production targets then it will have to pay a fine into a central pool managed by Ofgem (the electricity regulator), which is proportional to its shortfall of renewable energy. This fine is then paid (“recycled”) back to those suppliers who have met their obligation. Over time if a supply company continues to perform badly in this area relative to its competitors then it will find it progressively more difficult to keep the cost of the electricity it supplies at a competitive level.
