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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Who can claim LESA?
You can claim LESA if you are a landlord renting out residential property and are either:
  • an individual landlord – someone who pays income tax on profits from letting
  • a corporate landlord – someone whose rental business is registered as a company and you pay corporation tax on profits from letting
However, you can't claim if you are a landlord:
When was the allowance available from?
Individual landlords have been able to claim the allowance since 6 April 2004 - for corporate landlords it's been available since 8 July 2008.
How do you to apply for LESA?
You claim the allowance when filling in your tax return.
Can more than one landlord claim LESA for the same property?
If a house, flat or bed-sit is owned by more than one landlord, they can claim a share of the allowance either in proportion to:
  • their ownership of the property
  • the money they have spent on buying and installing the energy saving product
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