Renewables Obligation

The Renewables Obligation (RO) is currently the main mechanism the Government uses to support large-scale generation of renewable electricity. Since its introduction in 2002, it has succeeded in more than tripling the level of renewable electricity in the UK from 1.8% to 6.64% (so says DECC) and is currently worth around £1.4 billion/year (according to Ofgem) in support to the renewable electricity industry.

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The amount of support provided through the RO varies by technology – with the aim of providing a greater assistance to earlier more expensive technologies which have the potential to make a significant contribution on a large scale. The support is provided by means of a Renewables Obligation Certificates (ROCs) which is issued to a renewable electricity generator – the number of ROCs a generator receives depends on the technology, e.g. onshore wind receives 1 ROC/MWh, offshore wind currently receives 2 ROCs/MWh, and energy crops 2 ROCs/MWh. This support is guaranteed to the renewable electricity generators currently until 2037 for new projects.

Essentially the RO is funded by the major electricity suppliers, as it places an obligation on the major electricity suppliers to source a specified and annually increasing proportion of their electricity sales from renewable sources (e.g. by buying ROCs), or pay a penalty.

The obligation in England and Wales for 2010/11 is circa 11% renewable electricity. Find more information published by Ofgem.

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FAQs

How much is LESA?
LESA is a tax allowance (not a cash payment) that allows you to claim up to £1,500 against tax every year.
What does LESA cover?
This allowance can be claimed for properties you rent out in the UK and abroad. You can claim LESA for the costs of buying and installing certain energy saving products for properties you rent out, but only for what you actually spend. You can claim LESA for what you have spent on:
  • cavity wall and loft insulation, after 6 April 2004
  • solid wall insulation, after 7 April 2005
  • draught proofing and hot water system insulation, after 6 April 2006
  • floor insulation, after 6 April 2007
Can you claim LESA for more than one property?
Since 6 April 2007, it's been possible to claim a maximum allowance of £1,500 for each house, flat or bed-sit you rent out. For example, if you rent out a building that contains four flats, you can claim up to £1,500 for each flat. Previously, the maximum allowance was £1,500 for the whole building.
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